Did you hear the news? Mayor Landrieu is proposing… (drum roll please)… tax increases!
This shocking development stems in large part from the consent decrees with the U.S. Justice Department over the widely-acknowledged and widespread constitutional violations routinely committed by the New Orleans Police Department and the Sheriff’s Office vis-à-vis Orleans Parish Prison. Those settlements have hefty price tags attached.
Who could have predicted this? Not to toot my own horn, but I certainly did.
In February of last year, I noted that “Landrieu is staring down an unpopular decision” and that “[g]iven his background, it would appear likely that he will shoot for tax or fee increases at least as a part of any plan to pay for the consent decrees.” Landrieu, after all, is no stranger to pushing for higher taxes.
As I noted at that time, Landrieu’s last-minute efforts to fight the NOPD consent decree were shameless. It hardly would have required clairvoyance to anticipate the expenses that were coming down the pipeline. Landrieu’s sudden case of buyer’s remorse amounted to little more than a transparent ploy to shift the blame to Sheriff Gusman and the federal government for his own lack of planning.
Adding insult to injury, New Orleans has also been saddled with unsustainable public pension obligations bestowed by previous generations of incompetent public leaders (including Landrieu’s own father). Essentially previous generations of New Orleanians thought it would be a hilarous joke to underpay public employees while promising gold-plated pensions that would, naturally, be paid for by succeeding generations. Although such inter-generational theft is immoral and ought to be illegal, Landrieu has regrettably tried and failed in his attempts to fight those obligations in Court.
Alas, Landrieu and his predecessors have screwed the proverbial pooch on this, and nothing is going the change that. Hence, it comes as little surprise that Landrieu setting his avaricious eyes on the billfolds of New Orleans taxpayers.
Landrieu’s plan encompasses three separate tax increases, which I will henceforth refer to as the “three strikes.”
First, Landrieu plans to increase the hotel tax from 16.44% to 18.27%. This increase, which would be the second in two years, will yield the second-highest hotel tax in the entire country after New York. New York, take note, is just about the most unaffordable city in the country.
Although bilking tourists is a favorite pastime of many of our citizens, there is a point at which a higher hotel tax will start to impact the tourism industry, and I’m far from confident that this tax doesn’t cross a line. We depend on tourism far more than New York does; it’s starting to sound like we’re trying to kill the golden goose.
That’s strike one.
Secondly, Landrieu plans on lobbying the state legislature to pass a law allowing the city to enact a 75 cent tax on cigarettes and all other tobacco products within Orleans Parish. Cigarette taxes, like hotel taxes, are a favorite resort of opportunistic politicians dealing with budgetary shortfalls. Hotel taxes are pitched as targeting nonresidents, and who cares about them and their crocks and their fanny packs? Meanwhile, cigarette taxes are pitched as targeting smokers, who have a bad habit and should just quit anyway. A win-win, right?
While I’m not a smoker myself, I also understand that tobacco is rather addictive. Demand for it is fairly inelastic, which creates a reliable revenue stream for tobacco taxes. In other words, it’s hard to quit, and increasing the price slightly, while a financial hardship to smokers, is unlikely to force them to quit or even cut down significantly. Moreover, smokers tend to be poorer on average and the tax is strictly regressive, falling far more on the shoulders on those who can least afford it.
Even worse, Landrieu is proposing a new citywide cigarette tax at the same time that President Obama is clamoring to raise the federal excise tax on tobacco products to expand preschool education. That means two major cigarette tax increases could hit at almost the same time.
Naturally, proponents of such increases argue that cigarette taxes are truly designed to deter smoking, but this argument is belied by the use of cigarette tax revenues as a reliable source of income for specific government needs and projects. Landrieu can’t claim on one hand that he’s discouraging a bad habit while simultaneously hoping that smokers don’t quit so that he can fill a whole in the budget with a new, regressive tax.
That’s strike two.
Finally, Landrieu is pushing for increases in both the police and fire property tax millages. This is where Landrieu’s proposals are likely to be the least popular. These millages are “special” tax millages, meaning that they are owed on the full value of the property regardless of whether a homestead exemption is claimed. Thus, these increases will fall on all homeowners, even those whose homes are assessed at less than $75,000.
The problem here is that New Orleans homeowners are tapped out. Post-Katrina increases in the costs of insurance, taxes, and utilities have been onerous to say the least. The increase Landrieu is proposing is hardly massive, but combined with all the other increases homeowners have been facing each and every year, it appears as another nail being driven into the coffin. It costs too much to live here and the jobs pay far too little.
That’s strike three.
Landrieu’s out – out of his mind, that is, if he expects New Orleanians to blithely accept these tax increases. For all of Landrieu’s talk of having cut city finances down to the bone, he has also promoted waste and largesse, particularly within his own office. He claims that there are no more cuts to be made. I don’t believe him. He’s taking the easy route, as I suspected he would.
The budgetary problems we face cannot be fully placed at Landrieu’s feet, but how he deals with those problems is something he must personally own. Landrieu’s consistent response to problems has been to make the citizens of New Orleans pay more. I think at last we’ve had enough.
Owen Courrèges, a New Orleans attorney and resident of the Garden District, offers his opinions for UptownMessenger.com on Mondays. He has previously written for the Reason Public Policy Foundation.