Tomorrow, Louisiana lawmakers in the House Municipal, Parochial and Cultural Affairs Committee will once again hear pros and cons regarding New Orleans Mayor Mitch Landrieu’s proposal to create a local cigarette tax in the city.
The proposal already failed in the House committee last week, but as the Lens reports, state Rep. Helena Moreno (D-New Orleans) is bringing the tax hike back to the forefront for Landrieu in an attempt to get lawmakers to sign onto it. Moreno told the Lens that two legislators were absent when they voted down the tax hike.
The cigarette tax, as previously reported by the Hayride, 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.
Moreno amended the cigarette tax legislation to add 5 cents to the original amount in order to fund the city’s economic development and health care.
The hotel/motel tax increase 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.”
Lt. Governor Jay Dardenne has made known his opposition to the Landrieu hotel/motel tax hike for what he says would be detrimental to the city’s tourist industry.
“It would be a blow to the tourism industry in New Orleans,” Dardenne said.
If the proposed tax is implemented, New Orleans would have an effective hotel-motel tax of 18 percent, Dardenne said.
“What this does is create a hotel-motel tax rate that is on a par with New York City,” Dardenne said. The hotel-motel tax would be 50 percent higher than that in Orlando, Fla., and Las Vegas, he said.
Dardenne said the tax would put New Orleans at “a tremendous competitive disadvantage when we’re bidding on major sporting events” such as the Super Bowl, NCAA finals and the new college football championship game, as well as conventions.
“I’m adamantly opposed to that proposition,” Dardenne said.
These two tax increases are just two of three hikes proposed by Landrieu to help the city pay off millions for the city’s firefighters pension fund, renovate the Orleans Parish Prison and refine the police force, as a judge mandated.
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.
The other tax hike, 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.
Each of the proposals if approved by the House, would still need approval from the Senate and Gov. Bobby Jindal’s signature in order for Landrieu to have his tax dreams come true.