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To fix New Orleans deficit, Landrieu wants special economic district

new-orleans-tourismMayor Mitch Landrieu wants the state Legislature to create a special economic district along the New Orleans riverfront in which all tax revenue generated by new hotels and other development would be the city’s.

 by Tyler Bridges of The Lens

First deputy mayor Andy Kopplin told The Lens Wednesday that the plan is a work in progress with details still to be decided.

The effort is another attempt by Landrieu to cover a pension deficit and to pay for federal consent decrees that Kopplin said could cost the city up to $40 million a year.

“The money is intended to help us with the financial challenges we face,” he said.

The plan calls for creating the Louisiana Economic Development District and allowing the city to keep all of the sales tax and hotel/motel taxes generated from new developments within the district. The state and other public entities would not get a share.

The beauty of the measure, from a political standpoint, is that it would take tax revenue away from entities that are not yet getting the money because the developments have yet to be built, said Stephen Perry, the president and chief executive officer of the New Orleans Convention and Visitors Bureau. “The goal is to figure out a potential revenue source for the city that is not relied upon by anyone now.”

Kopplin said city officials don’t know yet how much revenue the tax district, if enacted, would generate for the city.

Perry said the tourism industry is backing Landrieu’s proposal in the hope that it will head off another mayoral initiative that it doesn’t like at all: a 1.75 percentage point increase in the hotel/motel tax. That would require voter approval in November’s election — assuming the Legislature saw fit to authorize the New Orleans City Council to place the proposition on the ballot.

“We want to fund answers that make good economic sense,” Perry said. “The [proposed] hotel sales tax would give New Orleans a hotel tax rate that is 50 percent higher than those in Orlando or Las Vegas, our two biggest competitors.”

The hotel/motel tax measure was scheduled to be considered Thursday by a House committee but has been pulled from the agenda while the city attempts to nail down the special taxing district as an alternative, Kopplin said.

As The Lens disclosed last week, the mayor would like voters to approve tax hikes, and the city would use that money to pay for court judgments that require the city to shore up the firefighters pension fund, upgrade the parish prison and reform the police force.
Kopplin estimated that improving the jail and fully funding the pension plan would cost up to $40 million annually. The city is already accounting for the $11 million cost to reform the police force but Kopplin said that means budget cuts in other vital programs.

The alternative to the revenue-generating measures — cutting $40 million to pay for the court-ordered judgments — would be catastrophic for public safety, Kopplin said, considering that 62 percent of the city’s general operating budget goes for police, fire, emergency services and the like.

Another revenue measure the city wants the Legislature to enact would impose a tax on tobacco products, including 75 cents on each pack of cigarettes. The bill, HB 1210, would have the Legislature authorize the New Orleans City Council to put the proposed tax on the November ballot for voters to decide. The bill’s sponsor is state Rep. Helena Moreno, D-New Orleans. The bill will be heard Thursday by the House Municipal, Parochial and Cultural Affairs Committee.

Plans for the proposed riverfront tax district have not been made public until now.

Read more of this story on The Lens

Written by Tyler Bridges.

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