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City tax system changes suggested

Many entities are exempt from levies

Thursday, March 17, 2011
By Michelle Krupa
The Times-Picayune

Facing a March 20 deadline for suggesting changes to New Orleans’ tax system that would require approval from Baton Rouge, a mayoral task force on Wednesday hastily endorsed a handful of recommendations aimed at scaling back property tax exemptions for public and nonprofit entities.

The panel also advised giving local officials the authority to levy limited taxes on properties that qualify for exemptions, and it said it wants the Legislature to roll back court precedent that exempts from taxes some property that is not used for public purposes.

With an estimated $1.7 billion worth of property citywide excused from ad valorem taxes — nearly 44 percent of the total assessed value of real estate — members of the Tax Fairness Commission have focused much of their debate over the past six weeks on ways cash-strapped City Hall might tap those properties for revenue.

About half of tax-exempt property in New Orleans is owned by the government, with the remainder split between property protected by state-authorized exemptions for homeowners and a broad range of nonprofits including universities, churches and cultural groups, according to a recent report by the Bureau of Governmental Research.

Commission members on Wednesday generally agreed that overly broad exemptions allowed by state law erode the local tax base. They also noted that virtually all entities that enjoy such exemptions benefit from the public services that those revenues finance, from police and fire protection to the court system.

After haggling over various options, members agreed to ask the Legislature during its upcoming regular session to narrow the type of entities that are exempt from property taxes, as well as to restrict exemptions to properties that are used for public purposes — not simply owned by nonprofits or the government.

They also want lawmakers to grant local governments the power to levy a proportion of the local property tax rate, to a designated maximum, on exempt properties.

Any measure backed by the commission would require approval of a constitutional amendment by voters statewide.

Aides to Mayor Mitch Landrieu in coming days will formalize the recommendations before the commission reconvenes to approve the final language, Chief Administrative Officer Andy Kopplin said.

The administration has not settled on a legislator to sponsor the bills, which must be filed by April 15, he said. The measures will be taken up during the regular session that begins April 25.

Members on Wednesday also heard a nearly three-hour presentation from economists Tim Ryan, the former University of New Orleans chancellor, and Jim Richardson, an economics professor at Louisiana State University, on various ways the city could alter the tax system and the effect of those changes on residents by income category.

Possible changes included implementing a graduated homestead exemption system, as well as adjusting sales and property tax rates. The commission has until June to issue a final report.

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