Kip Holden Plan: Raise Central Tax From 9½ to 10¼%

CENTRAL — If Mayor-President Kip Holden has his way, the sales tax rate in Central will increase from the current rate of 9.5 percent to 10.25 percent next year.

That would give the City of Central the highest sales tax rate in the U.S.

Chicago previously had the highest sales tax rate at 10.25, but that was reduced to 9.75 on July 1, 2010.

On Tuesday, Holden said he will ask voters to approve three tax increases this fall:

• 1/4-cent sales tax and .75-mill property tax for infrastructure

• 1/4-cent sales tax and 2.15-mill property tax for public safety

• 1/4-cent sales tax and .25-mill property tax for economic development

Prior to the creation of the Central Community School System, the sales tax rate throughout East Baton Rouge Parish was 9 percent.  However, when Central created its own school district and took over public schools in Central from East Baton Rouge in July 2007, it inherited public school buildings that were in a deteriorated state.  Some had already been condemned or contained cancer-causing asbestos.

As a result, Central voters went to the polls in 2009 and approved a one-half cent increase in sales taxes.  As a result, sales taxes are currently at 9.5 percent in Central, but only 9 percent in the rest of East Baton Rouge Parish.

Holden’s plan would add 3/4 cent to these taxes, increasing the overall sales tax rate in most of the parish to 9.75 percent and in Central to 10.25 percent.

What the effect of such a high tax rate would be on economic activity in Central is unknown, but some think it could be catastrophic, especially in tough economic times.

Central Mayor Pro-Tem Ralph Washington said a 10.25 percent sales tax in Central would be unthinkable. “The consequences would be far-reaching in Central,” he said.

Metro Councilman Scott Wilson (R-Central) is a member of the 12-member Metropolitan Council that would have to approve Holden’s proposal before it could be placed on the ballot for voters to face in November.

“I’m totally against it,” Wilson said, “just like I have been before.”  Holden proposed two previous parishwide tax increases — the first in 2008 and again in 2009.  Both went down to defeat overwhelmingly.

Here in Central, voters defeated Holden’s 2009 tax increase with 93 percent of the people voting against.

The official vote total from Central was as follows:

Nov. 14, 2009

City of Central

Yes 603 7%

No 8,014 93%

East Baton Rouge Parish

Yes 25,766 36%

No 45,851 64%

Central provided approximately 40 percent of the margin of victory for opponents of the tax.

Unlike the previous proposals, this new one does not include the $225 million Alive! project.

But Wilson said it makes no difference.  “This is a terrible time to propose additional taxes,” he said.  “I’m opposed to it and so are several other members of the Metro Council.  I’m not sure whether the Mayor-President can get enough votes on the Council to get this on the ballot, but I won’t be for it.”

For the City of Central and the Central Community School System, the danger posed by Holden’s proposal seems serious.

Sometime in the future, voters in the City of Central may want to consider a bond and tax election to build roads and highways.  Likewise, there could come a day when voters in the Central Community School System may want to consider a bond and tax election to build a new high school.

But if the sales tax rate in Central were already 10.25 percent, any further increase in sales tax would have no chance of passing.

Of course, there is very little chance that Holden’s tax plan could pass in Central.  However, the tax increase would be imposed on Central if it passed parishwide.

The question is whether the elimination of the Alive! project would lessen opposition to the tax enough to allow it to pass over Central’s opposition.

The Metro Council plans to consider Holden’s plan on Aug. 10 and then vote on whether to put it on the November ballot.

By Woody Jenkins, Editor, Central City News