The last-minute scramble to raise revenues during the recent special legislative session opened the possibility for the Saints and Pelicans to terminate their contract with the state, allowing the two professional teams to leave New Orleans.
The Saints, an NFL franchise, and the Pelicans, an NBA team, weren’t commenting Friday. But Louisiana Revenue Secretary Kimberly L. Robinson said the teams’ owners haven’t raised that threat during the negotiations held over the past few weeks to sort out the mess.
“There’s no indication on their part that they’re looking to exercise any of their rights under the lease,” Robinson said.
In addition to termination, part of those provisions in the 2009 contract include the requirement for the state to reimburse the company owned by the billionaire Benson family for any sales taxes collected by the state in the Mercedes-Benz Superdome and the Smoothie King Center.
The situation is an unintended consequence of that last-minute flurry during the recently concluded special session, whose aim was to fill deficits in this year’s finances and next year’s.
At issue is the interplay between legislation that didn’t get passed with the passage of a bill that temporarily stripped tax exemptions and the state’s contract with the New Orleans Louisiana Saints LLC.
It’s a touchy subject that few want to discuss publicly. Greg Bensel, on behalf of the Saints and Pelicans, refused comment, as did Kyle France, chairman of the Louisiana Stadium and Exposition District, the state agency that oversees the Superdome and other publicly owned facilities.
Doug Thornton, who manages the facilities for SMG, did not respond to a phone message, text and email seeking comment.
With the state facing huge financial problems, lawmakers started looking for exemptions that could be stripped in order to collect taxes.
Aware of the contract provisions, New Orleans Sen. JP Morrell, a Democrat, looked at altering the exemption and collecting sales taxes for nonsporting events, such as concerts. His measure, Senate Bill 22, included wording to ensure the professional football and basketball teams were protected.
Meanwhile, House Bill 61 removed other tax exemptions. Its wording struck the sales tax exemption for domed facilities and professional baseball parks. The two bills were designed in the Senate to work together.
SB22 failed to get a final vote. HB61 became law.
HB61 was sponsored by Republican Rep. Jay Morris, of Monroe.
A conservative populist, Morris has, in the past, voted against subsidies to the Saints and their owners. But this was unintentional, he said.
New language was added to HB61 with about two hours before the state constitution required the special session to end. Morris still had problems with how the exemptions would apply for the purchase of manufactured machinery, so he focused on that part of the bill and didn’t really look closely at the rest of the new wording.
“To go through that draft item by item would have taken several hours, and we just didn’t have it,” Morris said. “Gosh no, it wasn’t intentional, at least on my part.”
The final version HB61, and House Bill 62, another tax raising measure, returned to the state Senate ahead of Senate Bill 22, which would have protected the professional teams from sales taxes. The Senate voted on HB61 with less than nine minutes to go, then bogged down HB62, not completing a final vote on it until 97 seconds were left in the session.
“You saw the melee at the end of session,” Morrell said. “It didn’t get through the process.”
He said he suspects the issue will be part of the special session Gov. John Bel Edwards is expected to call after the regular session ends on June 6. (The state constitution forbids the Legislature from considering tax-related issues in even-numbered years, hence the need for special sessions.)
The end result, at least for now, is a law requiring the collection of a 5 percent sales tax on tickets, concessions and merchandise through June 30. Then for the next two years, the rate drops to 3 percent and goes back to zero starting July 1, 2018.
But the 2009 agreement, which was negotiated by Gov. Bobby Jindal, specifically voids the contract if the state imposes a sales tax at the Superdome or Smoothie King Center. Essentially, the language says the state has to either overturn the tax or agree to reimburse the team with the proceeds or “the club shall be entitled, in addition to any other remedies available to it by law, to terminate this agreement.”
The Saints’ home season doesn’t start until the end of August — plenty of time to work out the issues. But the Pelicans have three more home games and the state will be collecting sales taxes in the Smoothie King Center, Secretary Robinson said.
Clearly, however, the contract requires the state to reimburse the Benson companies for whatever is collected. Forbes magazine lists billionaire Tom Benson as Louisiana’s richest person, though he lives in San Antonio.
How that issue works out is part of the ongoing negotiations, Robinson said.
But Morrell doesn’t think checks will be written.
“I’ve spoken to both LSED (Louisiana Stadium and Exposition District) and to the Saints and Pelicans organization, and I think they don’t want the check,” Morrell said. “The optics are awful.”
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