Sales tax in newly created TIF districts could be raised by two percent

District C Minden City Councilman Vincen Bradford looks at the five different Tax Increment Financing districts recently established in Minden. The council met for a workshop Wednesday to establish what taxes would be levied and the percentage the districts would collect. Michelle Bates/Press-Herald

The process of establishing the Tax Increment Financing districts continues to move forward as the city council met in a workshop to talk about what taxes would be implemented and the scope of those taxes.

Minden Economic Development Director James Graham says they will be asking the council for a two percent increase on sales tax and hotel occupancy taxes.

“It fits within our overall development of economic strategy,” he said. “It fits in regards to attracting investment. It fits in our effort to encourage business expansion. These levies should help us address all of these factors in terms of the increments.”

The sales tax and hotel occupancy tax levies completes the entire package, he said. In other words, once the percentage is established, then revenue can begin to flow.

Graham gave the council a brief review on the TIF districts of when they were established in Minden, what they are and the foundation needed to support them. Attorney David Wolf was also in attendance to talk to the council about the different ways the council is authorized to grant the funding received from the taxes collected inside the TIF districts.

He says the TIF districts can levy sales taxes, hotel occupancy taxes and property taxes. He went through each one giving council members examples of how different municipalities use them in their TIF districts.

“The limits on those are two percent sales tax, two percent hotel occupancy tax and five mills in property tax,” he said. “What’s interesting about all of those, particularly the sales tax, is it is stated explicitly in law that that can be levied without regard to the existing tax rate.”

Wolf explained that many work under the assumption that a municipality cannot go above a certain tax rate.

Attorney David Wolf explains the different options and gave examples the Minden City Council is authorized to use in implementing a revenue stream for the TIF districts. Michelle Bates/Press-Herald
Attorney David Wolf explains the different options and gave examples the Minden City Council is authorized to use in implementing a revenue stream for the TIF districts. Michelle Bates/Press-Herald
“The reality is there is a general rule, but there are so many exceptions to that general rule, that there basically are no rules,” he said. “About nine to 10 percent is what the combined rate can be in any given locality.”

The combined rate is comprised of the state, which collects five percent, municipalities and the school board. Tax rates in Louisiana range from five percent to 12.75 percent, he said.

Beginning in October, the city will likely follow a proposed timeline and adopt resolutions giving Notice of Intention to levy a two percent sales and use tax and a two percent hotel occupancy tax at its monthly meeting. At that same meeting, two ordinances will be introduced, one for the sales tax and the other for the hotel occupancy tax.

Once these are properly published in the legal journal, then the city will get certification from the Webster Parish Registrar of Voters that there are no registered voters within any of the five TIF districts.

In November, if all goes smoothly, the council will be asked to consider the adoption of those ordinances. Then these ordinances will be recorded in the Webster Parish Mortgage Records office and submitted to the Webster Parish Sales and Use Tax Commission.

If all goes according to the proposed timeline, then the sales and hotel occupancy taxes within each of the TIF districts will go into effect January 1, 2017.

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