Property tax levies and collections in New Orleans, before and after Hurricane Katrina.

• Author: Guajardo, Salomon Alcocer

In August 2006, Hurricane Katrina hit the City of New Orleans, Louisiana, devastating the city's levy system along with its commercial and residential housing stock. Immediately after Katrina, the city's population dropped from about 497,000 to about 211,000, putting the city's economy and financial position in a precarious state. This study examines property tax levies and collection trends before and after the hurricane to assess the financial impact on New Orleans' tax-based revenue. In doing so, it also provides a preliminary barometer of what other cities are likely to experience financially if faced with a major natural disaster and its aftermath. The New Orleans experience illustrates what cities are likely to expect with regard to changes in their population and property tax bases as well as providing a window into the gestation time from disaster to recovery with respect to their financial condition and position. In short, the New Orleans experience is a case study of how a natural disaster alters the financial landscape of a city drastically and immediately, and provides insights into how the tax base might behave after a natural disaster.

TAX LEVIES AND COLLECTIONS

Prior to Katrina, the city's estimated and net assessed real property values were increasing steadily (see Exhibit 1). In 1995, the city's estimated actual value for real property was about $7.5 billion, with a net assessed value of about $885 million. By 2000, the estimated actual value of real property had increased to about $9.9 billion, with a net assessed value of about $1.1 billion. The estimated actual value for real property reached about $12.1 billion in 2004. At this time, the net assessed value of real property was about $1.4 billion. From 1995 to 2005, the city realized a steady increase in the estimated and net assessed values of real property from year to year. As of year-end 2008, the estimated actual value of real property was about $17.2 billion, with a net assessed value of $2 billion.

A similar trend is evident for personal property estimated actual and net assessed values from 1995 to 2004 (see Exhibit 2). In 1995, the estimated actual value of personal property was about $3.1 billion, with a net assessed value of about $467 million. By 2005, the estimated actual value of personal property had increased to about $4.5 billion, with a net assessed value of about $679 million. However, beginning in 2005, the estimated actual and net assessed values in personal property began to decline. From 2004 to 2005, the estimated actual value of personal property declined from $4.5...