BGR backs New Orleans ballot initiatives aimed at raising funds for infrastructure

By Jeff Adelson

Source: The Times-Picayune | The New Orleans Advocate

October 29, 2019

The Bureau of Governmental Research is backing three ballot initiatives aimed at increasing city funding for infrastructure that Mayor LaToya Cantrell’s administration is putting before the voters on Nov. 16.

Cantrell is asking voters to impose a new sales tax on short-term rentals, approve a new 3-mill property tax and give the city permission to issue $500 million in bonds.

All three measures got the stamp of approval from BGR, a nonpartisan policy group, in a report issued Tuesday.

The Cantrell administration has pitched all three as ways to fund the city’s immense infrastructure needs. BGR has been raising the alarm about underfunding of city infrastructure for years.

The 3-mill tax, which city officials have said would be dedicated to maintenance of infrastructure and public facilities, would generate about $12 million a year. BGR said the money would help meet a backlog of repairs needed on city streets, drainage systems and buildings.

The city has estimated that it needs between $30 million and $35 million a year to properly maintain its infrastructure. BGR reports have previously found that the city spent only about $4.6 million a year over the past decade.

While endorsing the tax, BGR noted that it will not be enough on its own to make up for the shortfall. The group called on the city to rededicate money from sources directly related to streets — such as parking tickets and traffic-camera fines — to increase the amount available for their maintenance.

The $500 million bond issue also received BGR’s seal of approval, though the group noted there are no requirements binding the city to specific projects. The Board of Liquidation, City Debt, has said that the bond issue will not require any increase in taxes because other bonds are being retired.

City officials have said they plan to spend half of the bond proceeds on roads and drainage, $225 million on public buildings and equipment, and about $25 million on creating affordable housing.

While describing the bond issue as providing “critical funding for necessary improvements,” BGR said the city has not done enough to answer questions about where much of the money would go.

“BGR’s analysis finds a clear need for the infrastructure bonds but a less-detailed case for the proposed allocations to public facilities and affordable housing,” according to the report. “Unanswered questions remain about their size, scope and priority.”

The group also endorsed a new sales tax on short-term rentals. The 6.75% tax was authorized as part of the Cantrell administration’s infrastructure funding deal with the hospitality industry earlier this year, pending voter approval.

The tax is projected to generate up to $10.5 million a year, with three-quarters of that money going to infrastructure and the rest to New Orleans & Co., a tourism-promotion group.

However, it’s unclear whether the tax will actually generate that much money, since that estimate was based on the number of short-term rentals that were operating before the City Council recently enacted stricter limits on their numbers and scope of operations.

“Economic research supports visitor taxes, such as the proposed short-term rental tax, to help offset the cost of public services and infrastructure (that visitors) use and fund the cost of tourism promotion,” according to BGR.

Voters will also be asked Nov. 16 to give the city’s Human Rights Commission additional powers. BGR did not offer an opinion on that measure.

The Cantrell administration has had mixed results when it comes to ballot initiatives so far.

Voters approved a Cantrell-backed measure last year that extended tax funding for the Audubon Commission but rededicated much of the revenue to other parks and city recreation programs. A measure opposed by the administration, which would have created a new tax to support the New Orleans Council on Aging, failed earlier this year.

However, the administration was unable this month to win approval of an initiative that would have allowed it to offer property tax breaks to residents to encourage affordable housing. That measure, which required the support of voters statewide because it sought to amend the state Constitution, received overwhelming support in New Orleans but failed in every other parish.

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