WWL>Topics>>12-18-13 1:10pm Angela: on property tax

12-18-13 1:10pm Angela: on property tax

Dec 18, 2013|

Angela talks with Janet Howard of the Bureau of Governmental Research about property tax exemptions.

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Automatically Generated Transcript (may not be 100% accurate)

Well it's another day of perfection. So glorious out there you just wanna be out playing in the sunshine. But you're not on Blanchard listening because I think we're gonna have three very interest -- topics today. Beginning with ones and I think we need to have a very long conversation about. Because just like you or your family the city of New Orleans can't spend money it doesn't. So we don't get all the marsh street lights -- store potholes filled. We don't have the number of police police officers we should have and we continued to have crumbling infrastructure. It's about money and not enough of it but the city could have much more if everyone who owned property paid something. There's at least a billion dollars in property if not more. That pays nothing. They are buildings owned by nonprofits. Who are exempt from paying property taxes. Churches universities. Hospitals paying nothing. But used the same streets the same police the same sewer system. When fewer pay those who do have to pay more to just keep the basic level of service is going. We are a -- city we need more tax dollars and we need not to add taxes to those who already pay the bulk. We need more entities on the property tax rolls. The bureau of government -- search has done a study on this and that's what we're gonna talk about today and who better to have as our guest. Janet Howard head of the bureau of government research I'm for ever grateful. -- -- whole hour of your life. -- pleasure Angela thank you for taking on the top. Let's write off the bat when I read a billion dollars in property not being taxed and that really very low. Because as -- read on. It's really more than that. Yes back in 1996 we -- -- -- based on the values on the tax rules of how much property was gone and how much was -- at that point we found that approximately two thirds of the property in the city. Was not paying tax. To third. And that was it have qualified number because. Property that he knew we hip problems with assessments to begin with. But beyond that the assessor only -- value properties actually on the attacks were. And so when it comes to things like nonprofit property. There are not adjusting. To reflect current value so you don't hit very good numbers. But. So if you look at what's current the last couple years. Approximately. 42%. I think it is of the property just using the value. That these sensors to sign is off attacks. But as -- set that's a funny number if you -- since 1996. Property they taxable properties come up in value by a 150%. But there's been no adjustment made for the nonprofit property. Its value actually it's gone down in value which is completely in understand I'm not understandable -- or 60% more Parcells attributable nonprofits now. If you it. Worked through it say okay let's make an assumption if tax -- property is gone up by by by 150% as soon. The non taxable property has by a 150%. And at that point you'll find it again that over 60% of the property is currently off the tax -- what does that mean. If that property once on the tax rolls. And you could hand. Ability to roll back equal to 44 mil -- a lot of medically -- -- an interrupted their exact thing that's a very important point. Right now anybody who pays property taxes as paying a 144 mills. Correct -- orally without -- it and a 148 mills on his morning milk time what you're saying is if if all these properties who were off line not paying work to pay. Then in fact those of us who are paying would be paying less and that is just for the nonprofit. Exempt property -- that those of us he when you take property off the tax rules for a nonprofit. Property you are providing an indirect subsidy -- the taxpayers are providing an indirect -- it. And it's reflected in either. Less money for services. Or. You could realize the value by reducing. Your tax rate. And at a 148 mills approximate 44 is attributable to the nonprofit -- -- I think it's good to Pete -- -- nonprofit. That does mean churches that doesn't mean universities that does mean. Watched well in Louisiana it means a very very broad range of things and that's one of the prop that's one problem that we -- The state constitution is very very broad in what defines this. Nonprofit property. Here's a catch -- provision says property owned by a nonprofit corporation. That span. Organize and operates basically for religious. Burial. Charitable. Health. Welfare fraternal. Or educational purposes. As long as no part of the earnings are going to -- shareholders something. There's also an exemption for a labor organization there is an exemption for lodges -- clubs organized for charitable purposes there's an exemption for. -- drug trade travel and comers. There's an exemption for Mardi Gras institutions and clubs they don't even have to own the property. So they're all kinds of them. Exemptions. Very probably stay in the constitution and one of the things we've recommended. Is that. The constitution should have some kind of definition of kind of a broad concept of a general concept of what is a nonprofit properties eligible for an exemption. But it should do -- do we should dangle onto narrowed the definition. Through stats statutes said the you're not just leaving it wide open. Right now -- nonprofit enjoys exemption whether it's something that really benefits the public or not. So that you're saying