New Orleans – Tax Time

Rail Transit Online, September 2000

Collection of a one percent sales tax on New Orleans hotel rooms finally began on Aug. 1, allowing the Regional Transit Authority to start moving ahead with construction of the 4.1-mile Canal Street trolley line. The tax is now 12 percent, lower than in many tourist-oriented cities including Washington, D.C. The hard fought effort to impose the tax continued for over a year and was finally resolved when RTA and city officials capitulated to the hospitality industry and agreed to use part of the proceeds to expand the convention center and promote tourism. The remainder, at least $4.2 million annually, will supply the 20 percent local share for the $157 million Canal Street line. The tax was a last resort after the legislature refused to provide any funding for the project. Transit officials expect initial construction to be underway by year's end, with streetcars running by late 2003. “We're approaching the end of what has sometimes seemed like an endless road,” RTA Chairman Robert Tucker told the Times-Picayune newspaper. “I don't want to say we're there yet, but we're very close.” The federal government is expected to release its portion of the funding by October once a review of planning documents is completed showing that the RTA has complied with a requirement to finish 60 percent of the design work. Once the Canal Street line is running, the tax revenue can be switched to a second trolley line costing $115 million that the RTA is planning in the Desire Corridor.