New Orleans Mayor Latoya Cantrell’s administration is offering a compromise in the debate over whether to lower property tax rates in response to skyrocketing property assessments throughout the city. Administration officials had originally asked the City Council to keep the rates the same next year — a maneuver called a “roll forward” — which was expected to result in more than $25 million in additional property tax revenue. But now they’re suggesting a partial roll forward, which would mean smaller tax increases for property owners in the city.
That detail came out during Wednesday’s meeting of the Revenue Estimating Conference, which voted to adopt a revenue forecast for 2020. The body is made up of Mayor Cantrell, Chief Administrative Officer Gilbert Montaño, Chief Financial Officer Norman White, Councilman Jared Brossett and Councilwoman Kristen Palmer.
That revenue forecast will be the basis for Cantrell’s proposed budget, which she will present to the City Council at its Thursday meeting.
According to the adopted projection, next year’s recurring general fund revenue will increase by about $26 million, a number that includes property and sales taxes as well as other revenue sources, like fines and fees. The biggest chunk of that will come from $14 million in new property tax revenue — a 9.5 percent increase above this year. That figure takes into account the partial roll forward. Over the summer, officials estimated that a full roll forward would have resulted in a $26 million increase in property taxes alone.
This summer, Orleans Parish Assessor Erroll Williams revalued 80,000 property parcels in New Orleans. The new values have been controversial, with tens of thousands of homeowners seeing their properties rise in value by 50 percent, and thousands more watching their values increase two or three-fold.
Overall, Williams’ reassessments would have caused the total value of all New Orleans property to rise by 15.7 percent, according to Montaño.
But that number will fall somewhat due to another vote that occurred on Wednesday morning, just before the Revenue Estimating Conference meeting. The City Council, acting as the Board of Review, voted on Wednesday to lower the assessments for thousands of property owners who appealed Williams’ findings. Now, that number will drop down to 14.1 percent, according to the consultants’ findings.
There were appeals for 5,879 properties this year. That’s nearly double the largest number of appeals in any year going back to 2012, according to a consultant hired by the council to process the high volume of challenges.
The consultant, from the firm Hammerman & Gainer, presented the firm’s findings to the Board of Review on Wednesday. The consultants found that Williams’ calculations for the appealing properties should be lowered by an average of 12 percent, leading to an overall property value reduction of roughly $71 million.
“I’m just worried about the folks who were not able to go through the appeal process,” Councilwoman Helena Moreno said during the meeting.
Still, even with Wednesday’s reductions, thousands of residents across the city will see their property taxes shoot up, leading to concerns about long time, older and low-income residents being forced to leave their homes and higher costs being passed down to renters.
Now, the City Council has to decide whether it will lower the property tax rates to provide some relief.
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 also has the option of a partial roll forward, which would put the rate somewhere between the current rate and the rolled back rate. But no matter what it decides, the council only has full control over about a third of the millages that make up the property tax rate.
Last month, the Cantrell administration asked the Council to fully roll forward the millages it controls, warning of dire consequences if they didn’t, possibly including mass layoffs or across-the-board budget cuts. Council members were skeptical, and accused the administration of using a “scare tactic.”
At Wednesday’s Revenue Estimating Conference, the Cantrell administration shifted it’s position. It’s now asking for a 50 percent roll forward, which would put the tax rate squarely between the current and rolled back rates. If all properties were fully taxed, that would lead to $16 million in new property tax revenue. But it’s expected to be closer to $14 million because of a constitutional amendment voters passed last year that will phase in some property tax increases.
The appeals approved on Wednesday may affect the size of the roll forward Cantrell requests before the 2020 budget is approved. After the meeting, Montaño said that taking the successful property tax appeals into account, the council would probably need to pass a roll-forward closer to 60 percent in order to realize projected revenues.
The proposed partial roll-forward would only apply to taxes that go to the city. Other taxes millages — earmarked for schools, the Orleans and Algiers levee boards and the Orleans Parish Sheriff’s Office — are controlled by other government bodies that will have to make the same decision the council is deliberating.
On Tuesday, for example, the NOLA Public School district asked the Orleans Parish School Board to fully roll forward the 45 mills it controls. So the full effect of this year’s reassessment is still unclear.
