Parish officials oppose bill that would create new local sales tax to cover levee debt

A Senate Bill that would create a new 1-cent sales tax in St. Charles Parish, among four others, to cover Louisiana’s portion of the $14.5 billion post-Katrina levee system, is under consideration – and facing opposition from local officials.

Senate Bill 226 was brought forward by Mack “Bodi” White, R-Central, and would create a new taxing district in Jefferson, Orleans, St. Bernard, Plaquemines and St. Charles parishes – the five within which the levee system is built and protects.

White has co-authored a separate House resolution with Rep. Jerome Zeringue, R-Houma, which would have each of the five parishes create their own plan to repay the levee debt, and report on that plan’s implementation by Dec. 1.

Bodi White

The thought behind both the bill and the resolution is that the rest of the state should not have to pay upgrades to the protection of effectively those five parishes alone through Hurricane and Storm Damage Risk Reduction System (HSDRRS) upgrades. White and Zeringue say the state has endured multiple hurricanes since Katrina, including three that caused historic damage to the southwestern part of the state, and time and again the state has incurred those costs. The resolution also argued other parishes are using their own local sales taxes for levee construction or improvement.

St. Charles Parish officials don’t agree with the premise. Last week, the St. Charles Parish Council unanimously passed a resolution opposing the tax related to the HSDRRS. Councilwoman Julia Fisher-Perrier led that effort and says White and Zeringue’s argument is flawed in several aspects.

“Flood waters do not stop at parish lines,” Fisher-Perrier said. “We may be the first to benefit from this levee protection system, but this system keeps dangerous flood waters away from a large portion of the entire state. Roads, bridges and levees are all part of the Department of Transportation for a reason … a state highway is not only used by the residents who live in the community it is in. Bridges connect millions of people. The state does not impose a sales tax on St. Charles Parish because the Hale Boggs bridge runs across out portion of the Mississippi, not should they for this levee protection system.”

Julia Fisher-Perrier

Put even more simply, Fisher-Perrier said, is that the proposed tax district alters previously agreed upon terms after the fact.

“If the parish built a new gym for the residents and previously budgeted money from the general fund to pay for it, but then after construction decided to add a new sales tax to impose on the residents to pay for it, would that be appropriate?” Fisher-Perrier asked. “The state agreed to pay for the structure and gave us no input on our small portion of the levee protection system … had we known this, would be have had the opportunity to build the levee as we saw fit, or not build it at all?”

Additionally, she noted St. Charles residents passed a dedicated levee tax six years ago, taking on the initiative to fund much of the system that does protect the area, and that only a very small part of the levee this new tax bill proposal pertains to is within St. Charles Parish.

Bill 226 still must make it out of the Senate committee, pass the Senate floor and pass the House to go into law. White and Wallace’s concurrent resolution has passed committee and must pass the House floor and the Senate. The session concludes in June, and if the measures were to pass, it would become law before the summer’s end.

Nowhere within that path would be a vote of parish residents on the tax, something Fisher-Perrier called a “bold and scary precedent to set.”

“We know this is a new tax that, for the first time in my lifetime, the voters will not have an opportunity to have a voice at the polls on a local sales tax,” Fisher-Perrier said. “No election for this tax will be held … all local governments should be prepared to receive an unexpected bill in the mail for millions of dollars if this passes.”

Along with St. Charles Parish officials, those of Jefferson and Orleans parishes also oppose SB 226.

Louisiana owes at least $2.9 billion for the upgrades to the levee system – a $1.7 billion principal sum and $1.2 billion in interest accumulated since 2008. Depending on the structure of payment, that total could climb to as much as $3.27 billion – were the state to choose to convey the amount in 30 annual payments of more than $100 million. An agreement struck earlier this year and authorized by Congress would allow the state to pay off the debt much sooner –  a payment of $400 million by Sept. 30 and then the rest by Sept. 30 of 2023 – and reduce at least $1 billion in interest.

Following Hurricane Katrina, the state agreed to pay 35 percent of the $14.5 billion approved by Congress to improve the levee system. The repayment agreement officially began in 2008.

White’s bill (226) would use the new revenue generated from the proposed sales tax in order to repay bonds the state would borrow from to make those payments. The sales tax would expire after the bonds are paid off. The lawmaker says there must be a new funding source to pay back the bonds or else the state could suffer consequences – it could reduce the general obligation bonds issued to meet the state’s capital outlay needs and could also adversely affect the state’s debt limit.

The tax district would be known as the Southeast Louisiana Taxing District and would be governed by a board of 11 members, including the Senate president and speaker of the House of Representatives – or appointees designated by them; the state treasurer; the Department of Revenue secretary (or appointee); five members approved by the governor, representing each of the five parishes within the tax district; and two residents of the state at large, selected based on experience in financial matters and estimated ability to act effectively in the district and state’s best interest. The board members would not draw salary or per diem allowance but would be entitled to reimbursement for necessary expenses.

 

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