there's a big gap between. Loyola university Tulane University or some hospital. Verses. The fraternal order Feliz I did hear all kinds of bureaucratic differences and ways of going about it. In general what you should have is is something that rare. The prop -- a nonprofit is not exempt just by virtue of being a nonprofit which is basically where we are. What a nonprofit that -- a tax exemption should be doing is providing some kind of service that the government would otherwise have to provide or some kind of service. Or amenity that. The -- is considered to be by the government a public good attempt it really increases the quality of of life -- they're all kinds of amenities that could fall on that depending on your view. But the idea that it's just a nonprofit and therefore it's exam is. A wrong way of going about this. I just again wanted to get my arms around the magnitude. Of the properties not on the role. And again we think of the big ones. And you know the argument would be for let's say -- university -- university. There not nonprofit. I mean they are nonprofit. But they should be paying something. I mean huge amounts of property are owned by universities. Yes an end it there are ways of going about. Tapping into that and having everybody contributes up after all. A nonprofit. Uses public services it uses the streets accuses the during need to separate. Just like any other business where citizen the differences they don't contribute anything right now to helping meet those costs. -- your number of options have been looked at another place step forward for dealing with this one is. To your payments in lieu of taxes which are voluntary payments -- really been shown to be not very. Worthwhile program contributes very little at the voluntary so it has its own set of unfairness involved with that one institution might say OK I'll play ball to this extent. He knows the sample on not and they might be in beat competitors so that's got that has its own set of problems. On -- -- the the largest numbers is Massachusetts but. And then Boston has a large number their looking at revamping their programs. Another way of going about it is it's been. Done in its some states is a state compensates local governments for the tax revenues that they lose from property taxes by virtue of the nonprofit exemption. After all and put them in most states in this is certainly true in Louisiana the rules for whose exempt or not exempt its debt at the staple. But the cost is paid by the local government right so some states that's a handful of them. -- have little laws that they require the legislature to reimburse local governments for. That lost revenue up. To some percentage. Realistically in our state without ever hand now yeah. But stay with this is a very important topic and I hope everybody is listening hard luck we would call in any comments about that. At at 260187. And -- -- will be right back talking to Janet Howard. About should nonprofits be paying some taxes run activists. Janet Howard of the bureau of government researchers are very special guest today. And we're talking about the subject of the enormous amount of property in the city of New Orleans that is not taxed primarily because. It is tax exempt by its nonprofit status. In a city that just needs money so desperately. It really should be something we look act. It is something in fact people have looked. And I I bring up now that it was Mitch Landrieu who -- the tax fairness commission in 2010. And that was sort of charged with. Looking at this. That's right we did some work for them and end game through presentations at that point and then what came out of that. I don't think much came out of that. They just established that -- -- they they've established the problem but didn't really solve the problem. And given its affect me being given an overview of the breakdown of exempt property again let's assume that it is a 150% rule over. Rule for -- that the largest. Sector is government property 31%. Nonprofit is 21%. Homestead about 7% conscious thing going down overtime is property values surprise lenders exemptions for industrial property around the range of of 1% that's kind of your your overview -- 30% is government meaning the city of New Orleans federal state okay. So they are exempt. The nonprofit is 21%. Correct me if I'm wrong but I thought that the what once the state. I took it up the legislature took about looking at. What this. Fair tax group had done. And -- and we need to look at things that does the city people went out and really didn't promote that they wanted to do. And -- that I'm I'm having trouble if I have to go back and check my records Angela I'm having trouble. I remembering I think that's that's what I read has in other words legislature that passed a resolution. Based on the tax fairness unfairness commission. To consult eleven entities. Ten of which has our profits with a vested interest in keeping the exemptions. Only one entity had an interest in changing it and that was the city of new that is correct you're right on the -- city of New Orleans would have said will give up. Our tax exemption. So with the city be paying taxes. Note it in a matchup that would make makes sense. For the city to be paying them taxes to it to itself or would try to unload some of these buildings. Possibility possibility. But I think that that that that particular commission I think was was focusing again on the nonprofit exemptions in the city was in there. Is kind of a stakeholder from the different. Ankle okay. Okay but understand that the city -- staff twice. Up to that tax commission. And they didn't advocates for reform. Even though it