Mayor Cantrell: Tax money for tourism, sports industries, should help pay for drainage, infrastructure

By Jessica Williams

October 4, 2018

Mayor LaToya Cantrell outlined tentative plans Thursday to shift some tax revenue away from various local tourism, sports and marketing agencies to improve New Orleans’ crippled drainage and water systems.

Cantrell said she would ask state lawmakers, presumably during next year’s legislative session, to shift a portion of hotel tax revenue away from at least four non-city entities, like the one that oversees the Ernest N. Morial Convention Center.

That money would be used to replace and maintain decrepit equipment at the Sewerage & Water Board, an overhaul estimated to cost tens or hundreds of millions of dollars.

It would also help realize the city’s Urban Water Plan, which touts innovations such as bioswales and rain gardens as key to bolstering the city’s resilience after major storms. That plan has a price tag of potentially $6.2 billion and could take a generation to fully implement.

Her proposal comes four years after former Mayor Mitch Landrieu tried and failed to use hotel money to help pay for court-ordered reforms to the New Orleans Police Department and decades-old firefighters pension fund debt.

But Cantrell seemed confident of success Thursday at a luncheon held in her honor by the group Women of the Storm.

“I’m not saying that we want it all,” she said of taxes received by the New Orleans Tourism Marketing Corp.; the Ernest N. Morial Exhibition Hall Authority; the Louisiana Stadium and Exposition District, which oversees the Mercedes-Benz Superdome and other sports facilities; and New Orleans and Co., formerly the Convention and Visitors Bureau.

“All I’m saying is that we need a little bit more of what we generate. And I don’t believe it’s pie-in-the-sky. I believe we can do it,” Cantrell said.

Plans to pull money from the city’s $8.7 billion tourism industry could face fierce opposition from industry leaders, who declined Thursday to give detailed comments without being briefed on the mayor’s proposal.

But a spokesman for New Orleans and Co. did say that “any efforts to weaken the tourism economy, reduce tourism-generated city revenues … or decrease tourism industry jobs will not likely be well received by our industry, small business owners, hospitality workers, or the entire body of state legislators and many state executives.”

Cantrell and Landrieu aren’t the only ones who have suggested rededicating taxes benefiting the tourism, sports and convention entities.

The nonprofit Bureau of Governmental Research called in 2015 for redividing the roughly 14 cents of every tax dollar that goes to that industry.

The report said that $143 million in mostly hotel tax revenue was collected in 2015 by the city’s two tourism promotion organizations, the Exhibition Hall Authority and the Stadium and Exposition District.

The city, meanwhile, took in only $18.4 million of the taxes guests pay at hotels, but about $410 million in property, sales and other taxes. The S&WB, which would benefit under Cantrell’s latest proposal, separately raked in about $48.5 million in property taxes for flood protection.

But the S&WB’s current haul isn’t enough to replace outmoded turbines and pumps that have been around for close to a century, Cantrell said.

The failures of the water board were put on display in August 2017 after homes and businesses flooded in part because of inoperable equipment and manpower shortages.

Neither will current tax revenues be enough to realize a 35-year strategy to help New Orleans “live with water” — a phrase coined in the Urban Water Plan released in 2013 — as climate change worsens.

The latest move is also being driven by Cantrell’s promise not to introduce new taxes until she’s proved the city is doing the most possible with what it has, she said.

She said she will work to create an “infrastructure and maintenance fund” before the end of 2018 that would specifically pay for the two priorities she outlined.

“It’s not giving (the new money she seeks) over to the city of New Orleans’ general fund, so that it can go anywhere the city chooses,” she said.

The mayor said she would then convene task forces to answer key questions, such as how much of the current tourism and sports taxes should be allocated to the new fund. She will meet with leaders of tourism and sports agencies so “they don’t feel like we are coming after them,” she said.

She named BGR as “a partner” in her work and said she also hopes for the support of major organizations and events that come to New Orleans annually or frequently, such as the Essence Festival, the American Heart Association and the American Cancer Association.

All those partnerships presumably must be forged before Cantrell asks the Legislature to change the taxes’ recipients. But she said the New Orleans delegation, at least, is on board.

State Rep. Stephanie Hilferty, a Republican whose district includes Lakeview and Metairie, floated a similar idea last year. Hilferty was not available Thursday to address Cantrell’s proposal.

But another New Orleans legislator said getting the rest of the Legislature to play ball could be “a heavy lift.”

“When you talk about diverting tourism dollars to infrastructure, you have to suspect that the tourism industry statewide will rally to get pushback,” said state Sen. J.P. Morrell, a New Orleans Democrat.

“If there is no plan, and if she hasn’t rallied with the tourism industry to get buy-in, this is going to be a very difficult thing to implement.”

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