Ascension tax rates scheduled to increase

Annexed portion of Donaldsonville
Annexed portion of Donaldsonville

Ascension Parish government and Donaldsonville officials are trying to broker a last-minute tax-sharing deal and avoid a 2-cent bump in sales taxes taking effect Tuesday in an important commercial zone for the city.

Coming on April Fool’s Day, but definitely no joke, the expected increase will boost sales tax rates from 9 cents to 11 cents in the 750-acre area along La. 3089 on the east side of Donaldsonville, city and parish officials said.

Donaldsonville Mayor Leroy Sullivan said Friday that he fears the increase will hurt residents’ pocketbooks and inhibit future growth in the area.

He has been in talks with Parish Council Chairman Chris Loar and west bank Councilman Oliver Joseph about a new sales tax-sharing agreement.

The old 10-year agreement, which had been set to expire Jan. 1 and had kept rates at 9 percent, was extended through Monday, parish officials said.

In that agreement, the parish and sheriff gave up a combined 1 cent and Donaldsonville gave up 1 cent, keeping the sales tax from rising and allowing the sales tax in the annexation area to remain consistent with the rest of Donaldsonville’s sale taxes.

“I’m hoping that we can work something out,” Sullivan said.

Even if an 11th-hour deal is reached, though, the effect may not be immediate.

Businesses have been directed to start collecting 11 cents on the dollar on Tuesday, sales tax officials said.

“I’m not quite sure, technically, how long it would take to put the brakes on it. I think that’s something that legal would have to get involved in,” said Kressy Krennerich, assistant administrator for the parish Sales and Use Tax Authority.

Similar tax-sharing deals have been cut in Gonzales, and parish officials are leery about renewing Donaldsonville’s special agreement, which could give Gonzales leverage on future agreements in its city.

“There are other parcels out there in the parish that are in a similar situation, so I think we have to be sensitive to precedents being set,” Loar said.

Though not mentioned by Loar, one parcel looming large is the 341-acre M.P. Evans tract annexed into Gonzales in 2012 and considered for major commercial and residential development.

No deal has been reached on that site along Interstate 10 and La. 44, so the sales tax rate is 10.5 percent, instead of Gonzales’ 8.5 percent, city officials said.

The area in question in Donaldsonville includes that city’s Wal-Mart, Wendy’s, Walgreens and other chain retail outlets and was annexed in January 2004.

Even though it was annexed into Donaldsonville, the parish’s and the sheriff’s sales taxes do not go away and can still be collected.

The parish and sheriff collect sales taxes through voter-approved districts, each encompassing all of unincorporated Ascension at the time voters approved them in the mid-1980s or mid-1990s.

The language setting them up also locked in the districts’ boundaries, effectively freezing in time old city and parish boundaries before several annexations happened in Donaldsonville and Gonzales.

That means those subsequent annexations have resulted in overlapping city and parish sales taxes. If fully charged, the combined taxes would boost sales tax rates by two cents, from 8.5 cents or 9 cents to 10.5 cents or 11 cents, depending on the annexation area.

Parish government, Sheriff Jeff Wiley and the municipalities have instead negotiated tax-sharing agreements where each side generally gives up half the sales taxes they otherwise would have collected to keep rates consistent with surrounding areas.

These deals amount to the sheriff and parish, which have a combined 2 cents at stake in the agreements, giving up 1 cent. Donaldsonville and Gonzales likewise have given up one of their two cents.

Donaldsonville’s expiring agreement also set a benchmark that allowed the city to keep the first $1.75 million in sales tax collected citywide. Only after that minimum level was reached did the 50-50 sales tax-sharing between Donaldsonville and the parish and sheriff start, in the annexation area only, Sullivan said.

Parish President Tommy Martinez said he offered Donaldsonville last year a 50-50 tax-share without a benchmark. A 2009 parish ordinance blocked any new benchmarks.

But Sullivan said that deal would mean the city would lose about $200,000 to $250,000 per year.

Sullivan said Loar has offered, in addition to a 50-50 share, to give Donaldsonville half of a pending $500,000 grant to install sewers for new residential and commercial development proposed in the annexation area. Sullivan said the grant would be a one-time fix that leaves him with the same shortfall next year and also would require an $80,000 city match.

Loar argued city officials need to look at the big picture. The sewer funds would help spur economic development and new sales tax revenue.

Donaldsonville’s expected shortfall also does not factor in the boost from CF Industries’ $2.1 billion expansion, Loar said.

“I certainly would hate to see them miss the forest for the trees,” Loar said.

But Sullivan disagrees with the precedent fears. He said the parish has treated Donaldsonville and Gonzales differently on other matters and doesn’t see why parish ordinances can’t be changed for a new deal.

“I think we need to put our heads together and come up with something that we can all live with, but it’s something that is long term,” he said.