Today, there are about 15 special tax dedications and exemptions benefiting a half dozen entities created to promote tourism through leisure travel, conventions and professional sports. Combined, the subsidies were worth about $154 million in 2015, roughly 28 percent of the city's general fund budget that year, according to a NOLA.com | The Times-Picayune analysis of public records.That's a lot. Is that a lot? It sounds like a lot.
The BGR study estimated that the hotel taxes generated $165.9 million in 2015. After accounting for all the pass-throughs and levels of distributions, the watchdog group estimated that about $126.8 million -- 76 percent -- went to tourism-related entities. The remaining 24 percent went to public services such as city government, transportation and education.Yep. It's a lot. Where is it going?
No other major American destination city devotes a smaller share of its hotel taxes to local government than New Orleans, according to a recent study by the Las Vegas Convention and Visitors Authority. On average, the 17 cities in the study dedicated 65 percent of hotel taxes to basic services. New York dedicates 100 percent to its city government.
In addition to the hotel taxes, there are other special taxes and local sales tax exemptions that benefit tourism that were not included in BGR's examination. When they are included, the total dollar value of tourism subsidies was an estimated $154 million in 2015.
The single largest beneficiary of the local subsidies is probably Tom Benson, owner of the New Orleans Saints and Pelicans, and Louisiana's richest man with a net worth of $2.2 billion, according to Forbes.Goddammit. I should point out, also, that during the first legislative special session this year, one of Benson's special tax breaks on stadium concessions was momentarily revoked in the scramble to "clean pennies" and fill the state budget gap. This immediately caused a round of "OMG the Saints could leave!" freaking out which led in turn to the legislature restoring Benson's tax exemption later in the year. And you thought those guys in Baton Rouge could never come together and get things done.
Benson is often thought to benefit primarily from state money because his teams play in venues the state owns through the Louisiana Stadium and Exposition District. The governor appoints the LSED's board, which the Legislature created in 1966.
Taxes generated in New Orleans, not state appropriations, pay for the bulk of the LSED's operations.
During the public budget meeting series this year, the mayor pointed specifically to the Superdome concessions tax break as a source of frustration. In recent years, he has complained more and more loudly about how much locally generated tourism revenue "goes to the state" without specifying who actually benefits from that arrangement. So hearing him sort of call out Benson was an interesting departure.
Of course Benson isn't the only beneficiary of these "state" funds. There are also the various tourism boards referred to in the article who ensure that these public funds never actually reach the public except in a drips and drabs.
Hotels overwhelmingly backed the special taxes and industry assessments on them because they were earmarked for endeavors that would drive revenue back to their bottom lines, Perry said. The benefits offset the cost of the extra taxes.In other words, New Orleans is a company town run by representatives of the company for the betterment of the company.
Sanders, the University of Texas San Antonio researcher, said industry boosters want hotel taxes invested in tourism because it serves their own interests, not because the argument has any rational economic basis.
"A hotel tax is a public revenue source that can and should be used for any desired public purpose," he said. Nobody would claim that sales taxes should fund Wal-Mart's advertising budget because it pays sales tax, Sanders said.
I'm a little disappointed Robert McClendon's article isn't generating more discussion. The T-P is promising a follow-up today although I haven't seen it appear online yet. While you're waiting, though, McClendon took a look at the way the tourism industry fosters income inequality in New Orleans in this article a few years ago. Now is a good time to review that. Also here are panel discussions on the issue from the seventh and eighth Rising Tide conferences if you have a little extra time.
Community or Commodity? from Jason Berry on Vimeo.
Rising Tide 8 - Beyond Tourism Beyond Recovery from Jason Berry on Vimeo.