The Tax Man: Landrieu Proposes Bundle Of Tax Increases

Mitch LandrieuAs a solution to courts ruling that the City of New Orleans must pay millions for the city’s firefighters pension fund, renovate the Orleans Parish Prison and refine the police force, Mayor Mitch Landrieu has decided to seek the extra cash by asking the taxpayers to pitch in, à la tax increases.

As reported by The Lens, Landrieu needs the approval of Gov. Bobby Jindal and the Louisiana legislature in order for the tax increases to be authorized by the New Orleans City Council to be put on the Nov. ballot.

Landrieu’s proposed tax increases include the following:

  • A 75 cent increase on cigarettes and other tobacco products in the city
  • An increase in the city’s hotel tax via a 1.75 percent levy
  • An increase in New Orleans property taxes to fund the police and fire dept.

As The Lens notes, Landrieu has decided not to make a fuss about the tax increases and hardly any media outlets have reported on the proposals.

The city would need $34 million to $49 million per year to pay for the consent decrees and the pension fund. If approved, the three taxes would raise an estimated $31 million to $41 million per year. The city’s general fund budget this year is $505 million.

Taxes are a sensitive subject. It was only last month that New Orleans voters rejected the Audubon Nature Institute’s request for a 50-year property tax increase, by a 2-1 margin.

Landrieu has fretted to lawmakers privately for several weeks — the latest came during a presentation to Orleans Parish lawmakers Wednesday at the Capitol — about how difficult it will be to pay for a court ruling involving the firefighters pension fund and federal agreements regarding the Police Department and the Orleans Parish Prison. The mayor has sought relief from the courts but has lost every round.

Under HB111, sponsored by Rep. Walt Leger (D-New Orleans) New Orleans property taxes would be raised to help pay for police and fire services. Currently, those millages are 5.26 for police and 5.21 for fire. With this proposal, the city could levy up to 6 mills for police and fire services.

A legislative analysis estimates that the measure would raise $5.6 million in 2015. The increase would cost the owner of a $200,000 home about $31 a year.

Leger said in an interview, however, that he may seek to increase the police and fire tax above six mills because of the city’s budget needs. Whatever the increase, the City Council could decide to use the money to recruit police officers and raise salaries, as the police union advocates.

To take effect, both houses of the Legislature would have to approve Leger’s bill, which would amend the state’s Constitution. The governor cannot veto it. The measure easily passed the House on Monday with an 89-0 vote.**

HB1210 in the legislature would triple the current tobacco tax rate, which is 36 cents per pack to $1.11. Not to mention, this would make the city of New Orleans the only local government to have it’s own tobacco tax and would raise approximately $12 million to $18 million per year.

The measure has yet to get its first hearing in a legislative committee. If it passes and gets Jindal’s approval, the City Council would have to vote to put it to a citywide referendum.

The tobacco lobby, which includes convenience stores, has snuffed out recent attempts to raise the statewide tax, which is the third lowest in the country, behind only Missouri and Virginia.

Tobacco interests have yet to take a position on the bill. The Louisiana Association of Wholesalers is opposed to the tax, said its lobbyist, David Tatman.

Landrieu’s next proposed tax increase, one that would give voters the option to raise the hotel tax, which is currently at 16.44 percent. According to The Lens, “The new rate of 18.19 percent would give New Orleans the second highest hotel tax rate among top tourism cities, after New York City.”

HB1083 by Rep. Jared Brossett (D-New Orleans) would help place the tax increase on the Nov. ballot. Brossett told The Lens that the tax increase was a better option than budget cuts.

Hotel patrons already saw 1.75 percent added to their bill this year after the hotel industry approved a voluntary surcharge on rooms to pay for tourism marketing, which the Legislature authorized last year.*

Brossett estimated his proposed tax would raise $13 million to $18 million per year for the city. It, too, has yet to get a legislative hearing.

Landrieu’s tax talk does not stop there, however. Just recently, The Lens reported that Landrieu is eyeing to create the Louisiana Economic Development District near the New Orleans riverfront area where all sales and motel taxes tax revenue generated would benefit the city.

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