Morgan City enacts 6% municipal energy tax to fund capital projects

Morgan City Council voted unanimously June 24 to adopt Ordinance 25-O-8, enacting a municipal energy sales-and-use tax set at 6% on natural gas and electricity.

The council and staff framed the tax as a revenue source to reduce reliance on property tax and to fund the citycapital improvement list. City staff estimated the new tax would generate roughly $300,000 annually at the full 6% rate; the city plans to transfer that revenue to the capital improvement fund.

Why it matters

Councilmembers said the additional revenue will help move forward projects the council prioritized earlier this year, including systems and resilience items on a $15 million capital list. Supporters described the tax as a relatively stable, user-based source of revenue that returns 100% of the local collections to the city.

Discussion and details

Ty, city finance staff, described how the tax would work and how the revenue was included in the proposed budget. "How that relates to the budget is the new budget includes an estimate of 300,000 of new revenue, which would all be transferred to the capital improvement fund," Ty said during the session.

Councilors discussed alternative approaches, including a phased adoption at a lower rate, and whether to earmark proceeds for specific projects. Several members said they preferred adopting a clear purpose for the funds. One councilor said the tax at full rate would likely increase a typical householdutility cost by roughly $10 a month, depending on usage and season.

The council also linked the tax to immediate project priorities. Council members explicitly discussed using revenue to help fund a planned generator project and property acquisitions related to downtown redevelopment. "You wouldn't be remiss in saying we adopted the 6% MET tax, and 1 of the purposes for it is to move this generator project along," a councilmember noted during debate.

Vote and implementation

The ordinance passed on a unanimous vote (motion and second recorded in the minutes). Staff was instructed to coordinate collection with utility companies and to transfer revenue to the capital improvement fund; quarterly revenue reporting was requested.

What was not decided

Council debated but did not require immediate voter input and chose the full 6% rate rather than a phased approach. The council also noted that although the revenue is directed to the capital fund, the city retains appropriation authority and will report back on allocations and project timing.

Next steps

Finance staff will coordinate with utilities for tax collection, post the ordinance and schedule the initial transfers into the capital improvement fund. The council asked for quarterly updates on revenues and recommended projects.