As adverse
court decisions begin to mount for New Orleans Mayor Mitch Landrieu that compel the city
to spend money on items he would rather not, passage of revenue-raising bills specific
to the city in this session become more critical. Decisions regarding consent
decrees and underfunding of pensions, even discounting a small budget surplus
this year, means next year the city must come up with at least $46 million more
for next year (and maybe
as much as $53.5 million) and perhaps as much as $38 million more annually
after that – assuming a flat budget extending from this year’s.
This resulted in a trio of bills
to confiscate from the people additional money to meet that annual gap. HB
111 by state Rep. Walt Leger would
amend the Constitution to raise property taxes a mil dedicated to police and
fire protection. HB
1083 by state Rep. Jared Brossett
(who within days will jump from the frying pan into the fire by assuming a seat
on the New Orleans City Council, so someone else theoretically must shepherd
this bill) would place a 1.75 percent occupancy tax on hotels. HB
1210 by state Rep. Helena Moreno
would slap an additional 75 cents tax on tobacco products in the city. All
told, they could raise $38.6 million a year.
But only HB 111 has made any progress,
zipping through the House. As with the other two, even if it made it out of the
Legislature, it would need City Council and then voter approval. Prospects of
the former group’s assent are uncertain, and the latter showed itself skeptical
to increased property taxes with its devastating
defeat recently of a proposal to raise these taxes for half a century to
fund the private Audubon Nature Institute over concerns that spending cuts and
better efficiencies should be given a whirl prior to asking for a handout. A
tobacco tax might also meet resistance, given that the bulk of those purchases
are made by Orleanians.
Since HB 1083 would be the only
measure that really does not affect directly the pocketbooks of residents that
could have the most traction. However, this thinking historically has guided Orleans
taxing strategy to give the city a rapacious 16.25 percent effective rate,
putting it in the top ten of cities’ lodging rates. The bill would push it all
the way to second-highest, just a fraction below New York City.
And that’s an outcome Lt. Gov. Jay Dardenne doesn’t
want to see. Dardenne, whose portfolio includes tourism, worries that such
rate would make the city even less competitive for grabbing convention and
similar business, especially for big bulk events such as sporting
championships. The Landrieu Administration naturally favors it for the possible
$15 million annually it could bring in.
Which introduces the subtext
underneath the conflict. Dardenne of the GOP has all
but announced that he will run for governor next year, while Democrat Landrieu
remains the best hope his party has to win that contest, which in
part may compel him to run. More interestingly, in a projected field, the
pair may fight over each other’s voters more than for any other candidates’.
Landrieu’s liberalism (reinforced by his recurring desire to raise more tax
money rather than cut spending) but ability to win over enough moderate voters
to prevail electorally both in the city and with Dardenne’s statewide office
before he arrived would compete for voters attracted by Dardenne’s perceived
moderate Republican label, earned in part because the Republican’s service in
the state Senate featured him supporting measures to raise taxes.
Yet with this declaration of
opposition, it helps Dardenne in a gubernatorial quest both relative to
Landrieu and also to the entire field. By putting himself on the other side of
the issue to Landrieu, Dardenne can draw a distinction between them making him
more easily believable as a candidate who seeks right-sized government. And it
makes him more convincing to a more conservative electorate that understands
Louisiana has a spending problem that needs no more enabling through tax
increases.
In fact, using this dispute Dardenne
(or tagging along if suggested by others with the power in the Legislature to
do this) can steal a march on the issue of managerial competence, an aspect to
his mayoralty Landrieu wishes to cultivate. Instead of heaping another assault
on lodgers, Dardenne could argue diversion of part of the existing tax that
goes to fund the Ernest N. Morial New Orleans Exhibition Hall Authority, it of
the $636 million in assets (three-quarters without debt), $171 million
unrestricted largely in cash equivalencies, and pulling in several million more
a year than it spends that has made it a prime
target for its use to supplement state budget spending. It drew in $30
million in
2012 from a 3 percent tax that goes to pay for debt service.
An unfriendly substitute bill could
redirect perhaps half of those proceeds to New Orleans (and, given the nature
of the bonds involved, perhaps also dedicate additional revenue sources to make
up the difference). The $7 million annual surplus the convention center
authority has run of late could make up half of that difference, and the other
half from growth in revenues (after all, the whole idea was to make the center
eventually largely self-sustaining) – assisted by the current budget plan that
intends to borrow $50 million from the authority’s stuffed coffers to be paid
back with $75 million in construction, meaning the state would carry that much
of the newly-created deficit. This would replace effectively HB 1083’s
projected additional take.
Advocating this maneuver would make
Dardenne (or anybody behind it) appear as willing to live within government’s
means, to hold the line against unnecessary taxation, and as a competent
manager finding ways to use existing resources to wisely fund purposes of need.
That’s a good profile to sell to voters, especially in contrast to Landrieu’s simple
sticking his hand out for more lucre, and a winner for the tourism industry and
for the citizenry, whose paychecks and business profits would suffer if higher
taxes discouraged lodging stays. Dardenne would do well for himself and the
city by moving beyond undifferentiated opposition to HB 1083 in taking this
next step.
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