The New Orleans City Council approved the the 2020 budget and slightly lowered the city’s overall property tax rate at its Thursday meeting.
The votes were the culmination of months of hearings, negotiations and compromises. The end result is a $726 million budget that looks much like what Mayor LaToya Cantrell originally proposed in October. There were some minor changes, including more funding for early childhood education, the District Attorney’s office, the Orleans Public Defender’s office and services for victims of domestic violence.
The budget also allocates a portion of $6 million in fines paid by Entergy New Orleans this year. It’s the first time this money is being tapped.
The most contentious issue over the past few months has been how much money the city will collect in property taxes next year. The City Council and the Cantrell administration have been arguing over what to do with the property tax rate in the wake of this year’s reassessments, which caused skyrocketing property values for thousands of residents throughout the city.
The council had argued that rates should be lowered to help out residents who now have to scramble to pay additional property taxes. The Cantrell administration, meanwhile, argued that the rate should be kept the same, or lowered to a lesser degree, in order to fund critical city services.
The rates set on Thursday represents a compromise between the two positions, keeping rates — called millages — high for infrastructure and public safety, while significantly cutting rates for taxes dedicated to the library, the Audubon Nature Institute, and several city funds. The overall rate will shrink by 4.6 mills, the amount required to offset gains from the reassessments. But key priorities will see higher property-tax funding.
Individual property owners who saw significantly increased reassessments should still expect higher tax bills. However, they will not be as high as they would have been had the city maintained 2019 millage rates. Others may owe the same or less than they did in 2019, depending on whether their property values increased slightly, stayed the same or decreased.
“We wanted to find a way to fund our biggest priorities, which are of course public safety and infrastructure,” Councilwoman Helena Moreno said.
After the vote, the Mayor and the City Council held a joint press conference, during which they characterized the budget as a labor of compromise and collaboration.
“I am proud to stand here with my colleagues, the New Orleans council collectively, who leaned forward, who also wanted to make sure there was no added burden for our people,” Cantrell said. “But we got through it with the leadership of my [Chief Administrative Officer] Gilbert Montaño.”
The city is not in control of setting all of the property taxes in Orleans Parish. Some taxes are controlled by independent government bodies and agencies, such as the Orleans Parish School Board, which recently decided to keep its rate the same in 2020 instead of lowering it. But the city controls the largest share.
The portion of the property tax under the control of the council was lowered from 90.7 mills to 86.1 mills — a five percent reduction. One mill represents $1 in property taxes for every $10,000 of a property’s total value, or $1 in tax for every $1,000 of its “assessed value,” which is 10 percent of its total value.
Taxes dedicated to the police and fire departments, Sewerage and Water Board, and general city expenses will all remain the same. To balance that, the property taxes dedicated to the library, parks, and street and traffic control will all be reduced somewhat. The millage for the Neighborhood Housing and Economic Development Fund was cut in half, while the millage for the Economic Development Fund was removed altogether. A millage for capital improvement and infrastructure is also being cut by roughly 70 percent.
The city’s zoo and aquarium, both of which are run by the Audubon Institute, also saw big reductions to their property tax dedications. However, the amount that was cut — 1.95 mills — is exactly equal to a what they will get in 2021 as the result of a new arrangement voters approved this year.
Entergy fines being used, DA sees budget increase
The budget passed by the council on Thursday is very similar to the version that Cantrell initially proposed, but with a few key differences.
The city’s overall general fund revenue for next year increased by $4 million from the Mayor’s draft to the final version. That extra money came from a few sources. The 4.6 mills being lowered are mostly for special funds. But other tax rates that are staying the same — and thus generating higher revenue — go to the city’s general fund. So the city is going to collect $2.6 million more in property taxes than it was planning to in October. At that point, Cantrell was proposing to roll all tax rates back, for a total reduction of about 2 mills.
The city will also utilize $700,000 from the Neighborhood Improvement Fund to help with code enforcement, according to Chief Administrative Officer Gilbert Montaño.
Lastly, the city will, for the first time, tap into the millions of dollars in fines that that the City Council has levied on Entergy New Orleans. The council passed two fines on Entergy this year. The first was for $5 million after one of the company’s subcontractors paid actors to pose as supporters of its controversial new gas plan in eastern New Orleans. The second was $1 million for the company’s “inaction and omissions in mitigating” the thousands of power outages the city experiences every year.”
The council and Mayor have debated where this money should ultimately end up. Both sides agreed that some of the money should go to the Sewerage and Water Board, but some councilmembers have argued that the money should also go to development projects and other council priorities throughout the city’s districts.
The city is using $800,000 of the total $6 million in this year’s budget. The money will be spent on smaller budget line items such as decibel readers for the Department of Health and small budget increases to the Ethics Review Board, the Independent Police Monitor and the Office of Inspector General.
The council also budgeted an additional $500,000 for District Attorney Leon Cannizzaro Cannizzaro had requested a $500,000 budget increase at a budget hearing last week, arguing that he needed $300,000 to hire more prosecutors and service providers in juvenile court because starting next year, 17-year-olds accused of serious crimes will be routed to juvenile court instead of the adult system. He also requested $200,000 for raises for assistant district attorney to stem the rapid pace of turnover.
The council budgeted an extra $250,000 more than what the Mayor had proposed for the Orleans Public Defenders Office. The Mayor’s proposed budget had already given that office a $500,000 increase next year compared to 2019 for a total of $2.3 million in city funding. Thursday’s increase will bring that to more than $2.5 million from the city.
Other major changes that the council made to the Mayor’s proposed budget include an additional $1.5 million for early childhood development, $135,000 for children’s programming at the New Orleans Museum of Art and $150,000 to the Department of Health for a domestic violence initiative.
Council urges tourism marketing agencies to create sustainable tourism plan
Also on Thursday, the council passed a resolution related to the budget of the New Orleans Tourism Marketing Corporation. Starting on Jan. 1, the majority of NOTMC’s staff, mission and funding will be absorbed by the private nonprofit New Orleans & Co., formerly known as the Convention and Visitors Bureau.
Both groups are responsible for marketing the city to tourists, but NOTMC has a board appointed by the mayor with seats reserved for council members, as well as six public meetings a year. New Orleans and Co. has an internally appointed board and no public meetings.
At a budget hearing last week, some council members were concerned about whether the public would still have a say in the city’s tourism future once funding transfered over to a private organization. Councilwoman Kristin Palmer, in particular, was adamant about the need for public participation.
She’s argued that for over a decade, the city’s tourism marketing has been focused on one thing: getting as many people to the city as possible. That roadmap was largely designed in the wake of Hurricane Katrina and later after the Deepwater Horizon disaster, when the city was desperate for more visitors and outside spending.
But the situation is different now, with millions of tourists flooding the city every year. Palmer believes that the city has to now shift focus on how to cultivate tourism while protecting residents from the negative effects.
The resolution on Thursday calls on NOTMC to set aside a part of its remaining budget to create a “sustainable tourism plan.”
“The overall goal of the plan should be to more equitably distribute tourism and tourism-related activities throughout the city to expand the beneficiaries of the positive economic impact, while reducing the overall burden any certain section of the city must bear,” the resolution said.