Danae Columbus: Mayor Cantrell needs Gov. Edwards’ help to keep more tourism taxes in New Orleans

By Danae Columbus

September 20, 2018

When Mayor LaToya Cantrell addressed the Bureau of Governmental Research on Tuesday, she was quick to talk about her desire to add currently exempt property to the tax rolls while also re-distributing other tax dollars that are generated in New Orleans, especially those collected by the tourism industry. Even though the City Council recently proposed new millage to support senior citizens, Cantrell told the packed house that New Orleans could not tax our way into prosperity and has been clear that a budget shortfall of at least $24 million is anticipated for 2019.

President’s Trump’s Council of Economic Advisors has declared the war on poverty largely over, according to the New York Times. Yet the nation’s recovery has bypassed an estimated 40 million Americans who live below the federal poverty level. As a progressive and former community organizer, Cantrell knows all too well that many New Orleanians – especially people of color – still lack decent jobs, affordable housing, and safe neighborhoods. Thousands still meet the federal poverty level threshold. That’s why increasing the property tax base and re-distributing existing sales tax dollars is a Cantrell priority, along with “fixing” the Sewerage & Water Board, of course.

Cantrell quickly admitted that eliminating property tax exemptions held by non-profits, schools and churches would have to be reviewed on a case-by-case basis. Protests by affected groups surely would be overwhelming. It might be easier, Cantrell could have surmised, to tap into revenues generated from hotels and restaurants – much of which ends up in the hands of the state-owned and operated Ernest N. Morial Convention Center, which is said to have more than $300 million in reserves.

Cantrell and the BGR have raised several serious questions about the substantial public subsidies under consideration for the much-anticipated 1,200-room convention center hotel developers Joe Jaeger and Darryl Berger propose to build just upriver. Both groups say they do not oppose the hotel project but seek a better deal. It is ironic that the developers would benefit from tax dollars generated by other hotels to compete against them once the new facility is complete. Cantrell, the BGR and others can continue to apply public pressure on the Convention Center board to reduce the subsidies, but – as a state agency – they are under no obligation to concur.

No developer wants to encumber too much of his or her own money in a project. In this case, the hotel venture is more than a little risky, especially in the early years. Yet, in addition to attracting more conventions, the hotel project would create desperately needed construction and permanent jobs and spur additional economic activity along the Tchoupitoulas Street corridor for generations to come. No other proposed public or private project would have such an impact.

Some observers believe Cantrell will be able to easily negotiate small concessions into the project such as robust DBE goals during construction and operation, minority hiring, training and promotion programs, salary guidelines, start-up grants for small business that would locate within a prescribed footprint, and paid summer internships.

Re-distributing sales tax revenues generated from tourism spending would be much more difficult. Unless Governor John Bel Edwards agrees with her request, the mayor’s words will mostly fall on deaf ears. Governors usually like to control how state resources are spent or not spent. They are also not particularly adept at sharing resources. Edwards is probably no different, even in an election year.

The governor’s election victory four years ago was based in part because of strong turnout by African-American voters in New Orleans. African-American elected officials like Sen. Karen Carter Peterson, a Cantrell ally and chair of the state’s Democratic Party, could weigh in.

The tourism industry earned the right to levy the taxes in question and will remain the foundation of New Orleans’ economy for the foreseeable future. To date, New Orleans’ investment in our tourism infrastructure has paid off handsomely. Whether the level of public subsidy for the hotel project stays as proposed or decreases, there is no reason to believe a 1,200-room hotel next to the convention center wouldn’t be a solid long-term investment for all New Orleans including for those who live below the federal poverty level. Mayor Cantrell will be hard pressed to stop the permitting process. Therefore many observers anticipate the project moving forward with only minor modifications.

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