Tuesday, November 20, 2012

Lifeblood of the city

Funny thing about the canard that "tourism is the lifeblood of the city." For the most part, circulation is limited to a very small loop.

Take the 13 percent hotel tax, for instance.

Norman Foster, City Hall's chief financial officer, told councilmembers last week that the city expects about $13 million from the hotel tax in 2013, about the same as the most recent estimates for this year.

  Based on that number, total reported hotel sales will approach $870 million, from which the state of Louisiana should expect about $78 million. In a fantasy scenario, in which all hotel taxes went to the general fund, the city's general fund would reap about $113 million next year.

  But that's not the case.

  Three state entities — the Louisiana Superdome Commission, the Ernest N. Morial Convention Center and the state general fund — get 9 of those 13 cents per hotel dollar. The Superdome Commission — responsible for the Superdome and the New Orleans Arena — gets the biggest cut: 4 cents per dollar, or about $34 million in 2013, based on city revenue estimates. The next largest beneficiary is the New Orleans Exhibition Hall Authority — which governs the Ernest N. Morial Convention Center — with 3 cents, or about $26 million in 2013.

  Two cents go directly to the state general fund. Of that, about $7.3 million is allocated this year to the New Orleans Metropolitan Convention and Visitors Bureau and $2 million to the Morial Convention Center for debt services on outstanding construction bonds.

  Of the four cents not going to the state, two-and-a-half cents are divided between the New Orleans Regional Transit Authority and the Orleans Parish School Board.

  The remaining penny-and-a-half goes to City Hall — meaning only 11.5 percent of the city's hotel/motel tax take goes to city government. At the Nov. 9 budget hearings, council vice-president Jackie Clarkson gasped when she misheard RTA president Justin Augustine announce the agency's share of hotel/motel revenues of "one and a half." "We only get one and a half," she said.
 Actually, never mind Jackie. What's important about this is that tourism, which our leaders tell us is the "lifeblood of the city".. the reason nobody can drive downtown right now... the reason the Mayor wants to close a public square to public traffic... the reason he also wants to sweep the city's homeless out of sight.. doesn't actually fund what most of the city's residents would consider its most vital services.  Instead it goes mostly to Tom Benson's independent fiefdom on Poydras Street and then to further subsidize the tourism business itself via, of course, a series of slush funds so the well placed pols all get a taste. Then there's a little left over for the quasi-privatized RTA before City Hall gets its "penny and a half."

Somehow this doesn't seem in keeping with any of those "best practices" the Mayor is so fond of talking about.
The same model does not apply in other tourism-reliant cities.

  San Francisco's 14 percent hotel tax — an entirely local tax — was expected to generate $220 million in the 2011-2012 fiscal year, according to city budget documents. Thirty-six percent, or $80 million, went to specific programs. Last year, well over half of that was allocated to convention center expenses, tourism and marketing. But about $16 million went to city-funded museums. And the 2012-2013 budget earmarks more than $5 million for the city's affordable housing/rental assistance program. The remaining $140 million — or 64 percent — went to general fund discretionary spending.

  If the same formula applied in New Orleans, the tax would generate about $72 million for the 2013 city budget, roughly equal to the combined general fund budgets of the Health Department, the Sanitation Department and the Orleans Parish Sheriff's Office.

  Atlanta budgets one-quarter of its 8 percent hotel tax revenue to the general fund. If New Orleans government took in the same portion of the city-state 13 percent hotel tax, it would receive about $28 million, $15 million above current estimates. That increase would more than cover added costs for streetlight repairs, with enough left over to pay for most of next year's consent decree expenses.
I know we're not big fans of San Francisco or Atlanta in these parts but, come on.

What's truly obscene, though, is that just this past year, Mayor Landrieu along with our various other Mayors of Hospitality very nearly converted downtown neighborhoods into an expandable "Hospitality Zone" taxing district which would have only intensified the misappropriation of public resources to service their "lifeblood" racket. 

Of course, next year, they'll undoubtedly try this again. Even if they don't have the "ticking clock" of a Superbowl deadline to play off of, I'm sure they'll come up with something.

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