If there is an ideal time to suggest state legislators give New Orleans a hand with its budgetary woes, this is certainly not it.
“I got troubles of my own,” your rural solon will allow, adding under his breath, “That den of iniquity deserves all that comes to it anyway.”
Well, maybe not under his breath.
In the chaotic aftermath of the Bobby Jindal administration, the Bureau of Governmental Research nevertheless up and renews its call for a review of property tax exemptions granted to nonprofits by the state constitution. These exemptions cost all local government plenty, but New Orleans is especially hard hit because this is where nonprofits tend to be headquartered. Moreover, the property tax waiver granted to Carnival organizations, for instance, will have a disproportionate effect in New Orleans.
How much revenue the city is required to forgo is hard to say, there being no reliable record of what exempt property in the city is worth. But five years ago, the Bureau of Governmental Research calculated that, if nonprofits were required to pay taxes, the city would be better off to the tune of $125 million a year.
Maybe the thought of that much extra dough piling up in City Hall does not fill your heart with gladness, but the removal of nonprofit exemptions would not necessarily give politicians more to play with. With everyone paying their way, millage rates could be significantly lowered to produce the same revenue. Either way, the case for spreading the burden more fairly seems unanswerable. There is no obvious reason for labor organizations and professional groups, for instance, to get a free ride at the expense of individual and corporate taxpayers.
Indeed, the entire concept of nonprofit property tax exemptions is a dubious one, for beneficiaries frequently neither need nor deserve the money.
Louisiana, in common with other states, provides a blanket exemption for religious organizations, cemeteries, schools and charities, which can often mean huge subsidies for fabulously wealthy institutions. The Catholic Church, for instance, could no doubt pay for the public services it receives. But such doubts will never be voiced outside secular circles, which may be widening but remain of no political consequence. In any case, fairness is not a consideration when privilege is so entrenched, and it would be a waste of time to suggest that the nonprofit exemptions be junked.
The Bureau of Governmental Research does, however, want them reined in. New Orleans Mayor Mitch Landrieu will too, as we know from 2011 when the bureau, which has had a bee in its bonnet on the issue for more than 20 years, last made a similar proposal. At the same time, what Landrieu termed his “Tax Fairness Commission” also issued a report urging that nonprofits shoulder some of the property tax burden.
The administration set about lobbying legislators for the requisite amendments to the constitution but gave up the ghost by the end of the year. No doubt City Hall will wish the Bureau of Governmental Research the best of luck as it seeks to take up the cause again. With federal consent decrees requiring millions in city money to bring the jailhouse and the New Orleans Police Department up to snuff, the administration will be more keen than ever to expand the tax rolls.
About 60 percent of the real estate in New Orleans is exempt, so it struggles even more than other major cities to raise the scratch for such luxuries as a police force, a fire department and flood protection. “Louisiana’s constitution grants tax breaks to virtually any nonprofit,” the Bureau of Governmental Research avers, regardless of what the property is used for. Thus, nonprofits may let exempt property sit idle or even lease it out.
The suckers who do pay taxes surely would be somewhat less generous to nonprofits if they were offered any choice in the matter. The bureau suggests, for instance, that exemptions be scrapped where they are for the primary benefit of a private membership. Nobody, save those lucky private members, will object to that.
Reform by constitutional amendment is cumbersome because it requires approval by two-thirds of the Legislature and a majority of the electorate. The case for this reform may be overwhelming, but so it has been for years without any sign of interest from Baton Rouge. Catching the attention of legislators won’t be getting any easier for a while yet, but there probably will never be an ideal time.
James Gill’s email address is email@example.com.