was Maryland -- with a time who was looking for some kind of reform. That says to me. People got upset. I'll -- people to get upset and yeah there there's it's a very it's a difficult challenge it's one that people have stepped back and Saturday. OK we have a structural problem here we have limits on our revenues that are affecting our ability. To. Provide services that a healthy community needs. We have limits that come from the fact that you have to think about. You're tax rate not just as the absolute tax -- you're paying you have to think about that in relationship to other terrorist actions -- so. And -- think about Orleans parish the -- right now the basic rate for it to become especially taxing districts. Being approximately -- 148 mills -- Jefferson Parish next door it's approximately 812. So. That too is a factor that affects -- -- revenue. Generation from eight. Role increasing taxes if you want to know -- rate if you want to say your only real solution to the revenue problem is to expand the base. And yet it's such a delicate subjects such a political subjects that we don't want to touch. It's it's it's seems to be. Very untouchable. Subject and know there are many ways -- ways of Kennedy and attack the problem that the margin in certain ways for examples I mentioned you could more tightly. Define what is non profit. You could. Make it changes says only non profit property. Eligible nonprofit property it's used for the charitable purpose is exempt right now these losses. Property that is used for commercial purposes is not exempt but that means a nonprofit considered this whole property without pain. Taxes for. So there's that kind of change that can be made limiting whatever the purposes are for which. The services are which nonprofits are exempt. Also you can take a look at the enforcement. Side. Indeed nonprofits should have to come in on a periodic basis to reestablish that fact that there are still eligible for an exemption they should have -- file for an exception. That kind of thing is not required now seems very very base. They tax successors as I said don't even calculate the value of exempt properties that we short resources. We don't know Leo bragging and revenue from this well but the prop promised nobody can really say. What it costs under those circumstance. I read in our that we did invite. Carol Williams -- assess it come on he wasn't able to today and I know he will in another time. And you certainly called us by phone and other issues but I think I read deny people call and correct me if I'm wrong but. That. Once he took over he dropped a lot of the nonprofits because they in fact. And not -- long time so and the IRS just on the same thing. I bring that up only because these are not the big ones he's not in churches universities were talking small and it reminded of this was maybe twenty years ago. I read in the paper a -- was a couple of pilots on the North Shore created a church. And what the trigger wise they called it like. The church of Jesus Christ -- -- -- close it was something almost thumbing their nose they were caught and they -- they went to jail. But it said. I don't the effort that anybody can do -- form based nonprofit. If like put it in my home and my gut and I completed all the forms. Then could I not -- had a summer home or find a little building -- -- out of depicted in unified produced enough. And you have to have rules that really. But that it that that kind of thing is basically fraud. Right but you you do have to -- rules that make clear you can't be using that property for any other purpose as its European truly an incidental. Minimal amount in church might occasionally. Ran out did you -- You have to have limits they have to be set forth in law and they have to be in force but the bottom line is we should do those things they're low hanging fruit. But beyond that. There's that period he will still have the basic problem. Of how do you generate enough revenue with these kinds of exemptions in place abroad and that is the question that we will address once again when we come back. Now let's join Chris Miller in the newsroom. Over talking with Janet Howard with the bureau of government over search. On the issue of tax exemption for having to pay property taxes. And what we're really learning is that there's an awful lot of property that has not taxed at any level. You know giving one of the reasons why we are not able to do the many things. That this community would want and again as I was saying to Janet every week we do a a weekly thing in neighborhoods. And universally it doesn't matter which neighborhood. The big issue other than crime street lights and streets and the status of our roads this takes money there's only so much. We have. How do we get more so looking at the tax exemption of so many organizations. You know I just truly believe would be a worthwhile. Constructive thing to do. And again it may not have to be exactly as we are text it could be a -- it could be something else. An answer back in time. We did last look at this is one of the things we did recommend was taxing nonprofits at a reduced. Rate. That has been done in a number of that's states so. It -- everyone is at that point is contributing. Something. Even for the recognition the quid pro quo in terms of community services and whatnot. And then there's another way of going about it and having nonprofits contribute their fair share is through survey of service speaks for example. The sewage and water board now has a one billion dollar capping a capital plan for the drain -- About 500 million dollars at that has to come from local revenue. If that meant monies raised through