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City hikes property tax to pay debt
By Bruce Eggler Staff writer

Having postponed the politically unpopular task until after the April 22 primary, the New Orleans City Council voted this week to approve a package of 2006 property tax millages that includes a sizable increase in the city’s tax rate to help pay off its debts.

As soon as Mayor Ray Nagin signs the ordinances involved, the city can begin mailing out the long-delayed 2006 property tax bills.

Not counting millages in special districts such as the Downtown Development District and neighborhood security districts, the council approved a total 2006 millage of 112.53 mills, most of which is subject to the homestead exemption. The figure is 9.8 mills higher than last year, with the extra money to be used to keep the city from defaulting on its bond issues.

The total does not include millages levied by the Orleans Parish School Board and Orleans Levee District, or a small millage for the criminal sheriff’s office.

Thursday’s move makes the city the second governmental agency to raise its tax rate to cover debt payments. The School Board voted in March to increase its millage by 5.75 mills, from 52.8 mills to 58.55 mills.

Together, the city and School Board rate hikes mean homeowners whose assessments have remained steady can expect to see an increase of about 9 percent in their total property tax bill this year.

However, most homeowners have seen their property assessments reduced since Hurricane Katrina, meaning they will pay less. After the homestead exemption is figured in, the owner of a house valued at $200,000 would pay about an extra $122.50 in city tax and $72 in school tax this year. Homes are assessed at 10 percent of their value.

The total citywide millage in 2005 was 171.29 mills, including 10.47 mills for fire and police protection not subject to the homestead exemption. That meant the owner of a house valued at $100,000 owed about $507 in property tax last year, and the owner of a $200,000 house owed about $2,200.

Overall, assessments are down by 27 percent since Katrina, said David Gernhauser, secretary of the Board of Liquidation, City Debt, the agency responsible for overseeing the city’s bonded indebtedness.

The city’s bond-repayment tax rate was increased by more than 27 percent because of a fear that the collection rate on tax bills will be lower than in the past because many property owners have left town or are suffering financial problems. In years past, the city has collected between 92 percent and 93 percent of taxes billed.

In accordance with a law passed by the Legislature at a special session in November, the City Council approved a tax deferment program that will let owners of property heavily damaged by last year’s hurricanes postpone paying this year’s taxes, instead paying the bill in installments over 10 years. In addition, the city is authorized to reduce interest and penalties on overdue taxes.

Details of the deferment plan will be spelled out in the bills mailed to taxpayers.

The council originally was expected to approve the 2006 millages at its April 6 meeting, but the matter was unexpectedly delayed after the council began considering amendments to the central ordinance setting the millage rates.

The key amendment would have raised the millage rate the city imposes to pay off its general obligation bonds from 28.4 mills in 2005 to 38.2 mills this year. The Board of Liquidation said the raise was needed because of the sharp decline in the assessed value of so many homes and commercial properties.

The council voted 5-1 on April 6 to OK the 9.8-mill increase, with Councilman Jay Batt, the council’s only Republican and chief critic of taxes, opposed.

But other council members, apparently surprised by Batt’s vote and perhaps worried that their support for the tax hike could become a campaign issue against them, suddenly began huddling, and Councilman Eddie Sapir announced cryptically, “This may all go up in flames, like the Chicago fire.”

After a few minutes, the council decided to defer the whole issue for a month. Questioned later about the reasons for the delay, council members would say only that some of them had not been briefed on the issue by the Board of Liquidation.

Batt said later that he intended to keep voting against any millage increases in the wake of the devastation the city suffered from Katrina.

But when the issue came up late in this week’s council meeting, Batt was absent, as he was for most of the meeting. In his absence, which was not explained, the same amendment that had been approved 5-1 in April was reapproved 6-0, and the council unanimously passed all the ordinances involved.

The chief effect of the council’s monthlong delay in voting was to delay the mailing of the tax bills, meaning property tax revenue will be a month later than anticipated in getting to the nearly broke city and other local government agencies.

A revenue forecast presented to the council’s Budget Committee in March showed the city expected to get no property tax money through June but was counting on receiving $22.8 million in July and $9.5 million in August, with another $5.7 million expected to trickle in during the rest of the year.

Those revenue forecasts now must be pushed back a month.

Besides the 38.2 mills to pay off city bonds, the council approved these citywide millage rates, which have not changed from last year: 14.91 mills for “general municipal purposes,” three separate millages totaling 22.59 mills for “operation and maintenance of the drainage system,” 6.4 mills for police officers’ and firefighters’ pay, 5.26 mills for “police protection,” 5.21 mills for “fire protection,” 4.11 mills for the Aquarium of the Americas, .44 mills for the Audubon Zoo, 4.32 mills for the city’s public libraries, 2.5 mills for the Economic Development and Housing Fund, 2.5 mills for the Capital Improvements and Infrastructure Trust Fund, 3 mills for the Parks and Parkways Department and Recreation Department, 1.9 mills for “street and traffic control device maintenance,” and 1.19 mills for the Board of Assessors.

The property tax is divided into many small pieces because the voters approved various extra millages for specific purposes in elections over many years.

The council also approved these special tax levies: 15.9 mills on property in the Downtown Development District, 22.79 mills in nonresidential property in the New Orleans Regional Business Park, and 15 mills on property in the Garden District’s Security District.

It also approved a $100 fee on each lot in the Lakeview Crime Prevention District, a $200 fee in the Spring Lake Subdivision Improvement District, a $250 fee in the Lake Carmel Subdivision Improvement District, a $325 fee in the Audubon Area Security District, a $300 fee on one- or two-family homes and a $700 fee on multiple-family homes in the Lake Terrace Crime Prevention District, a $365 fee in the Upper Hurstville Security District, a $450 fee in the Lakewood Crime Prevention and Improvement District, a $360 fee in the Lakeshore Crime Prevention District, a $200 fee in the Kenilworth Improvement District and a $350 fee in the Lake Oaks Subdivision Improvement District.

An ordinance suggested by the Nagin administration would have suspended the collection of fees this year in the Lakewood, Spring Lake, Lake Carmel, Lake Forest Estates, Huntington Park, Kenilworth and Lake Oaks neighborhoods.

But at the request of most of the security districts’ boards, most of the neighborhoods were dropped from the measure. In the end, only two fees were suspended: a $385 fee in the Lake Forest Estates Improvement District and a $175 fee in the Huntington Park Subdivision Improvement District.

Batt had also proposed an amendment to suspend the special security fees in all neighborhoods in his council district, but in his absence the council did not act on that amendment.


Bruce Eggler can be reached at or (504) 826-3320