If voters approve Mayor-President Kip Holden’s capital improvements package in November, area residents will pay some of the state’s highest sales taxes at 9.75 percent.
East Baton Rouge Parish people buying goods in Central and Baker would pay 10.25 percent sales tax, which is surpassed by only two small cities, and matched by one other, according to data from the Louisiana Association of Tax Administrators.
But within five years, city-parish officials expect the sales taxes, which exempts groceries and prescription drugs, to drop a quarter-cent.
Holden’s $748 million bond proposal, is about $150 million less expensive than his last attempt, which voters rejected in 2009. A similar bond issue also was rejected in 2008.
Rather than presenting the bond issue to voters as an all-or-nothing item, Holden this time has split the package into three segments: $350 million for public safety, $366 million for infrastructure and $32 million for economic development, which amounts to expanding the Baton Rouge River Center.
The public safety component seeks a quarter-cent sales tax and a 2.15-mill property tax increase; the infrastructure component seeks a quarter-cent sales tax plus a 0.75-mill property tax increase; and the River Center expansion seeks a quarter-cent sales tax and a 0.25-mill property tax.
The $901 million proposal that failed in 2009 sought a 9.9-mill property tax and a half-cent sales tax increase.
Holden now will pursue a smaller property tax increase — 3.15 mills total — and a larger sales tax increase — three-fourths of a cent.
John Carpenter, chief administrative officer to the mayor, said the quarter-cent sales tax designated for the River Center is expected to last less than five years, and could be gone in two years.
Carpenter said the administration didn’t originally want to push for more than a half-cent sales tax.
He said sales taxes, however, generate money quickly, meaning the River Center project could be finished soon and paid for in cash rather than by issuing bonds.
Mike Thibodeaux, president of the Baton Rouge Tea Party, called both the property and sales taxes “objectionable.”
“But property taxes are more so, because they unfairly make property owners pay more of the load for these projects that are supposed to be for everyone,” he said.
The sales tax in Baton Rouge and Zachary is 9 percent. Central and Baker both have 9.5 percent sales taxes after levying additional taxes to fund their school districts.
Roger Bergeron, executive director of the state association of tax administrators, estimated state residents on average pay about 8.5 to 8.75 percent sales tax.
He said compared with other states, Louisiana tends to have higher sales taxes.
“As a general rule, because Louisiana property taxes are relatively low, we are more reliant on sales taxes, particularly at the local level,” Bergeron said.
In 2010, East Baton Rouge Parish property owners on average paid 109.6 mills of property taxes, according to the Louisiana Tax Commission, to different taxing entities that fund services including schools, libraries, parks and fire departments.
The statewide average is 106.2 mills, according to the commission.
Parish Tax Assessor Brian Wilson said Baton Rouge is in the “middle of the pack,” when it comes to how many millages are assessed.
“We have a lot of industry, so our millage rates don’t have to be so high,” he said. “Property taxes are more spread out when you don’t have to just count on homeowners.”
In 2010, Grant Parish had the highest millage rate in the state, 175.1 mills. East Feliciana had the lowest rate, 50.9 mills.
But Wilson said East Baton Rouge Parish, along with Jefferson Parish, collects the most revenue from property taxes because of higher populations who possess properties with higher taxable values.
Thibodeaux said the Holden administration should expect opposition to the tax increases.
“Everybody pretty much opposes tax increases in general unless they’re given specific reasons for the money to be needed and spent,” he said. “For the mayor to ask us for more money, he’ll have to show us that he’s already spent the money he’s received wisely.”
He added, “That’s not necessarily the case,” citing downtown development projects as excessive and unnecessary uses of taxpayer money.
Josh Jarreau, another local tea partier, said city-parish leaders face a “credibility issue.”
“The bond’s passage not only relies on what’s in the bill, but it also relies on people’s confidence in local leaders,” he said.
Jarreau said voters are already feeling overtaxed, a problem compounded by the perceived down economy.
“They’re asking for money from private markets,” he said. “This is money that would otherwise be in private pockets if it wasn’t going into government coffers.”
Central Mayor Shelton “Mac” Watts said breaking up the proposal into segments could bode better for Holden, but added he’ll have a tough time winning Central voters.
Each of the three components contains an element geared toward downtown Baton Rouge: a $52 million City Hall consolidation, a $38 million parking garage, and the $32 million River Center expansion.
Voters in the northern and southern regions of the parish have historically opposed downtown projects.
“Why would we pay 10.25 percent (sales tax) for a parking garage in downtown Baton Rouge when we’re trying to build up our own city,” Watts said. “It was thumbs down before, and I feel like it’s going to be thumbs down again.”
The Metro Council is expected to vote Aug. 10 on whether to send the bond issue to the Nov. 19 ballot.
At least three of the 12 members — Mike Walker, Chandler Loupe and Rodney “Smokie” Bourgeois, have said they will not support the bond issue, while some other members have expressed serious doubts and concerns.
The measure needs seven Metro Council votes to be sent to the election ballot.
Councilman Trae Welch, who represents the Baker and Zachary areas, also said he would have a difficult time supporting the mayor’s third bond proposal, noting it’s too similar to the proposals already rejected in the past. “The new taxes are too steep for anybody,” he said. “It doesn’t matter if you live in Baker, south Baton Rouge or in the center of the city.”