Reuters

New Orleans wants to tax its tourist areas, but can't agree on how.

Nearly 9 million people visited the city of New Orleans in 2011, a 5.6 percent increase from the year before. City officials are expecting that number to increase again this year and next, as the city hosts an ongoing series of high profile sporting events that will culminate next February when the Super Bowl is played at the Superdome, a 20-minute walk from the daiquiris and debauchery of Bourbon Street.

That walk, unfortunately, is a little bumpy. Infrastructure has been deteriorating citywide, but its state of decay may be most noticeable in the French Quarter, the hub of the city's tourism industry. Sidewalks between the Quarter and the Superdome or the nearby train station are spotty, and the streets will give a strenuous workout to your shocks. Local hospitality and tourism officials see how this can leave a bad impression in the minds of visitors. So can Mayor Mitch Landrieu, who's been pushing since fall for the creation of a new tax district in the tourist areas to help market the city and fund infrastructure improvements. It's a proposal that could raise upwards of $12 million a year.

But the effort hit a wall this week in the state legislature, where amendments and disagreements about how the tax revenue would be split have caused the hospitality industry to pull support for a plan it helped to create.

The idea was to create a governing entity called the New Orleans Hospitality and Entertainment District to be in charge of levying an additional tax of up to 1.75 percent on hotels and restaurants within the "hospitality zone" of the French Quarter and downtown areas. The city would then dedicate those funds to support marketing the city's tourism and event spaces, as well as to fund infrastructure improvements. What's holding the plan up is exactly how those funds would be split.

The initial version of the bill had 30 percent of the revenue going toward city infrastructure and the remaining 70 percent going to tourism and marketing organizations. The amended bill would allocate 40 percent for infrastructure improvements, while the two main tourism agencies – the Convention and Visitors Bureau and the New Orleans Tourism Marketing Board – would receive 20 percent each. Two other tourism-related organizations would receive 10 percent each. The changes have been cheered by neighborhood groups, which had opposed the original plan's revenue split (and whether the board running the hospitality zone would be subject to open meeting laws).

But as a result of the changes the hospitality industry has pulled its support. The Convention Center Authority is threatening to renege on the $30 million it had pledged to help improve infrastructure in the French Quarter and downtown areas – a pledge it had tied to the passage of the hospitality zone plan and had intended to put into motion ahead of the Super Bowl. Even Landrieu is opposed to the amended bill, calling it an opportunity the city "may be very close to losing." He did not mention the plan in his State of the City address on May 22.

But the idea may not be completely dead. State Senator Edwin Murray, the author of the bill, says he still wants to try to make something work. The question now is, will he have enough time to do it? The current legislative session ends on June 4.

Photo credit: Carlos Barria / Reuters

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