An early voting sign in front of New Orleans City Hall. (Marta Jewson/The Lens)

On Saturday, Nov. 13, Louisiana voters will decide whether to centralize sales tax collection in the state, a function that’s now handled at the parish-level in each of the state’s 64 parishes. 

That means a business operating in multiple parishes has to individually remit taxes to each parish. Under the proposed change, a business would send taxes to a state commission which would then be distributed to parish tax authorities.

Supporters of the change say the decentralized system is a burden for businesses operating in multiple parishes and surmise an easier system could result in collecting previously missed remittance. Opponents call the change a power grab that would result in local municipalities losing control of their tax collections to a state board.

In New Orleans, Mayor LaToya Cantrell has come out against the amendment — arguing it’s a power grab and that it’s advantageous for the city to maintain control of its own collections. 

“The Cantrell administration is opposed to this amendment,” Cantrell’s Director of Economic Development Jeffrey Schwartz said at a Wednesday press conference. “We fully agree that this whole system of paying taxes needs to be reformed, but we think this is a political solution to a technological problem.”

New Orleans, a firmly blue city in a mostly red state, is prone to clashes with the state government. And the administration is concerned that the state could use its control over local sales tax revenue as a weapon against the city when it disagrees with local policies and decisions.

Schwartz pointed to a recent dispute at the State Bond Commission, which withheld millions of dollars slated for Superdome projects shortly after the mayor announced new COVID-19 vaccine and testing requirements.

“We’re really keen on making sure politics doesn’t enter this,” Schwartz said. “In the city of New Orleans, [sales tax revenue] accounts for 32 percent of our entire tax collections in our general fund. So this is hundreds of millions of dollars. … That’s far too large a sum, far too important a sum, for us to turn over to an as-yet undefined commission at the state level.”

The board would be run by eight members, composed of four people representing the state and then four representatives from various local level taxing authority bodies, including the Louisiana School Boards Association and Police Jury Association. 

While one local taxing authority agrees with Cantrell, some elected members of another do not.

Along with its own sales tax revenues, the city of New Orleans also collects sales taxes on behalf of other local government bodies, including the Orleans Parish School Board, the Regional Transit authority and the French Quarter Economic Development District (whose tax revenues are administered by the French Quarter Management District). 

Several of those bodies have clashed with the city before over how it remits those taxes and how much it keeps for itself as an administrative fee. For example, during a dispute with the Mayor earlier this year, the FQMD attempted to get the state to collect its sales tax revenue instead of the city. 

An FQMD spokesperson said that the board hadn’t taken an official position on the ballot measure. 

Spokeswoman Arian Randolph said the New Orleans Rapid Transit Authority is opposed to the amendment. 

“Local government agencies should be empowered to make critical fiscal decisions concerning local tax revenues. One critical local revenue stream is the One Percent Hotel Motel Tax which was originally approved in 1985 to fund public transit –and specifically the RTA,” she wrote in an email Thursday. “These funds are desperately needed here in New Orleans for investments in transit services, improvements to infrastructure, amenities for our riders, and the replacement of aging vehicles.”

But at the Orleans Parish School Board, two members have endorsed the amendment.

School board members foresee easier collection, more funding

School Board members heard a presentation on the amendment at their Oct. 21 meeting. The board receives its sales tax revenues through the city — and the two sides were involved in recent litigation regarding fees the city collected from the district’s sales and property taxes

In Orleans Parish, OPSB is second only to the city itself in annual sales tax collections. In its 2019 fiscal year, the most recent year for which a financial audit is available, the School Board collected $148 million in sales taxes, most of which were passed through to the operating budgets of the district’s charter schools. 

Though the School Board as a whole has taken no official position, several members seemed optimistic about the proposed change during last month’s presentation.

Board member Carlos Zervigon has endorsed the amendment. 

“Right now, what we have is incredibly inefficient and burdensome and unfair on our small businesses. If you’ve ever been in business you have to file a separate remittance for your sales tax for every parish you do business in. Because it’s so burdensome, many opt out because it’s too hard to report,” he said Wednesday. “So this would create a single online portal, it’d be far more efficient and much more easy on our local businesses. And we’d probably have higher returns.”

Though Zervigon notes there is no fiscal note predicting a boon in sales taxes for parishes as a result of the change, as a business owner himself, he anticipates easier filing would mean increased collections and potential increases in funding for school districts. 

“It absolutely preserves local control. The local government entity gets to set up the sales tax rate that the voters have approved and gets to enforce collections and audit our local collections,” he said. 

Asked about the State Bond Commission’s delay in funds to the city last year after stricter COVID-19 protocols were passed, he said he doesn’t think that will be a problem here. 

“They did a little theatrical thing where they delayed it and it was very unfortunate and ridiculous,” he said. “This is going to set up a system that works automatically.”

Zervigon thinks the board’s composition will protect local interests.

“It requires a two-thirds majority to set the rules or change the rules so I think we should be satisfied that the local voice will be protected,” he said. “I’m satisfied with the framework and the basic protections that have been laid out. The rest is just the establishment of the computer system.”

Board member Katie Baudouin also endorsed the amendment along with Zervigon. In a phone call Wednesday, board member Nolan Marshall Jr. said he has not taken a position at this time. Member J.C. Romero said he did not have a public position either.

Board members Ethan Ashley, John Brown Sr. and Olin Parker did not respond to requests for comment. 

Back at the city, Schwartz reiterated that the administration agreed with business groups that sales tax collections need to be streamlined. But he argued that the state should be using the framework it already created in 2019 to collect online sales taxes. 

“It’s already multi-parish, it covers all 64 parishes in the state, and streamlines for any business,” Schwartz said. “We already have that solution. And so creating yet another committee with as-yet undefined roles and responsibilities and makeup, seems like the politicization of something we’re already doing really well through the online portal.”

Marta Jewson

Marta Jewson covers education in New Orleans for The Lens. She began her reporting career covering charter schools for The Lens and helped found the hyperlocal news site Mid-City Messenger. Jewson returned...