property taxes it will fall on the small. Group that were estimating that at 40%. That pay property taxes. If that were done -- through a drainage -- And you can pick up. Hawaii all the property in the city like she was not just nonprofit property not just homestead exempt property but also. The federal government is willing to contribute. Although you the localities can't tax the federal and the federal government changed the rules in 2011. They said if you have a fairly constructed training ski. We will paid. Our fair share so at that point you have an option of spreading the cost. Of a service that everybody. Meets there is no way you can be here without train date. And instead of putting on just a little group. You can put it on everybody says that's another option for raising their can be used for trainees can also be used some places are using it for street programs. We have a caller Charles from gentlemen. Hey -- I held on. Yeah I heard the -- back of some controversy in and morality tale but it is true that golf courses don't pay property taxes. And I just thought it would it would bigger pieces of land Langer has put a golf courses in the vicinity. Our golf courses exam I was have to check into that the end. It. This is something that's something I remember -- like several years ago -- know those big controversy in -- have been Jefferson Parish but. I think it was like a big stickler too concerned -- just imperative in effect all the military action. At the world golf course -- exempt from property taxes. Very very good question because you're right that's a big body laying out. Total -- and policy and even the municipal courses I mean -- you know the people that play there and not working for the government so. They should raise their fees that they have to pay property taxes raise rates Michael there. That's within two additional revenue from I'll think about seven on the question but it really related to property tax which is kind of similar thing. -- exempt things from property taxes you -- look at the sales tax laws. There's on people that company's sales tax either in their exempt from the state they're probably comparisons to that. A problem. Look at the money that's generated sales taxes. Don't think they'll that was brought a bigger generator that property taxes in the parish. Who would be exempt from some singers. A lot of nonprofits could. It's it's you know it's a lot of the same things that are exempt for the property taxes. If you look at the sales tax -- everything's subject to sales tax. And every -- every everything that's everything that's old is subject to sales tax and personal property. An illegal look at that as -- that the the majority of attacks flaw is that exemption -- -- talks about everybody it's not subject to attacks. Because they pop politically people give him a little what -- -- -- and when architects and that's politically favorable. For whatever reason. Oh there's a slew of people in the company's tax. That's probably a bigger killer yes. I'm here for your correct on the on that when it's there that there are many sensitive sales taxes with something that came up on. Actually when the Jindal administration is looking at revamping the taxes remember it was one of things that. Really jumped out was. The wide number of. -- yeah it's it's like this and and it's. Some exemptions. Are partial exemption just -- you talk about maybe making impartial and nonprofits and property tax. An exemption phase -- -- constantly like there you know here exempt for this three year period the men not what is next for you to the robberies and two assists. -- that office whose friends are lobbying or whatever you know it's pretty crazy but there's that it that's impossible thing I used to work for this guy about. 25. Years ago. Pretty wealthy landowner in Orleans parish. And what he used to do it was all perfectly legal suppose. He used to -- this big firm. That -- -- political connections and I. But they would go in and they would argue with the -- over the value of this property and he used to win pretty much every time. The value of the property with a man you know what it really the value of the property. It was a little -- little loopholes in the system that people can use to get out of paying just about anything. It goes back to and everything you send them hanging on every word you know that goal goes back to. What kind city do we want. And. -- we -- fitted everybody's in for themselves or more humbling. We're not paying attention to certain things had to sit and complain about -- streets and street lights that aren't fixed for years. You know what do we wanna be. Because the problem in the people the hard working person and as a piece of property worth a few thousand dollars maybe. He's been through the it's everybody else that has the power to wield the stick. Favoritism that -- getting out and property tax if you ask me. And that's you know and that's what we talk about the political structure in this state area thing. It goes real deep to get looked really deep to solve the problem cannot supplements -- physical effects. Charles I really appreciate this column we're gonna take another break we'll be right. We are talking about the tax exempt status of so much property university that it's there were some tax paid on it perhaps we would have enough funds to do things better. Whether it be streets and lying to more police but all of the things that I think create the quality of life that. People want in this town it is about paying more. And you know certainly I would enjoy listening to the hospitals are the universities or any of the non profits. Who would like come talk love