Ad Valorem Tax Policy Brief 0809-03

24 August 09

Prepared by:

  • Jamie Boudreaux
  • Maria Patselikos
  • Kevin Welsh

This report was written by undergraduate students at Loyola University New Orleans under the direction of Professor Peter F. Burns.

EXECUTIVE SUMMARY

Like most municipalities in the United States, New Orleans depends on ad valorem taxation for a vast amount of city revenue. Ad valorem policy is formed by a complex web of state and local law, and different localities often adopt different strategies to fund city services, facilitate outside investment, and promote tourism. Different areas, even those that are geographically and demographically similar, have opted to use radically different strategies.

New Orleans is unique in taxation strategy because of the presence of public-private partnerships that have the ability to levy ad valorem taxes, often within a specific city district, for the provision of extra city services or to facilitate outside investment and tourism. Consistently, we found that these public-private partnerships share two properties: (1) the ability of the city’s elected officials, especially the mayor, to staff the leadership of the taxing body with political allies (patronage) and (2) the creation of new policy options and the acquisition of resources that would be otherwise nonexistent.

While we found that transparency in tax expenditure and patronage in leadership appointments were potential issues in these public-private partnerships, we found no evidence that these partnerships are detrimental to the city. To the contrary, both the Audubon Commission and the Downtown Development District have served the city well during their respective histories; both entities have executed their respective functions efficiently and consistently. We do note, though, that these partnerships are seemingly created only when they will advance substantive business interests, outside of the highly localized and rather small “security districts” in uptown New Orleans.

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