In The News › Tax panel looks at nonprofits

Feb 4, 2011

Source: The Times-Picayune

Filed under: Orleans Parish, Taxation & Assessments

Tax panel looks at nonprofits

Broad exemption in N.O. to be examined

Friday, February 04, 2011
By Bruce Nolan
The Times-Picayune

A blue ribbon panel charged with recommending ways to make the city’s tax system fairer began its work Thursday, with one topic commanding more early attention than others: rethinking the broad property tax exemptions given to nonprofit groups in New Orleans.

Mayor Mitch Landrieu’s Tax Fairness Commission has until March to suggest tax reforms that would need legislative approval and until June to issue a final report.

Feeling their way forward in their first meeting, 10 committee members made clear they want to explore a range of options during the coming weeks.

But much of the initial conversation focused on changes in property taxes rather than sales taxes. And much of that centered on the potential benefits of narrowing the property tax exemptions now enjoyed by universities, churches and a wide range of other nonprofit groups.

Under the 1974 state Constitution, that exemption covers the property of a broad array of groups, regardless of its use, the members were told.

Those might include office buildings, parking garages or other income producing properties.

Janet Howard of the Bureau of Governmental Research, a critic of the exemption, told the group the waiver exempts not only major landowners like churches and universities, but much else as well, including property owned by nonprofit groups organized for “burial, charitable, health, welfare and fraternal” purposes.

Also included, she said: nonprofit corporations devoted to promoting trade, travel and commerce, and property used for cultural, Carnival and other civic activities.

City Councilwoman Jackie Clarkson, who is not a member of the group, attended the meeting and urged the commission to make rethinking those exemptions its highest priority.

“The general rule ought to be, if you pray or educate, you pay no taxes. But if you make money, you should pay money,” she said. “We’re encouraging them to acquire more and more property that doesn’t add to the tax base. It’s sinking the city.”

However, a line of court cases makes clear that income-producing properties owned by nonprofit groups are tax-exempt regardless of use, meaning a constitutional amendment likely would be required to change that, the commission was told.

Three of its members, Jay Lapeyre, Mary Zervigon and Donna Fraiche, are current or former board members at Tulane, Xavier and Loyola universities, respectively.

Still, the committee, which next meets Feb. 17 at City Hall, resolved to explore that issue, among others, in coming weeks.

Howard cautioned that it’s not possible to estimate how much the city would raise by eliminating the exemption because assessors have not put much effort into accurately appraising properties that pay no taxes.

Even so, the BGR estimates the value of tax-exempt property owned by nonprofit groups is at least $384 million. Eliminating the exemption altogether would add about $15.6 million to the $182.1 million in property taxes the city is expected to collect in 2011.

Moreover, the city might forgo collecting extra money, opting instead to lower the tax rate for property owners as the tax base broadens.

Another possible tax change: whether New Orleans, like every other city in the state, might remove some or all of its taxable property from under the protective umbrella of the homestead exemption.

That exemption effectively makes the first $75,000 of an owner-occupied home free from property taxes.

That, too, would require changes in Baton Rouge.

Even with the talk of tax increases, committee members said they understood that their mission from Landrieu was not to find ways to raise taxes. Rather, their job is to recommend adjustments to the city’s tax scheme to make the tax burden fairly distributed. Landrieu said the tax structure also should provide stable, adequate income and keep the city competitive with its neighbors.

Feb 4, 2011

Source: The Times-Picayune

Filed under: Orleans Parish, Taxation & Assessments

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