Sales tax raises controversy; Let’s get the facts straight

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The I-49 corridor, or Economic Development District C, that was established in August 2010 is the area affected by the proposed tax.

By Juanice Gray, jgray@natchitochestimes.com

Tax.

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No one likes the word, no one likes to pay taxes and when a new tax is proposed, everyone gets upset and speculation abounds. Such is the case with the proposed 1 percent sales tax for the businesses along the I-49 corridor to support the operations of the new sports complex, Parc Natchitoches.

Parc Natchitoches will have a five-plex of ballfields that can be adapted for baseball and softball teams for all ages. It will also feature a pavilion containing restrooms and concession stands. There will be five batting cages and a storage unit, four regulation soccer fileds, nature trails, a natural wooded area, beginner bike trails and a stocked fish pond.

I sat down with Mayor Lee Posey Thursday morning to get the facts.

1. The tax is only on purchases made at businesses along the I-49 corridor, or Economic Development District C, that was established in August 2010, with the geographical boundaries being revised in 2019 (see graphic).  This includes hotels, motels, restaurants, gas stations, etc.  “In fact,” Posey said. “A couple of trailers were moved into the area and the district lines were redrawn to exclude them so they would not have to pay the tax on purchases like buying a car.”  Posey said contrary to some speculation, automobiles sold here will not be included in the tax.

2. The maintenance and operations of the sports complex is “…not an afterthought.”  The mayor said they knew from the beginning, in 2017 when it was proposed, that there would be costs associated with the complex once it was built. Step one was getting the funding to build it. Step two was getting the funding to operate it. “We knew the recreation budgets would not be able to support it,” Posey said. “I met with the hotels way back, before the contracts were even let, to discuss the proposal of a 1 percent tax.  Not everyone was on board, but once they saw the good it could do for Natchitoches, they agreed.”

3. The funds generated from the tax will be split 50/50 between Natchitoches and NSU. “They will get half and we will get half. That will generate about $250,000 annually to split between the two entities,” he said. None of the tax revenue can be put into the City’s general fund. Posey said the money from the sales tax can only be used to fund economic development for the area, which would include maintenance and operations at the complex.  “We’re all on the same page. They benefit, we benefit and we help each other.  We will enter into a Cooperative Endeavor Agreement.”

4. “Lets face it. Two things; sporting events bring people into town and Northwestern is the backbone of this community. We looked at what brings in the most people and it’s travel ball. There’s that and for NSU, number one is football but there’s also basketball, baseball, softball and track and field. That’s what brings people here year round. People follow their kids’ activities,” Posey said. “NSU will also use Parc Natchitoches for intramural sports throughout the year. They’re excited about that. It gives them one of the best intramural complexes in the state and hope it helps in recruiting.”

5. The funds generated from entry fees and concessions will be put back into maintenance and operations (M&O) of the complex. All funding will not be reliant upon the tax.  “We’ve looked at models at other facilities and the recreation budget is not enough to self-sustain the M&O,” he said.  He said Ruston has a complex and they instituted several means of funding including a 1 percent sales tax, some TIF districts and more. “We’re not going to do that,” he said. The funds generated from the I-49 corridor, the recreation fund and the park itself will pay for M&O.

6. Posey said he looked at other sports complexes that encountered problems when they couldn’t maintain what was built.  He stated, “It is important for the City of Natchitoches to be committed to the citizens and also the community improvement projects we take on.  There is the potential of risking the future of Economic Development progress in our community if we do not take unique approaches such as implementing the 1 percent sales tax.”

7. When evaluating the revenue on a purchase, for example, a 1 percent sales tax on a $50 purchase would generate 50 cents of revenue.

8. Posey agrees this would put the tax rate in that area among highest in the state, but the offset is an operating park that brings a steady flow of guests to the City and in turn creates revenue. The business owners will pass the tax on to customers which will be offset by increased patronage. There will be more patrons at restaurants, hotels, motels and gas stations.

9. It does not require a public vote. A State statute authorizes local entities to levy up to 2 cents in such an economic zone “…with the proceeds being used for costs of acquiring, constructing, equipping, operating and maintaining recreational facilities in the City and for the promotion of recreation and sporting events in the City.”

10. Posey cited one large M&O expense as specialized mowers for the fields. Other expenses include, but are not limited to payroll, sales and marketing, leased equipment, repairs, landscape maintenance, accounting and legal fees, stocking the concession and restrooms, utilities (gas, electric, water, sewer, telephone), insurance and payroll taxes.

11. The City applied to the La. Bond Commission for $12.5million in bonds to be paid back over 12-15 years with $3.5 million interest at a total cost of $16,036,858. The City will pay the bonds with a 1-cent sales tax that was rededicated in 2016.  The proposed tax cannot be used to pay for current construction, nor can it contribute to the dog park that will begin construction following completion of Parc Natchitoches.

The sports complex will generate revenue. “The hotels will have ‘heads in beds’ and the guests will make purchases locally. That is good for us, that is good for Northwestern. We have something pretty special happening out there,” Posey said.

Mayor Lee Posey