Key to Cantrell’s 2019 legislative agenda? Tourism cash to rebuild New Orleans S&WB, more

By Jessica Williams

March 17, 2019

Less than a month away from the start of the 2019 legislative session, Mayor LaToya Cantrell’s legislative agenda is being shaped by her push to divert millions of tax dollars from state-sponsored tourism and sports agencies to helping meet New Orleans’ infrastructure needs.

The city’s delegation is considering, at Cantrell’s request, several proposals that would divert hotel funding, or raise new funds, for the cash-strapped Sewerage & Water Board.

Notably, Cantrell is proposing a new tax on short-term rentals, potentially diverting to the S&WB a portion of the 1.75 percent “self-assessment” now paid by certain hotels in the city, and asking for New Orleans voters to have a say on how hotel-related taxes levied in the city are spent.

The administration stresses that the options are tentative as negotiations with tourism industry leaders continue.

“It’s not cookies yet; it’s cookie dough,” Cantrell spokesman Beau Tidwell said. “All the stuff that’s laid out there, they are possible ideas, but everything is still in flux.”

Meanwhile, a working group convened by Gov. John Bel Edwards continues to work toward a temporary solution for the S&WB’s woes, even though Cantrell has demanded a longer-term fix.

The 22-member working group created by Edwards and Cantrell has been meeting with the governor’s staff to identify available federal or state money to help bail out the S&WB. A dozen people involved in the behind-the-scenes discussions say they think that group and another group of local tourism and business leaders can deliver about $50 million of the $75 million in one-time money that Cantrell is seeking.

State Sen. Conrad Appel, a Republican who represents Metairie and parts of New Orleans, said any legislative action will be a heavy lift if no deal is struck ahead of the session.

“Without a deal between the tourism industry and the mayor’s office, it will be a very difficult sell,” Appel said, adding that he was “guardedly optimistic” that such a deal will come.

Cantrell first proposed tapping money from the tourism industry for the struggling S&WB in October.

Most hotel taxes charged in New Orleans now go to four entities: the Ernest N. Morial Exhibition Hall Authority, which oversees the Morial Convention Center; the New Orleans Tourism Marketing Corp.; the Louisiana Stadium and Exposition District, popularly known as the Superdome Commission; and New Orleans & Co., the city’s main convention promotion agency.

Those bodies split about $160 million in taxes annually. Over the years, the Convention Center has amassed a $235 million reserve fund.

The mayor has asked for $40 million in recurring dollars and $75 million upfront from those agencies, and has said City Hall will come up with the remainder of the $80 million to $100 million in annual revenue she says the S&WB needs.

A path to meeting City Hall’s end of that proposed bargain was filed last week by Rep. Jimmy Harris, D-New Orleans. House Bill 43 would grant the city the right, if the voters approve, to raise taxes on short-term rentals in New Orleans so that they match those assessed to hotels, and would send the new money to a city “infrastructure fund.”

As it stands, guests of properties listed on sites like Airbnb pay less in taxes than do hotel guests.

But according to documents first provided to nola.com, the mayor has also asked New Orleans lawmakers to consider:

Raising the hotel occupancy tax by 1 percent, a step that could generate $13.6 million a year in recurring revenue.
Requesting some of the Convention Center’s surplus in a move that could provide $25 million.
Diverting some or all of the 1.75 percent “self-assessment” tax paid by guests at certain New Orleans hotels.
Asking state lawmakers to let New Orleans voters decide how tourism and sports taxes in the city should be dedicated.

Among other ideas, the mayor is also considering coming up with City Hall’s half of the goal by assessing an additional $1 per night fee on larger hotels, or redirecting the city’s “hotel occupancy privilege tax” — 50 cents to $1 per night the city collects that currently funds the Tourism Marketing Corp. — toward infrastructure needs.

There is confusion about whether the latter tax can be diverted without voter approval, due to conflicting language in the city’s charter, the Bureau of Governmental Research has said. The issue has never been decided by the courts.

The BGR has long called for a redistribution of the city’s hospitality taxes.

Tidwell, Cantrell’s spokesman, stressed that none of the proposals are set in stone, though the plan Harris is sponsoring apparently was hashed out enough to be prefiled last week.

The hard deadline for filing bills is April 17. Cantrell has been meeting monthly with the city’s delegation to hash out the specifics of the proposals.

A handful of local lawmakers had measured reactions to the plan when reached recently. Sen. J.P. Morrell, a New Orleans Democrat, said that while the delegation “is generally supportive” of Cantrell’s plans, that support isn’t necessarily going to translate into successful passage.

“I don’t necessarily see a movement at the state level to embrace what the mayor is trying to do,” Morrell said. “That’s from talking to state legislators in other parishes, who don’t have the same urgency that we do about the Sewerage & Water Board.”

Appel, for his part, expressed doubt about the S&WB’s ability to effectively manage any new money, given its well-documented record of problems, and questioned why that funding has to come from the tourism agencies Cantrell is eyeing.

Still, he said her proposals could be “doable” if a deal is struck with the tourism agencies beforehand. Cantrell has said she hopes to reach such an agreement before the session starts April 8.

A “draft legislative agenda” drawn up by Cantrell’s camp places Sen. Karen Carter Peterson’s name next to one of the document’s notable proposals — a bid to let voters decide the fate of the city’s hospitality tax structure.

Peterson said that idea and others are meant to “set the table” before the session starts.

“There’s no question that we can do better than we are — that New Orleans can get more of her fair share,” she said. “How we get there is an ongoing conversation.”

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