Largesse should serve people, not special interests
The trick to the scam is staying with it. That typifies the reaction of those associated and allied with the Ernest N. Morial New Orleans Exhibition Hall Authority to legislation that threatens some of their taxpayer largesse.
Better known for its ownership and operation of the Convention Center and Exhibition Hall, diversion of decades worth of taxes collected by state and local governments have let this state-created entity bank (at the end of 2015) $268 million, with only $36 million committed to ongoing expansion projects. Because of these tax receipts, it took in nearly $25 million more than it spent in 2015, although its user fees, concession sales, and other minor charges without the subsidy would have left it $32 million in the red.
HB 622 and 623 by Republican state Rep. Stephanie Hilferty would stop the excessive siphoning to this special interest. The bills would move the proceeds of two citywide levies, a third of a three percent tax on hotel lodging and half of a half-percent tax on food and drinks, to a new special government set up to fund roads. In 2015, the pair, which were dedicated to an expansion project that never materialized yet the Authority continued to collect these, accounted for around $16 million in 2015.
This only makes sense. The citywide reach of these taxes have little connection with the convention center; like somebody attending a convention there really would stay on Read Blvd. and dine on Chef Menteur Highway. The purpose for the existence of these became mooted years ago with cancellation of the expansion. And the loss of revenue still would have left the Authority $9 million the good for 2015 while it sits on over a quarter of a billion dollars.
Meanwhile, New Orleans could use the money for infrastructure. The bills create a cumbersome method for redistribution of funds; the laws simply should abolish the taxes and permit New Orleans to pass similar ones dedicated to roads. Regardless, the bills should move forward.
But the rhetoric of the Authority and its fellow travelers condemning the bills makes it seem they feel the world would end if these passed. “That kind of bill is very nearsighted,” asserted Bob Johnson, the center’s general manager and soon to retire, claiming “the Convention Center is much more than a meeting space. It’s an economic development driver.” Stephen Perry, head of the Convention and Visitors Bureau, chimed in alleging that taking money from the Convention Center would harm the city in the long run as the bill “would lower dollars available for roads, crime fighting and public safety, and sanitation and garbage collection” and said hotel and food and beverage taxes should not go to unrelated purposes, such as roads.
Let’s parse this stupidity, which relies heavily on the myth that pumping money into these kinds of facilities consume fewer tax dollars than the operation of these bring in – a fantasy disproven both in theory and fact. Consider the logical absurdity behind this thinking: if shoveling money to these inevitably makes more money, then why not keep upping the ante? Why not raise and dedicate even more taxes so the Authority, who wishes to replace the discarded project with a pie-in-the-sky $1.5 billion riverfront hotel development currently stalled in negotiations, can continue its endless desire to build and own property?
Indeed, even as Perry badmouthed diversion of money from the convention center the Authority, so flush with cash, has done precisely that, agreeing to fund nearby road construction, pay for policing in the Vieux Carre, and bought a building several blocks away from its footprint. Tax money gathered citywide, especially with a significant chunk of the food and drink taxes paid by local residents, actually makes more sense spent on these purposes that going full-frontal Ceausesscu.
However, logical absurdity alone doesn’t disprove equating the convention center to printing money. Academic studies demonstrate the overblown nature of claim that more convention center-related spending pays off. The most recent and comprehensive effort reveals forecast demand typically falls woefully short of projections and that adding items like hotels do little to compensate (in fact, typically a large number of hotel room utilizers would have spent money in the region regardless of the presence of a convention).
The Authority trots out the usual litany of supposed numbers backing its desire to hold onto more money – conforming to the usual attempts seen nationally which academics note usually cater to the tourism interests that pay for these nor can these prove the amenities caused the visitation, and which locally the Bureau for Government Research criticized as justifying “self-imposed reserves [of the Authority] are clearly excessive, redundant and far beyond what best practices would recommend.”
And if needing any confirmation of the vacuity of Perry, the top aide to GOP former Gov. Mike Foster, on this issue, note his summation of the bills: “well-intentioned but way off the mark and contrary to Republican economic growth principles.” Substituting the notion of crony capitalism for “Republican” principles on economics begs the question of whether Perry ought to just go all the way and grow a pencil-thin mustache, prop a pince-nez on his nose, smoke a fat cigar, and just ooze every bad stereotype the political left can conjure to try to paint the GOP as fat-cat elitists trying to divert as much of the people’s money to their pockets as possible.
These bills offer the opportunity to spend on behalf of all New Orleanians, not just hyping the business opportunities of a small cabal of tourism-related entities and political appointees in the hope some might trickle down to the citizenry. Anybody can see improvements to infrastructure across the city makes a bigger impact on more people than shoveling funds to build and add on to a grand palace. The change prompted by the bills needs to become law.
Posted by Jeff Sadow at 10:45