Opposing Amendment No. 1 blocks them All
25th October 2021 · 0 Comments
By Christopher Tidmore
Contributing Columnist
Constitutional Amendment No. 1 – creating a commission to centralize sales tax collection in Louisiana – looked like it was coasting to public approval just one month ago.
With parishes watching their local retail sales tax revenue decline, as their citizenry patronized Internet mega-retailers, a majority opinion amongst the political class agreed that the state needed to pool its resources to make it easier for small retailers to operate in different parishes. Currently, local retailers must deal with different taxing authorities in each parish.
Then New Orleans Mayor LaToya Cantrell came out against the amendment. She echoed critical comments uttered by some other local officials like Jefferson Parish President Cynthia Lee Sheng who has warned that Amendment No. 1 could prove a massive loss of authority on the local level.
However, Cantrell‘s principled opposition might also have the side effect of dooming both Constitutional Amendment No. 2 as well as a constitutional measure on the 2022 ballot to slow the increase in property assessments endured by homeowners in Orleans Parish.
Over the last few months, Lee Sheng has simply voiced the concerns of her close political ally Jefferson Sheriff Joe Lopinto. The sheriff’s office is the parochial agency – in most parishes – that collects local sales taxes for which it receives a small percentage of that money for doing so. In Lopinto’s case, losing those administrative revenues would constitute not just a loss of political authority, but also a major financial hit. Jefferson Parish, thanks to Lakeside Mall and other big box retailers, remains the nexus of retail sales in the metropolitan area.
Orleans, however, does not have the same degree of retail presence; at least it has not in decades, a decline only slightly slowed by the entrance of a Home Depot and a Costco. While the city does gain quite a bit of sales tax from its tourist economy and restaurant culture, there is an argument that Orleans stood to gain more revenues from better state management of local retailers wanting to expand beyond parish lines. Currently, the bureaucratic labyrinth of different parochial regulations makes it difficult for small retailers to expand outside of a particular parish. (Big box retailers actually like the current system because the “red tape” limits competition, and Internet retailers can already go through a state portal to pay sales taxes.)
Cantrell had been silent on the issue. That she chose to reverse course and speak out against Amendment #1 in the midst of her reelection campaign stunned supporters of this constitutional change. It also worried them. The competitive municipal elections in New Orleans promise to drive a plurality of the total state electorate for the November 13 elections. It’s predicted 25 percent of all voters will come from Orleans Parish and a concerted opposition from the city’s electorate will kill Amendment No. 1, and Cantrell knows it.
What the Mayor might not have contemplated however is that her opposition to this fall’s constitutional amendment might ricochet back on her next autumn. She is an ardent supporter of another constitutional amendment, authored by Rep. Matthew Willard that’s on the ballot in November of 2022. It would limit the increase in assessments of those holding a homestead exemption to 10 percent per year meaning a homeowner will not see the taxable value of their home increase by more than 100 percent over a decade. But ONLY in Orleans Parish.
In order to get his measure passed, over the objections of the state assessor’s association, Willard was forced to agree to limit the effect to only homeowners in the City of New Orleans.
He wanted to limit assessment increases across the state, but La. Assessors Association agreed to drop their legislative opposition to the amendment if it would only cover his home parish. (Assessors, in most parishes, are funded by milliages, so they stood to lose money long term.)
They also knew that such a provision constituted something of a poison pill. The rest of the state often votes against any New Orleans-specific measure. Next year, the assessment amendment needs ubiquitous support, to overcome opposition from these assessors, and that is not a given. Many progressive advocates like the idea that rising assessments lead to higher tax revenues.
Moreover, some business groups worry that an assessment cap for homeowners could drive up business property taxes. Nevertheless, powerful lobbying organizations like the Louisiana Association of Business and Industry (LABI) have been quiet so far, avoiding any true opposition. At least they were until two weeks ago.
LABI leadership – along with some of the most prominent business people in Louisiana outside Orleans – have grown furious with Cantrell over her opposition to No. 1. Unlike this year, not much will be on the local Orleans ballot in the Fall of 2022. Cantrell may not be able to count on a surge of 25 percent of the electorate to carry her constitutional amendment to passage. And next year’s assessment amendment must pass statewide – as well as in Orleans Parish – to take effect. Her newfound opposition to centralizing sales taxes has gained her some powerful enemies – entrepreneurs who may let New Orleans flounder in unreformed assessment hell out of revenge for Cantrell opposing an amendment that they all desire.
This could be especially true if the opposition to Amendment No. 1 leads to citizens of New Orleans voting down Amendment No. 2 on November 13, 2021. This second measure on this year’s ballot stands the “holy grail” for the business community. It is a revenue-neutral effort to lower Louisiana’s comparatively high state income tax rates. By eliminating deductions, the personal rate would go down from six percent to 4.25 percent above $50,000, from four percent to 3.5 percent above $12,500, and from two percent to 1.85 percent at the base. Louisiana’s top corporate income tax rates would fall from eight percent to 7.5 percent, with proportional decreases – and simplification from five rates to three.
Historically, opposition to one tax measure tends to lead to opposition to them all. Should Amendment No. 2 fail on November 13, though, thanks to Cantrell agitating the New Orleans electorate, there may be implications when the Mayor asks voters statewide to help New Orleans next year. Any opinion leaders in other parts of Louisiana that she needs to back the city’s reform effort in 2020 may extend the same courtesy of skepticism that Cantrell has displayed.
This article originally published in the October 25, 2021 print edition of The Louisiana Weekly newspaper.
