Lake Charles Mayor Randy Roach. (American Press Archives)
Last Modified: Thursday, January 10, 2013 10:30 AM
The City Council has approved a resolution calling for an election in April in which the local electorate would decide if sales taxes could be undedicated and the taxing district on the lakefront legally activated to collect sales taxes.
“Generally speaking, the TIF (tax incremental financing) Districts are allowed by law to use the increase in taxes collected within a defined area to pay the costs of certain eligible projects developed in the district,” Mayor Randy Roach said Wednesday.
The Legislature authorized the TIF for the lakefront to help provide financial support for capital improvements to the district, where voters allowed public-private development to occur.
City officials made a request to get on the Louisiana Bond Commission agenda last Thursday to get voter approval to activate the TIF and use sales taxes collected in the district to fund eligible projects.
Roach said the district could collect anywhere from 4.5 percent in sales taxes to as much as 6.25 percent. That determination will not be made by the state until after voters decide whether or not to approve the TIF.
Those figures are based on current sales tax rates collected by Lake Charles and the state.
“The local bill which created the lakefront TIF allows the district to collect a sales tax on taxable transactions in the district,” he said. “The rate is equal to the total of state and local sales taxes otherwise due and payable.”
The city’s sales tax rate is 9 percent: 4 percent to the state, 2.25 percent to the city, 2 percent to the Calcasieu Parish School Board and .75 percent to the Calcasieu Parish Sheriff’s Department.
Based on a court ruling, “if the local sales taxes were dedicated when originally approved, the voters must also vote to allow the revenue to be used by a TIF for economic development projects,” Roach said as the reason for the vote.
If approved, City Hall’s intention is to ask the state to allow the TIF district to use both the state’s sales taxes and the city’s sales taxes.
Roach said in some situations the state will only offer matching dollars with local sales taxes being collected for TIFs on eligible projects. However, the law approved for the lakefront does not include that limitation.
“Therefore we will have to seek a determination from the state as to whether or not the limitation applies to our TIF district. If so, the most the TIF could collect in terms of the state sales taxes would be 2.25 out of the 4 percent,” he said. “We are not asking any other local taxing authority to contribute to the TIF. Therefore the district could collect a minimum of 4.5 percent if the state sales tax limit applies (2.25 percent plus 2.25 or as much as 6.25 percent if that limit does not apply (4 percent plus 2.25),” Roach explained.
The application to the Bond Commission to allow the vote is due in Baton Rouge today. The government agency will meet Jan. 16 to decide if the election can be held.
Roach said the timing of the proposed vote in April was based on several factors with a main concern being the cost of a special election in May and voter turnout.
“The April election will have a number of ballot items. If we had waited, we could very well find ourselves as the only item on the ballot in May. We did not think we would get the voter participation that we’ll have in April,” he said.