Should New Orleans have a drainage fee? City Council member is wary

By Beau Evans

Source: NOLA.com | The Times-Picayune

December 20, 2018

New Orleans Councilwoman Kristin Gisleson Palmer warned this week that she would not support any new fee levied on residents and businesses to raise money for the city’s drainage system unless it’s paid fairly by everyone in the city and nixes exemptions built into the state’s property-tax structure.

A preferable option would be to avoid a fee entirely and raise drainage revenues by tapping historically tax-free entities like nonprofits, schools and churches, Palmer said.

No formal proposal has been offered so far by city or Sewerage & Water Board officials for a drainage fee. But the utility in 2016 commissioned a consultant’s study that recommended charging a tiered fee based on the amount of a property’s impervious surfaces that contribute to water runoff and flooding. Utility officials heard a presentation on that study in March, and a task force convened to assess the utility’s organizational structure has considered the fee.

Palmer, speaking on WWL Radio Tuesday (Dec. 18), said she would not be inclined to support a drainage fee without first tweaking the overall property-tax structure to reduce exemptions. In an interview with NOLA.com | The Times-Picayune Wednesday, Palmer honed in on exemptions granted to some property owners, such as nonprofits, that she said “need to start paying into the system.” If more money came from tax-exempt groups, Palmer said, the increased revenue might make it unnecessary to ask the wider public to pay a new fee.

“Publicly, I’m opposed to any kind of additional drainage fee or millage unless everybody pays into it,” Palmer said. She continued: “I think we need to look at our own house before we start saying we need more money.”

A Sewerage & Water Board spokesman did not address whether the utility has drafted any drainage fee proposal yet, but said the utility plans to work “with all our partners” on devising how to best fund the city’s drainage infrastructure going forward.

Mayor LaToya Cantrell’s administration estimates the city needs $103.5 million annually to properly fund drainage operations, but faces a $50.7 million shortfall without additional revenue-generating sources. The issue has received heightened attention following the summer floods of 2017, which drew renewed focus on mechanical problems with the Sewerage & Water Board’s pumping and power equipment that utility officials say have since been fixed with an injection of emergency money.

In recent months, Cantrell has ramped up a campaign to recoup more hotel-tax revenues that largely go to the state and tourism-centric groups. Cantrell has suggested, but not publicly detailed, that her plan would involve diverting some hotel-tax revenues toward drainage improvements. The idea has been opposed by tourism groups and powerful state officials including Louisiana Senate President John Alario and Gov. John Bel Edwards.

Palmer declined to comment Wednesday on whether she supported Cantrell’s call for hotel-tax rededication, saying she did not know enough specifics of the mayor’s plan to give an opinion.

Palmer also said she would need to see details of any proposed fee before deciding whether to support it.

Palmer pointed to a report issued in 2011 by the nonprofit watchdog Bureau of Governmental Research, which estimated between 40 and 60 percent of taxable properties in New Orleans are off the tax roll due to exemptions. The Orleans Parish Assessor’s Office this year counted about 13,000 properties as exempt and another 66,000 properties with homestead exemptions, accounting for collectively about 40 percent of the total $7.2 billion assessed value.

Nonprofits exempt from taxes made up between roughly 10 and 20 percent of all properties in 2011, totaling an estimated $41 million in additional revenue that went uncollected, BGR’s report found.

“I have stated for many years, and I’ll continue to state it, that I’m not in favor of any additional millages or fees that go to a specific thing if not everybody’s paying into the system,” Palmer added.

Last year, BGR issued a report backing stormwater fees separate from property taxes as a fairer and more effective way than additional taxes to boost drainage revenue. It noted state law does not grant exemptions to nonprofits and other groups from such fees.

Palmer also said she’s wary about raising new funding streams for the Sewerage & Water Board “until they’ve demonstrated reform in their billing system and everything else.” That sentiment was echoed by Councilman Joseph Giarrusso, who leads oversight of the utility as chair of the council’s public works committee. Acknowledging that the drainage system is underfunded, Giarrusso described a fee proposal as “not a question of if but when.”

“It would be difficult, if not impossible, to ask residents, for-profit businesses and nonprofits to pay a drainage fee until credibility is restored and a plan is in place to update and harden the system,” Giarrusso said in a statement.

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