for them to come out and discuss this with us. And I'm sure part of your argument would be is that they. They contribute a lot in the sense of the work that they do. And they certainly do but they are still citizens. -- citizens and we all. Try to contribute a lot and we have a different role at the homeowners contribute to the city by living here by maintaining their property. Businesses contribute to this city by being here and nonprofits contribute to the city by being here. But there -- all citizens and as citizens we all have for community work were all have to give. Without. Necessarily extracting a quid pro quo for what our contribution is just our contribution by virtue of our work. But you would say that -- New Orleans and or Louisiana. Is. There was 11 Frazier had him try to find it but it was. The scope -- exemptions is unusually large and the bar for receiving an exemption is set unusually low. So even trying to compares to other states. This is discouraging. This is it this is discouraging it's something that needs to be addressed. So that you really focus that when I'm going -- quid pro Clinton different sense that. A nonprofit is not given an exemption just by virtue of the fact it's -- nonprofit it is giving. A quid pro quo is quid pro quo in the sense that. It is providing a service the government would otherwise have to provide. Or it is providing an amenity that the community thinks is worth. While in terms of giving up property tax to him that. This is something has been addressed actually at the constitutional. Level the list of exemptions is set by the state in the constitution. So any kind of change has begun at that level which of course complicates things. I went to matches have gone back to Charles from -- yes. Recently a study came out that looked at the M. Tax via a deep -- process for property taxes in fifty states. And Louisiana ranked at the very bottom of the list for the quality of appeals in part of that one of the factors they considered. In that assessment how fair to people perceive the tax system. To be so. You -- -- to be the site for that and he might be interest and that would be very interesting we'll take another quick break we'll be right back right activists. Well important thoughts to be thinking about and that is how can we make this city everything we all want it to be which is better. You do it with more money and how to get that money and so we're looking at. The amount of money that could be generated if we didn't have so many tax exemptions for nonprofits and others. Janet Howard is our guest and let's talk about some ideas on. Or compromises are reforms sure it'd be -- we talked about a lot of ideas and work through as you mentioned some of really aren't very. Practical for example asking the state to spend more money right now. But there are a number things that really can be done one is the legal changes -- the state level to tighten the eligibility. So that you're. Focused on groups that really are providing a true public benefit and is some benefit that goes beyond their own members that's important to. We have to make clear that it's has -- properties just used for tax. The tax exempt purpose. Not just any properties that they -- Beyond that we've recommended that he -- be better administration. Of the tax exemptions more aggressive administration. And this terms of revenue. Measures are two things we think -- really worth pursuing we've recommended one is to turn to Japan. East where possible for example drainage or road maintenance I should mention. City of New Orleans last week -- listening forming in dollars on road maintenance four million dollars that's it. Now that's history that's at fort they spent forty million a year in boundaries give you at with them much newer infrastructure -- -- US census. How we need money for purposes like that the other thing that we've recommended is amending the constitution to impose -- reduced tax. On nonprofits. We've also looked at eliminating it completely but we can think we have enough information. On on the impact but to have a a lower rate. Is realistic. It is it's it's a contribution. Not at the same level as those who were involved in a for profit activity or. To those of us who are homeowners and living here but at that point everybody would be contributing. Some. Have any idea on the dollar amount that could go into the coffers. I think it would depend on the level which you set the taxes we said at the current rate. Our estimate. Was. That it would be approximately an additional 125 million dollars for tax recipient bodies and again we re using this just as a scenario we don't really would we can't be sure of numbers because of the way to attract. But if you. Did did this assumption again -- 150% about that those properties increased at saint greatest. Tax. Once you would be able to generate an additional 125 million dollars by taxing those properties at. The full rate. Or you would be able to reduce everybody else's tax bill by 44. Millions or some combination that so you're really talking about a third. The third and if you cut 4040 Miller met -- can't afford it your your talk about their products -- right so people need to think in those terms to him would have. You know to keep it where it is not tax people who are overtaxed frankly. And then. And look at what we could do. Just taking a little money just to fix roads. Just to fix the light -- Janet Howard I cannot thank you enough. I hope I hear from our nonprofits we'd like to do a show with -- as well. State tuna were going to be talking with activist from the French Quarter but now let's go to Dave -- know Chris Miller in the newsroom.