As Louisiana continues to recover from Hurricane Ida, lost economic activity could develop into a major concern without timely federal support, placing additional burdens on taxpayers and local governments.

Nearly one million electricity customers remained without power as of Wednesday afternoon, including nearly all of New Orleans and 10 surrounding parishes in southeast Louisiana, according to Another seven parishes are at least 60% without power.

Emergency distribution sites for basic necessities such as water, tarps and food rations are available in place of shuttered or damaged grocery stores in devastated communities. A real-time Walmart store map shows 26 locations remain closed from greater Baton Rouge to New Orleans and throughout the southeast region.

As relief efforts focus on survival needs, the storm’s impact on residents, businesses and local economies could lead to significant government revenue losses and associated services without immediate federal recovery aid.

“Federal funds are the key,” said John Gallagher, executive director of the Louisiana Municipal Association.

Based on pervious storms, sales tax revenues decline from businesses being shut down, evacuations and damaged property, he said.

“Once the recovery starts and federal funds come in to help rebuild and communities start opening up, I think you’ll see an increase in sales tax revenues,” Gallagher said.

According to the Tax Foundation, a Washington-based nonprofit, Louisiana has the highest combined state and local sales tax in the country at 9.55%. The revenue raised from taxing applicable goods is used to fund public services.

The more widespread the damage and the longer the natural disaster recovery persists, the less sales tax is collected. At the same time, the Louisiana Department of Revenue is issuing relief initiatives aimed at easing taxpayer obligations.

A department spokesperson offered two examples: one extending tax filing and payment deadlines to Louisiana residents and business owners, and another exempting nonresident employees and businesses from income taxes for activities directly related to the Hurricane Ida recovery.

President Joe Biden approved a major disaster declaration for Louisiana on Sunday, authorizing the Federal Emergency Management Agency to assist state and local recovery efforts. 

“Assistance can include grants for temporary housing and home repairs, low-cost loans to cover uninsured property losses and other programs to help individuals and business owners recover from the effects of the disaster,” a news release said.

An attempt to gauge funding timelines and dollar amounts was submitted to FEMA, however a representative was not able to respond by time of publish.

“You’re always concerned, especially in devastated places. What’s the storm’s footprint going to look like when they come back?” Gallagher said. “But once the federal funds start coming into these communities and federal resources help citizens rebuild, people are going to go to those local stores and buy appliances, lumber and other things.”

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