Report: New Orleans may have improperly diverted millions in special taxes to pension fund

Report: New Orleans may have improperly diverted millions in special taxes to pension fund
A lawsuit has been filed alleging the city improperly diverted nearly $400,000 from the Downtown Development District to the state's pension fund between 2014 and 2016. Source: Chris Granger, Nola.com | The Times-Picayune

NEW ORLEANS (WVUE) - A new report by our partners NOLA.com | The Times-Picayune says that a tax-funded agency is suing the city for improperly diverting nearly $400,000 to the state's pension fund.

The report claims that the Downtown Development District, an entity tasked with making improvements to downtown New Orleans, has filed a lawsuit to stop the city's tax allocation practices.

The group alleges that the city has been improperly using the agency's funds since 2014.

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Judge Piper Griffin is expected to set a hearing on the injunction later this month or early next, according to court records, according to the report.

"In its injunction petition, the district argues the city's practice of withholding some payments from voter-approved special taxes and diverting those funds to the state started in 2007 under former Mayor Ray Nagin and continued into the administration of former Mayor Mitch Landrieu. Created in 1974, the Downtown Development District uses tax revenues for improvements to the downtown area and, since about 1979, has drawn revenues for a special tax that Orleans Parish voters in 2005 approved to extend through 2029." - Nola.com | The Times-Picayune

According to our partners, the district is asserting that the special tax revenues can only be used the district's activities, not for state pensions.

Spreadsheets attached to an affidavit filed by the district's finance and administration director -- and purportedly given by the city's finance department -- indicate a portion of special tax revenues have gone instead to state pensions for district attorneys, clerks, assessors, voter registrars and sheriff's offices, the article says.

"On top of the nearly $400,000 allegedly due to the district, those spreadsheets also indicate the revenues from a host of other special taxes went to state pensions, totaling nearly $4 million annually. Those revenues derive from voter-approved taxes for the Orleans Parish School Board, the New Orleans Public Library and three millages to pay for improvements to the Sewerage & Water Board's drainage system." -Nola.com | The Times-Picayune

In a response brief filed late last month, the city argues the district waited "a significant period of time" before seeking remedy last month, given the attorney general's opinion was handed down in 2007, according to the report.

The city said because of the lag time, the district's claims should be dismissed for the years of 2013, 2013, 2015 and 2016.

According to the report, the city also argues that Mayor LaToya Cantrell's administration should have a chance to reach a resolution with the district after her staff is up to speed on the tax allocation details.

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