Officials from New Orleans Mayor LaToya Cantrell’s administration will formally ask the New Orleans City Council to maintain current property tax rates instead of lowering them in the face of skyrocketing property assessments, according to documents obtained by The Lens and confirmed by Councilman Jared Brossett’s office.
Administration officials plan to make the request on Thursday, during a meeting of the council’s budget committee.
This year’s reassessment has been highly controversial, with thousands of properties facing huge tax increases due to higher assessments. The value of 24,000 properties will jump nearly 50 percent, with thousands more seeing even steeper increases, according to an analysis of property tax data by The Times-Picayune/New Orleans Advocate.
As a result of the higher assessments, keeping the rates the same would result in nearly $100 million in new revenues for government agencies in New Orleans, including more than $20 million to the city alone. It would also mean significantly increased tax bills for city residents and businesses next year.
Officials in Cantrell’s administration have long made it clear that they will push for the move — called a “roll forward” — but they have yet to make a full public case for it. In July, Brossett requested such a presentation. And in August, top administration officials began convening a so-called “Roll Forward Task Force” to prepare.
Key pros and cons of the roll-forward were boiled down in the notes, obtained by The Lens, from the first meeting of the task force on Aug. 22.
Lowering tax rates, the notes said, would be “good for people,” but it might make the city unable “to pay for what we have/improve.” Increasing taxes with the roll-forward, on the other hand, “screws people over” but is “good for budget,” the meeting notes said.
The Mayor’s Office did not respond to requests for comment on this story.
The citywide assessment is set to be finalized next month. The council then has to vote to set 2020 tax rates, also called millage rates. That vote typically takes place when the council adopts the city’s operating budget, which it’s legally required to do by Dec. 1. Unlike most of the council’s votes, this one will require a two-thirds majority, or five out of seven council members, to pass.
When property values are adjusted every four years, the state constitution requires the council “roll back” the property tax rate — reduce the tax rate to a level that will not increase revenues as a result of higher property values. But following that vote, the council has the option to “roll forward” the rates — increase the tax rate back to what it was before the roll-back, meaning higher taxes and more revenue for the city. The council could also do a partial roll-forward.
“It’s a tax increase without further voter approval,” explained the City Council Chief of Staff David Gavlinski at a June meeting. “Most millages require a vote of the people. This doesn’t require a vote of the people. It gives you, the governing authority, the ability to increase taxes without a vote.”
A roll-back, on the other hand, could mean smaller tax increases for those property owners whose assessments ballooned this year, and decreases for many others.
The council has direct control over about one-third of property taxes levied citywide — about 43 mills or $150 million in annual revenue this year. It also votes to finalize millage rates recommended by other government bodies, including the Sewerage and Water Board’s drainage taxes — about $55 million this year — and the tax used to pay off the city’s bond debts — about $77 million this year.
An additional $200 million in 2019 taxes — about 60 mills — are earmarked for schools, the Orleans and Algiers levee boards and the Orleans Parish Sheriff’s Office. The City Council does not control those agencies’ rates.
‘A clear proposal’
At the June budget committee meeting, Cantrell’s chief administrative officer, Gilbert Montaño, told the council that the administration planned to request the roll-forward.
“Unequivocally the administration is going to be asking the Council to roll forward. Specifically because that money has already been spent — from a previous administration,” Montaño said, referring to police officer pay raises that former Mayor Mitch Landrieu initially paid for with an upfront payment connected to the redevelopment of the World Trade Center. That one-time money is running out.
“So if in fact we don’t roll-forward we will be scraping every crevice to fill a very significant re-occurring gap.”
In July, Brossett wrote to Montaño requesting a public appearance from administration officials.
“At the Budget Committee meeting on June 27, you made it clear that the Mayor’s Administration is asking the Council to roll the millage rate forward,” he wrote, asking for a presentation on a plan that “clearly delineates the proposed uses for the roll-forward dividend.”
“A clear proposal from you would go a long way in assisting the Council in its deliberations and in building the public’s trust as the Council debates priorities in public spending,” Brossett wrote.
The next month, according to an email, Cantrell’s Chief of Staff John Pourciau called for the creation of the task force, which met for the first time on Aug. 22 to prepare for the presentation, which Brossett’s Chief of Staff Domonique Dickerson confirmed is scheduled for Thursday.
According to notes from that first meeting, the administration expects a roll forward to bring in roughly $26 million in additional revenue.
That will be necessary, Montaño and other officials have said, to pay for the roughly $20 million in recurring expenses that had previously been paid for with one time revenues. Maintaining the raised police pay accounts for the biggest piece of that, at $13.2 million.
According to the meeting notes, the administration has floated the idea of a partial roll-forward — raising the tax rate just high enough to get the money it needs to cover the unfunded recurring expenses.
Political dangers to rolling forward
But there is a danger to rolling forward as well, aside from exposing residents to skyrocketing assessments: there are a number of expiring property taxes in 2021 that voters will have to renew.
If they aren’t renewed, the lost property taxes could take away $12 million in funding from the library, $8 million from a capital infrastructure fund, $3.5 million from an affordable housing fund, $3.5 million from an economic development fund and $7.4 million from street and traffic device control every year.
The administration is also asking voters to approve a new three-mill property tax during the Nov. 16 elections for an infrastructure maintenance fund.
The Roll Forward Task Force meeting notes point out that a full roll-forward “endangers 3 maintenance mills,” presumably because people will be less inclined to vote for new taxes if their property taxes are already jumping.
“It will be significant ask to the voters, but it’s also, to sustain and have longevity for the future of this city, just as important,” Montaño said at the July council meeting.
As anxiety around the assessments has risen, both Cantrell and the City Council have looked for ways to shield people from tax hikes that could force them out of their homes and raise prices for renters. Councilwoman Helena Moreno has been leading the charge to find other sources of property tax revenue, including uncollected business taxes that were previously exempted under the state’s Industrial Tax Exemption Program.
And on Tuesday, the council held a committee meeting to explore whether there are too many exemptions being handed out for nonprofits.
For her part, Mayor Cantrell has been touring the state, according to The Times-Picayune/The Advocate, trying to convince voters to pass a constitutional amendment that would allow New Orleans officials to exempt certain parcels from property taxes. In theory, that would allow the city to help homeowners who can’t afford their rising taxes.
But any of those solutions will take time and will have little bearing on the city’s finances next year. And with budget hearings around the corner, the council doesn’t have a lot of time to deliberate.
The Cantrell administration will send a budget draft to the council by Oct. 17, according to a letter from Jared Brossett to Montaño. The council will then need to pass a final budget by Dec. 1. To do that, they’ll need to know whether to expect $26 million in new revenue or not.
