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But officials in New Orleans' hospitality industry vowed to try to block collection of the tax, which was ordered Thursday by Civil District Court Judge Terri Love.

The court battle was ignited last month after the RTA board of commissioners, looking for cash to pay its 20 percent share of the $153 million cost of the Canal streetcar line and other federally-assisted light-rail projects, told the city to start collecting the tax on hotel and motel room occupancy.

RTA officials estimate that the tax will generate more than $6 million a year, income the agency could use to borrow tens of millions of dollars, more than enough to finance the streetcar project and other capital needs.

When New Orleans voters passed the one-cent sales tax for transit in 1985, the language on the ballot specifically exempted the city's hotels and motels. The RTA's attorneys now argue that the exemption was invalid.

Confronted with RTA's legal interpretation, the Morial administration said it wouldn't impose the tax until a court authorized it to do so. That response prompted RTA to file the suit that led to Love's order Thursday.

"The court finds that the RTA's taxing resolutions are presumed valid unless and until they are declared to be unconstitutional or otherwise invalid and unenforceable," Love said, explaining her order.

"The court further finds the duty of the city tax collectors is to collect the tax levied by the RTA, not to interpret the law which imposes that duty," Love said. Love will next hold a trial to decide whether the one-cent tax as applied to hotels and motels passes legal muster.

Meanwhile, a spokeswoman for Morial said the city's Finance Department will notify hotels in writing to begin collecting the 1 percent tax on Aug. 15.

But representatives of the city's hospitality industry said they hope to delay any effort to collect the tax until they can argue their case to a higher court.

"We're disappointed in the judge's ruling and we do intend to appeal" all the way to the state Supreme Court if necessary, said Bill Langkopp, executive vice president of the Greater New Orleans Hotel-Motel Association.

However, Love said in her ruling that only individual hotels have legal standing to enter the case.

The hotel association, along with the New Orleans Metropolitan Convention and Visitors Bureau and the Louisiana Restaurant Association, have all tried to intervene in the case.

Phil Franco, president of the visitors bureau, said his group will challenge Love's decision to exclude the groups as well as her order that the tax can be collected immediately.

"Our opinion is this would have a tremendous adverse affect on the hospitality industry, and that's why we're involved," Franco said.

Representatives of the hotel industry also challenged the RTA's argument that an additional penny in sales tax would not place New Orleans at a competitive disadvantage. RTA officials have said that increasing the room tax from its current 11 percent rate to 12 percent leaves the city with a lower room tax than those assessed in other tourist destinations such as San Francisco, Chicago and Houston, whose rates range from 14 to 17 percent.

But hotel officials said the RTA has not taken into consideration a special surcharge on rooms that can add up to 3 percent to the cost of a room. The extra charge, which is dedicated to tourism marketing and to pay for the expansion of the Ernest N. Morial Convention Center, varies according to a hotel's size.

The daily surcharge is $3 for hotels with 1,000 or more rooms; $2 for hotels with 400 to 999 rooms; and $1 for hotels with at least 399 rooms.

When the surcharge is factored in, Langkopp said, the room tax on the city's largest hotels already is at 14 percent.

Addressing the hotel industry's objections, RTA officials said its planned transit improvements, particularly the return of streetcars to Canal Street, will provide an added attraction that will be a boon to the tourism industry.

RTA Chairman Bob Tucker said no one has yet put a figure on what financial loss, if any, the city's hotels and motels would suffer as a result of imposing the RTA tax.