Landrieu's tax legislation hits roadblocks at capitol

N.O.-related bills gain no interest at State Capitol

“Everything always stays in play until the end of session. I’m going to keep working with the legislative delegation.” Mayor Mitch Landrieu

Patting some legislators on the back and extending his hand to others, New Orleans Mayor Mitch Landrieu had a ready smile as he made the rounds in the state Senate chamber Tuesday.

It was New Orleans Day at the State Capitol. A few yards away, at the Louisiana State Museum, Irvin Mayfield and the New Orleans Jazz Orchestra warmed up, ready to play for a cooing crowd of legislators and lobbyists.

Despite the glad-handing and glitz, the mayor had deep concerns. Two pieces of his three-piece legislative package aimed at resolving some of his city’s financial problems litter the legislative floor like rotting carcasses.

“Everything always stays in play until the end of session,” Landrieu said Wednesday as he beat a path to the elevator at the Capitol. “I’m going to keep working with the legislative delegation.”

The city’s budget faces heavy demands during Landrieu’s just-begun second term as mayor. Millions of dollars are needed to upgrade conditions for inmates at the jail. Millions more are needed for the firefighters’ pension fund after Landrieu lost a legal battle over the size of the city’s obligations to it. The city’s libraries are relying on a small property tax and rapidly dwindling reserves.

Part of the mayor’s solution was a complicated package of tax increases: Property taxes would rise to fund police and fire protection. An added tax would be placed on smokers. Tourists would pay more for hotel rooms.

What Landrieu might not have anticipated was the force of the opposition leveled by the tobacco industry, Lt. Gov. Jay Dardenne and tourism officials. Legislators rejected his tobacco idea not once, but twice. His hotel tax increase sits on the House calendar, unlikely to come up for a vote with just two weeks remaining in the session. Only the property tax increase — which also would need approval by the state’s voters, the New Orleans City Council and the city’s voters — appears viable.

Stephen Perry, CEO of the New Orleans Convention and Visitors Bureau, said Landrieu must have turned a blind eye to the shark fins in the water, particularly when it came to the hotel tax.

The night before the deadline to file bills, Landrieu summoned Perry, Audubon Nature Institute CEO Ron Forman and Mercedes-Benz Superdome boss Doug Thornton to his office. The mayor laid out his legislative agenda, revealing that — among other things — he wanted to bring in $18 million by increasing tourists’ hotel room taxes.

For two hours, the meeting unfolded before ending with niceties. Perry offered to help on everything but the hotel tax, then waited to see if the mayor would take his advice.

The next day, then-state Rep. Jared Brossett, D-New Orleans, filed House Bill 1083, calling for an additional tax of 1.75 percent on hotel rooms in New Orleans. It was the same tax that tourism officials had warned Landrieu against pursuing.

“Has it caused tension between the mayor and our industry? The answer is ‘yes,’ ” Perry said. “It doesn’t change our commitment for wanting to make sure our city is stable.”

State Rep. Helena Moreno, D-New Orleans, took two stabs at advancing House Bill 1210 — to charge an extra 75 cents per pack of cigarettes bought in New Orleans — out of a House committee. She couldn’t muster enough votes either time.

“The mayor called me, and he was like, ‘What happened?’ ” she said.

Moreno said she couldn’t get past an incredibly strong tobacco lobby. Even the fact that the bill was for a local — rather than a statewide — tax didn’t help her cause. She offered to carve out dollars from the proceeds for state programs. Legislators still rejected the bill.

“It’s dead,” Moreno said.

State Rep. Austin Badon said he also tried to make concessions on the hotel tax. Badon, D-New Orleans, picked up HB1083 after Brossett resigned from the House to join the New Orleans City Council.

Dardenne, Perry and others worked hard against the bill after it cleared a committee when several members took a lunch break. They buttonholed legislators, making the argument that increasing hotel taxes would result in tourists spending their vacation money elsewhere. They warned New Orleans could lose the 2018 Super Bowl and other money-generating events.

“It’s kind of, like, in bill purgatory right now,” Badon said.

Badon said he offered to lower the additional tax to 1.25 percent and to dedicate the proceeds solely to public safety. He pointed out that the tax would have to go before the City Council and New Orleans voters. He still couldn’t find the sentiment in the House to advance the bill.

“They think they’re voting on a tax when they’re not voting on a tax. They’re voting on letting people in New Orleans vote on it,” he said.

Badon said the lack of support angers him. A hotel tax for Zachary whizzed through the Legislature. Special tax authority for a single hotel in downtown Baton Rouge is chugging along.

“So you would be against hiring more police and making the city more safe for you when you come to New Orleans?” he asked.

State Rep. Walt Leger III, D-New Orleans, blames Grover Norquist. Norquist leads Americans for Tax Reform, a politically powerful organization that opposes tax increases. Gov. Bobby Jindal is a disciple. New Orleans, on the other hand, is a Democratic stronghold.

“They’re taxes. We live in a state where many members of this Legislature have signed pledges not to raise taxes, ever,” Leger said.

Leger also believes legislators are looking toward the future on tobacco taxes. Under Jindal, it’s been impossible to increase cigarette taxes. Jindal even resisted a tobacco tax renewal.

Once Jindal leaves office in two years, legislators could revisit the issue of tobacco taxes. Allowing New Orleans to increase its tobacco taxes now might foreclose on higher taxes at the state level.

Leger sponsored House Bill 111, the property tax increase. The bill initially called for millage rates for fire and police protection to increase from 5 mills to 6 mills each. One mill generates $2.8 million for the city, based on a 90 percent collection rate, and translates to $20 per year for a $200,000 home. In New Orleans, property owners now pay 5 mills for fire protection and 5 mills for police protection, on top of other property taxes; the two taxes are not subject to the homestead exemption.

Earlier this month, HB111 abruptly turned into a 10-mill increase: a total of 10 mills for fire protection and 10 mills for police protection. The bill, which is a constitutional amendment, has easily cleared its legislative hurdles and now faces debate in the Senate. It would generate $31.6 million a year, assuming voters statewide, the City Council and the city’s voters all agree to the hikes.

Even with the increase in the property tax, the bill would not cover the potential tax revenue lost by the failure of the tobacco and hotel taxes. The tobacco tax hike was expected to generate $25 million. The additional tax on hotel rooms could have brought in $18 million.

“All these taxes are going to go before the citizens,” said state Rep. Wesley Bishop, D-New Orleans. “There wasn’t the will to let the people decide.”

Landrieu, for one, isn’t ready to unroll his shirtsleeves and call it a night. He said everything’s in play until “sine die,” the moment when legislators end the session.

“We’re going to work through all of the issues that are coming forward. The city continues to, you know, struggle through difficult financial times,” Landrieu said.

Follow Michelle Millhollon on Twitter, @mmillhollon. For more coverage of Louisiana government and politics, follow our Politics Blog at http://blogs.theadvocate.com/ politicsblog/