New Orleans residents would vote on whether to raise the tax on short-term rentals under legislation that passed its first legislative hurdle on Thursday.
House Bill 43, which passed the House Municipal, Parochial and Cultural Affairs Committee without dissent, now moves to the full House.
The proposed 6.75 percentage point tax increase is one of the three key parts of the package that would finance improved road and drainage in New Orleans. HB43 would equalize the short-term rental tax with the tax on hotel guests in New Orleans. Most of the short-term rentals are through Airbnb.
Negotiations to move the entire package forward continued Thursday and aim to be completed by Monday so that the House Ways and Means Committee that day can hear the sticking point, House Bill 589,
The dispute over the bill, which is sponsored by state Rep. Walt Leger III, D-New Orleans, involves state money that would be spent by the Ernest N. Morial Convention Center for a proposed 1,200-room hotel on the upriver end of the exhibition hall and for the development of adjacent land owned by the Convention Center.
The committee was supposed to hear HB589 on Thursday, but state Rep. Neil Abramson, D-New Orleans, the committee chairman, pulled it from the agenda, to the consternation of other state lawmakers and aides to Gov. John Bel Edwards, who are also part of the negotiations.
Edwards and New Orleans Mayor LaToya Cantrell planned to hold a press conference on Wednesday in Baton Rouge to announce the overall infrastructure package, but Cantrell cancelled it after Abramson insisted that they wait until they smoothed out the Convention Center language.
In all, the deal is supposed to provide $48 million in one-time money for infrastructure from the Convention Center and unspent state disaster funds and $27 million in recurring revenue, mostly from higher lodging taxes.
HB43 sponsored by state Rep. Jimmy Harris, D-New Orleans, would raise the short-term rental tax by up to 6.75 percentage points if the full state Legislature approves his bill and New Orleans voters then approve the tax in October.
“What you’re doing needs to be done,” state Rep. Mike Huval, R-Breaux Bridge, a committee member, told Harris and the two others who testified alongside him in favor of the bill, John Pourciau, who is Cantrell’s chief of staff, and Paul Rainwater, who is the city’s lobbyist.
Of the $10.5 million that the tax is projected to raise annually, 75 percent would go to the city’s infrastructure needs and the other 25 percent would go to efforts to market New Orleans to visitors.
“Short term rentals benefit from the marketing they do,” Harris told the committee.
It's quite possible that Harris' bill actually would generate less if the New Orleans City Council moves forward with plans to restrict Airbnb, VRBO and other short-term rental companies. In an interview, Harris said he didn't know much about what the council is trying to do.
Abramson and Leger sat behind Harris, Pourciau and Rainwater in the House committee to show their support for HB43 but did not testify.
Abramson and Leger, who are negotiating the Convention Center bill language with Pourciau, Rainwater and others, have had an uneasy relationship since Abramson was the only Democrat to help elect state Rep. Taylor Barras, R-New Iberia, as speaker in January 2016, over Leger.
Pourciau noted that affordable housing advocates have wanted the money from raising the short-term rental tax to making more housing available for lower-income families in New Orleans.
Pourciau said that remains the mayor’s goal but she is attempting to do so through other means.
Stephen Perry, who heads New Orleans & Co., New Orleans' private marketing arm, testified in favor of the bill. He has represented the hospitality industry in negotiations for the overall infrastructure package.
The package also includes a proposed 1 percentage point increase in the tax on hotel guests. House Bill 522, which would do that, is awaiting action by the full House and then the Senate. It would require a two-thirds vote by each chamber and is sponsored by Abramson.