The state Department of Revenue incorrectly applied a formula and as a result overpaid the Algiers Economic Development District by $6.9 million since 2004, according to a report released Monday by Legislative Auditor Daryl Purpera.
Auditors recommended that the Department of Revenue work to establish a repayment plan before turning over any more of the Algiers district’s cut of state sales taxes.
But there’s not much the auditor can do if the Department of Revenue refuses to collect the money. And Revenue Secretary Tim Barfield doesn’t appear eager to do that.
“The senior management team of the agency does not concur with the finding. We feel no corrective action is needed,” Barfield wrote Purpera in response to the audit’s findings.
He disagreed with the auditor’s interpretation of the formula used to split the state’s 4-cent sales tax collections with the economic development district.
“The auditor’s calculation and methodology would render an absurd result and offend the spirit” of the law, Barfield wrote, adding that the idea of the formula was to help raise money for the Algiers economic district and that following the auditor’s path would generate little, if any, funds.
“We never got an explanation about what they think is precisely wrong with the calculation,” said Beth Davis, the legislative auditor’s assistant director of financial audit services.
“We were going by the language in the agreement,” she said in an interview Monday.
The cooperative endeavor agreement says the Department of Revenue is supposed to calculate each month how much money over 31.25 percent of the 4-cent state sales tax was collected from the taxpayers of the district, which is essentially the Algiers neighborhood. Revenue then compares that sum to $74,864 and pays the lesser amount to the district, Davis said.
The Department of Revenue used the total sales tax collections from the taxpayers in the district, rather than a percentage, for its calculation, which resulted in the overpayments, the audit stated.
In 2014, the district raised $1.13 million of its $5.18 million in total revenue from the sales taxes, according to its financial statements.
The Algiers Development Corp. is a nonprofit arm of the economic district designed to support the growth of businesses on the West Bank of New Orleans. Nobody at the office returned calls or emails seeking comment Monday.
The special taxing district is part of the city of New Orleans. It is developing a master plan for Federal City and a bike path on the Mississippi River levee, among other projects.
Its membership includes two state representatives and two state senators whose districts include parts of Algiers, along with a City Council member, the parish assessor and the mayor.
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