Cantrell plan to aid New Orleans S&WB? $75M upfront, $40M in revenue from sports, tourism

By Jessica Williams

February 14, 2019

Mayor LaToya Cantrell on Thursday gave the clearest outline yet of her vision for plugging budget holes at the cash-strapped Sewerage & Water Board, a plan that banks heavily on the city’s tourism and sports industries providing an upfront $75 million payment and at least $40 million a year in recurring revenue.

She said the remainder of an $80 million to $100 million annual gap in recurring revenue could be filled by City Hall, through a variety of belt-tightening strategies and potentially through levying of drainage fees.

And she touted a working group recently convened by Gov. John Bel Edwards to explore new revenue sources for the S&WB as proof that her campaign has begun to bear fruit.

“It’s a step in the right direction, and I have to take my hat off to the governor for listening and being willing to understand that this is serious,” Cantrell said. “It’s not a show; it’s not a game. … But this is something that we have to address. And shame on us if we don’t.”

A spokeswoman for the governor said the working group is focusing solely on seeing what funding might be available for the initial $75 million infusion Cantrell is seeking. No discussion is being held about sources of recurring revenue, Edwards spokeswoman Christina Stephens said.

“We’re not at a place where we have a solution yet,” she said.

Still, Cantrell cast the governor’s nod to her recent request for a working group as a victory for New Orleans residents sick of repeated boil-water advisories and other problems related to the city’s ancient water infrastructure.

Cantrell in October first floated the idea of asking tourism and sports industry leaders to help finance at least $80 million a year in upgrades to the S&WB’s water and drainage systems. The idea was quickly panned by the powerful state Senate President John Alario of Westwego, called a “heavy lift” by state Sen. J.P. Morrell of New Orleans and derided by Edwards.

The proposal also hasn’t gained the support of the four agencies that currently split the roughly $160 million in annual tax revenue that Cantrell is eyeing: the Ernest N. Morial Convention Center; the Louisiana Stadium and Exposition District, popularly known as the Superdome Commission; New Orleans & Co., the city’s main convention and tourism promotion agency; and the New Orleans Tourism Marketing Corp.

Their money comes largely from a tax on hotel guests in New Orleans. The Convention Center also benefits from a separate sales tax on food and beverage purchases at restaurants and bars.

The Convention Center, which has a $52 million operating budget but is sitting on about $235 million in reserves, says that all of its funding is tied up in current and planned projects, such as a proposed hotel and the ongoing revamp of Convention Center Boulevard.

The other entities also claim that they need their tax money for their own priorities and for promoting the city to the 18 million visitors who arrive here each year.

The S&WB, however, has been touting its cash-flow issues. Though the agency recently identified $25 million from FEMA that had been misallocated, its leadership has said about $28 million more in old debt for its drainage system must be paid off this year, which will cut deeply into the $56 million in property tax revenue it expects to receive in March.

Without new money, Executive Director Ghassan Korban has said, the system could go insolvent by the middle of the year.

A political action committee has been launched to educate residents on the agency’s needs, and Cantrell has said tourism industry leaders aren’t the only sources she’ll be tapping to fill an “infrastructure and maintenance fund” the City Council recently created at her request for the S&WB.

Cantrell said she could come up with about $40 million in recurring revenue through several cost-cutting measures, such as going after money owed to the city’s Emergency Medical Services by insurance companies and ending a lease on a Poydras Street office building where dozens of city employees now work.

She said imposing a new stormwater management fee for the drainage system would be plausible, but only after the city has combed its own couch cushions for extra dollars. Such a fee, if assessed to water and sewer ratepayers’ bills, could create a broader payer base, the Bureau of Governmental Research has said.

“I’m working on other things internally, but there is only so far that those dollars can take us,” Cantrell added. “The people in the city cannot carry the burden of 18 million visitors a year … it’s just not common sense.”

Cantrell said she hoped to see a resolution from the working group ahead of the legislative session that begins in April.

“I think we are all adults, and we can get there,” she said.

The call for yearly funding is likely to be a thornier issue, however.

The governor is “open to discussions about how to fund this infrastructure need in the city and he’s interested in hearing from the mayor about her plans on this issue,” Stephens said.

But, she said, the state has not committed to any specific proposals or dollar amount.

“At this point we’re having conversations about what their needs are and what resources we can connect them to,” Stephens said.

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