An arguably unconstitutional tax hike races toward Jindal’s desk

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Earlier this month I told you about the ill-conceived plan racing its way through Baton Rouge to impose a new tax on tourists visiting New Orleans and to use the money not to address the burning problems in our neighborhoods — high crime and lack of code enforcement — but on an amorphous tourism slush fund. Although our arguments have gained some traction, so far common sense has not been enough to derail this overstuffed freight train headed for the desk of Gov. Bobby Jindal. Senate Bill 242 has now won approval in the Senate and is likely to be taken up by the state House later today. If it wins approval there, the bill poses a serious test for Jindal and his 2016 presidential aspirations. Will he really be able to hike levies on visitors to the Crescent City — where the lack of basic government services is palpable — from states such as Iowa and New Hampshire, and then go to these early primary states and declare himself an anti-tax warrior?

To quickly recap, SB 242 imposes a 1.75 percent stealth tax on hotel guests in New Orleans and its immediate suburbs — a levy that lodging owners are not even required to break out on guests’ bill. The income will create a $12-to-18-million fund that would be controlled by the New Orleans Convention and Visitors Bureau, a quasi-public entity that has fought tooth-and-nail against disclosure of its expenditures.

The plan comes at a time when the Big Easy seems to have staked its fragile economic recovery on attracting a young, rowdy, alcohol fueled brand of free-spending tourists — and when shocking crimes like the recent shooting of 20 bystanders at a Mother’s Day parade make national headlines. Its goal is to shoehorn even more tourists into New Orleans’ historic splendors like the French Quarter rather than fixing local problems — even though a study showed only 16 percent of visitors now plan to come back a second time. I am working with a coalition of neighborhood groups that is vehemently opposed to the creation of this fund.

In recent days, as we have delved deeper into this proposal, we have uncovered two other serious problems with SB 242 — problems that cry out for Gov. Jindal to veto this measure if it does indeed reach his desk:

1) In recent weeks, a staffer in my law office, Justin Winch, has been relentless pursuing a legal fight to get the tourism bureau (known by the acronym NOCVB) to open up its books, and late last week he finally was able to open NOCVB’s previously sealed records and examine its current spending practices. What he found was alarming:

The New Orleans Convention and Visitors Bureau spends up to $4.5 million in taxpayer dollars – half the amount allocated by the citizens of this state to the organization already for “tourism marketing” – on salaries for its CEO and multiple Vice-Presidents and other executives.  There is no guarantee that the tax money generated by this bill would actually go to “tourism marketing”, for which the tax payers are already providing millions of dollars.

2) A white paper prepared by my law firm, SmithStag LLC, explains how the measure appears to be in direct conflict with Louisiana’s constitutional protections of the French Quarter. Here’s an excerpt:

The Citizens of the State of Louisiana found that the French Quarter was so precious to them, that it deserved a Constitutional Amendment to provide for its preservation…

Nevertheless, Senate Bill 242 – The “New Orleans Visitor Tax” – ignores the Citizens of the State, who voted to require the French Quarter be safeguarded; the effects of Senate Bill 242 actually conflict with the Constitution of this State and furthermore attempts to add insult to crippling injuries that the Tourism Industry has already identified.

Please read the whole thing — and listen to what a community leader has to say about this ill-advised scheme:

“The state has a constitutional duty to preserve the French Quarter,” said Meg Lousteau, Executive Director of the Vieux Carre Property Owners, Residents and Associates, Inc.. “Just last week the ceiling fell in on the lower Pontalba. The city is already failing to fulfill its constitutional obligation, and now they’re going to dedicate more money to drive up tourism in the Quarter which will only catalyze historic structures’ decline into disrepair. This is irresponsible, unconstitutional, and unacceptable.”

It’s truly remarkable that this scheme has come so far, so fast. This is why we are making this urgent appeal to Gov. Jindal, if the measure does indeed reach his desk, to do the responsible thing. The choice may come down to him. Does the governor want to present Louisiana — and himself — to the rest of America as a place that indiscriminately hikes taxes to reward the politically connected while its crown jewel of New Orleans continues to be plagued by rampant crime and inadequate services? Or does he want to prove his fiscal responsibility.

It wasn’t that long ago that Jindal refused to sign off on a reasonable plan to pay for telecommunication services for the deaf because his Washington-based tax guru Grover Norquist called it a tax increase. Supporters have spread rumors that Norquist is OK with this and that it’s not really a tax but “a voluntary assessment.” That’s a bunch of malarky! The plan is constructed so that hotel owners can’t easily opt out. It walks like a tax and smells like a tax because it is a tax.

The entire nation may soon learn whether or not Bobby Jindal is a tax hiker.

For more detailed information about convention center spending and other problems with SB 242, please read: http://www.brylskicompany.com/1/post/2013/05/cvb-ignoredpublic-records-law-spends-millions-of-taxpayer-dollars-on-salaries.html

The SmithStag white paper on the constitutionality of the pending tourism tax (PDF file) is here: http://www.brylskicompany.com/uploads/1/7/4/0/17400267/130528_supplemental_white_paper_tourist_tax.pdf

Check out my May 15 blog post first asking whether Gov. Jindal will endorse this stealth tax hike: http://www.stuarthsmith.com/jindal-to-embrace-stealth-tax-hike/

To read my May 10 post about this bass-ackwards scheme for New Orleans tourism, please read: http://www.stuarthsmith.com/stop-the-bass-ackwards-plan-for-new-orleans-tourism/

Check out the BGR report (PDF file) at http://www.bgr.org/files/reports/BGR-Now_Hotel_5-14-13.pdf

© Smith Stag, LLC 2013 – All Rights Reserved

2 comments

  • How much longer do we have to endure this incompetent Governor who doesn’t give one damn about Louisiana. His least concern is for education. It’s debatable what falls next on his top ten list of what else he plans to demolish before he leaves office. It is embarrassing to be an educator in Louisiana. Bobby Jindal is a disgrace.

  • Please Veto this tax! And it is a tax and there is precious little accountability in this town. We don’t need more monoey with less responsibility.

Stuart H. Smith is an attorney based in New Orleans fighting major oil companies and other polluters.
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