BGR issues report on Orleans hotel taxes, recommending change

By Rob Masson

Source: FOX 8

January 30, 2019

NEW ORLEANS (WVUE) – A leading local research group published a comprehensive report on New Orleans hotel-motel taxes, which shows the city lagging far behind when it comes to using hotel tax revenues to help fund city services.

Since 1961, hotel-motel taxes in New Orleans have grown from 3 percent to more than 16 percent, and now generate $200 million a year.

For the past year, the Bureau of Governmental Research studied hotel-motel taxes in New Orleans and recently issued a 40-page report on their findings.

The study found that when it comes to spending hotel tax revenues for municipal purposes, New Orleans lags behind other cities like San Francisco, which spends 72 percent of hotel tax monies on city services and Boston, which spends 42 percent.

New Orleans, on the other hand, spends only 9.5 percent for municipal purposes.

Amy Glovinsky, president of BGR, said they hope that will change.

“Certainly we hope it supports the ongoing public dialogue about critical unfunded public needs,” Glovinsky said.

The BGR also found that New Orleans falls short when it comes to spending hotel tax revenues on municipal needs, even compared to other cities in Louisiana. For example, Shreveport sends 18 percent of its hotel tax revenues to municipal needs. In Lafayette, 15 percent of the taxes were reserved for municipal works — both cities’ far exceeding New Orleans’ 9.5 percent.

The BGR report stated entities like the Superdome and the Convention Center get the lion’s share of New Orleans’ hotel tax revenues, with the Convention Center accumulating a $235 million unrestricted reserve fund, as outlined two years ago in “Finding the Funds,” a FOX 8-Lee Zurik investigation.

At the time, then-Mayor Mitch Landrieu disagreed with that system.

“Why are you sucking out $12 million a year that could be going to the city for police protection, to just put it in an account at the Convention Center and just build it up to a $200 million surplus,” Landrieu said in 2016. “That, to me doesn’t make a whole lot of sense.”

The BGR said there are 16 different Orleans parish hotel taxes going back to 1966, which the group said lack accountability.

“We advocate for public bodies receiving the taxes to demonstrate the necessity of the tax, and allow a public dialogue about the necessity of the tax,” Glovinsky said.

BGR would like to see state lawmakers to go over the legislative package addressing the needed changes, and setting up a structure to call for the expiration of some taxes after their intended purposes are funded.

The BGR report found that 15 of the 16 hotel taxes, some of which date back more than 50 years, never come up for re-assessment or renewal. The BGR is also recommending that the city restore a one penny sales tax, that was taken away in 1966, to help pay for the Superdome.

There was an effort as recently as last year to divert some hotel tax money to street maintenance, but it never made it out of committee.

Representative Neil Abramson said he’s now reviewing the report, and looks forward to working with the city and delegation members, to consider proposed ideas that might be beneficial.

The city’s visitors bureau — now known as New Orleans and Company — said Wednesday (Jan. 30), the report outlines money spent on the Superdome and Convention Center, which it calls a “good deal for citizens.” The group said it supports efforts to help the city land another penny sales tax.

“The answer to city operating needs and Sewerage and Water Board issues will need all of business, and all of our citizens to participate in finding broad based solutions,” New Orleans and Company said.

The Convention Center also issued a statement, saying that it does not have excess revenues. It said reserves are used to maintain the facility and to carry out a 5-year capital improvement plan.

Mayor LaToya Cantrell’s office also released the following statement Wednesday:

“The Mayor intends to review the report in full, and she thanks BGR for the hard work and diligence that went into creating it. As we have heard the Mayor say repeatedly: New Orleans needs and deserves her fair share of the revenue we generate. We are at the table with stakeholders across the board. All options remain on the table to get us to a win-win.”

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