Dire consequences

A couple months ago, New Orleans Chief Administrative Officer Gilbert Montaño told a City Council budget committee there would be "dire consequences" if the council did not agree to "roll forward" its property tax millages this year.

Perhaps the biggest criticism was around what Montaño said the consequences would be if they failed to roll forward. One potential budget cut, according to the presentation, would be laying off 500-plus city employees. Another was a 10 percent budget cut for all city departments. The options also included pay cuts across the city and cutting personnel in the police department, fire department and EMS.

After it became clear that councilmembers were unconvinced by what Helena Moreno correctly identified as a "scare tactic,"  the mayor's office lowered its demand by 50 percent. "I don't make idle threats," Cantrell warned.

Her administration has warned of things such as slower response times from police and fire, cuts to recycling, closing down rec centers or libraries -- or even longer waits to fill potholes if they can't get the extra money.

“I don’t make idle threats,” Cantrell said. “I’m telling you if we don’t see a modest roll forward -- $6.9 million? Come on. Yes, we will have to look at how we can make cuts.”

The possibility of a half-roll was still on the table come November when the mayor took a new scare tactic to the public as she argued for a 3 mill tax increase which was on the local ballot during the state election runoffs this past Saturday.

Voters were unmoved by the idle threats, however, and the property tax ballot measure failed by almost 9,000 votes. It's particularly telling that it did, too. Because all of the rest of Cantrell's "Ballot of Yes" items she campaigned for passed and all of the legislative candidates she endorsed won their races as well, this result didn't mean voters were rejecting her, specifically. It just meant they didn't buy her pitch on this particular issue.

Maybe they read the DSA voter guide.  There they would have found one of the more cogent arguments against the new tax. Maybe it's authors won't mind if we share a couple paragraphs of that here.

The new taxes would have serious impacts on the city’s cost-burdened renters and homeowners. Typically landlords pass on all or most of the cost of such increases to tenants. According to HousingNOLA, 41 percent of New Orleans homeowners are cost burdened and one third of all owner-occupied homes earn below the median income. Meanwhile, our property tax system remains riddled with exemptions handed out to developers, manufacturers, and non-profits that need to be revisited or eliminated.

The mayor claims there is no other way to raise the $10.2 million the new tax is estimated to bring in but her 2020 budget proposal includes $4.7 million in highly questionable appropriations to police and surveillance and has left the door open to funding Sheriff Gusman’s proposed jail expansion. We recognize the city’s fiscal situation is tenuous. But we also question why proposed remedies favor the privileges of wealth and bolster the police-surveillance state while heaping even more excessive burdens on poor people. We can do better.

That part about landlords passing property tax hikes on to renters, by the way, is definitely not an idle threat. My rent just went up 50 bucks this month based on the recent reassessments alone. I expect it may have been more had the millage gone up too.

Anyway nobody has to worry about that now because the final budget approved by the City Council this week is based on a deal among the council and various taxing authorities that amounts to a net cut in the overall city controlled property tax rate.

Mayor LaToya Cantrell and the City Council, which has the final say on the lion’s share of taxes in the parish, are close to finalizing an agreement that would cut the city's overall tax rate by about 5%, juggling about a dozen individual millages to come up with a deal that would, in effect, give up any revenue the city stood to gain from this year’s reassessment.

This is actually even more complicated than it already looks. So, apologies to everyone whose eyes are already glazed over. To begin with,thanks to the assessments, a lot of people's taxes are going to go up regardless of what the rate is. 

Exactly what that means for a property’s tax bill depends on the details of the city’s deal and where the property is located, since some taxing bodies cover only portions of the city.

And how well a taxpayer makes out also depends on what happened during this year’s reassessment.

Owners whose property values stayed the same will pay less. Those who saw only a slight increase will pay around the same amount as they did in 2019. But the tens of thousands of homeowners who saw substantial jumps in their property values will face significantly higher tax bills.

There's also the matter of the school board which is one of the independent authorities who voted to roll its millage forward thus capturing the reassessment windfall. Not only will this contribute to an overall tax hike for many residents, it also constitutes a shift in costs formerly assumed by the state onto local taxpayers.

The School Board on Tuesday voted unanimously to roll its tax rate forward all the way to its current level, in part because the higher assessments will trigger a $9.1 million automatic cut in state funding for the city's schools.

The roll forward will fill the gap left by that cut and provide an additional $15.1 million for New Orleans schools on top of that.

But leaving that aside, the crux of the deal that's been struck, is the library and the Audubon Commission have agreed to reductions this year in order that S&WB, the Fire Department, and NOPD can "roll forward" to pull in new revenue. That's not an ideal solution. But it's also not a disaster.  The actual numbers aren't available but this article strongly suggests that departments taking cuts can cover their expenses with reserve funds or other revenues.

For now, this will have to do. Streets and drainage improvements need funding. We'd prefer the city find the money it needs by reducing the amount we spend on police, not boosting it. Ideally, cities like New Orleans with critical infrastructure needs would have access to billions of dollars in Federal aid as part of a Green New Deal program.  But that's all in the future. Or at least we hope it is. Otherwise, the consequences could be dire, indeed.