Confused by the two sales tax propositions on the runoff ballot? You’re not alone. As far as legalese goes, the ballot language on these “rededications” is about as bad as it gets. Fear not. The crux of it is pretty simple.
Here’s the legalese with the key phrases highlighted:
Shall the City of Lafayette, State of Louisiana (the “City”), having been previously authorized at elections held on May 13, 1961, November 20, 1965, March 22, 1977, and July 21, 2001, to levy a one percent (1%) sales and use tax (the “Tax”) (an estimated $42,600,000 reasonably expected at this time to be collected from the levy of the Tax for an entire year), after providing for the principal, interest and other requirements in connection with the issuance and payment of all bonds heretofore or hereafter sold and issued by the City secured by and payable from the avails or proceeds of the Tax, then be authorized to appropriate, dedicate and use the remaining revenues derived from the Tax for the capital improvement purposes and to supplement the general fund revenues of the City as set forth in the prior propositions approving the levy of the Tax; provided, however, no more than forty-five percent (45%) of the annual revenues of the Tax may be used for such general fund purposes?
So, uh, what does that say? That’s the language of the two propositions you’ll vote on, but they’re really one proposal.
In plain English it says this: The city of Lafayette collects a 1 cent sales tax. Should it be allowed to spend a larger share of that money (45%) on regular government functions as opposed to projects like roads and bridges?
Let me explain. Right now, LCG can move up to 35% of what it collects on these two, 1 cent sales taxes into the city general fund. The general fund is essentially the city’s checking account. General fund money is discretionary. It can be spent on any legal government service. The rest of the money, by law, goes to capital improvement purposes or projects like new roads, new bridges and drainage infrastructure.
The proposition raises the cap to 45%. So if this passes, LCG would be able to spend more on discretionary expenses and less on capital improvements, if it wants to.
Let’s plug some real numbers in here. Again, there are two taxes in play, and you’re voting on them separately. And here’s what they take in each year (roughly). We’ll use the 2019 budget, which is the more typical year.
1 cent sales tax passed in 1961: Collects $43 million+
1 cent sales tax passed in 1985: Collects $36 million+
Total collected: ~$80 million
- Under current rules, LCG could spend up to $28 million on general fund expenses. The rest pays for debt and capital projects. LCG makes debt payments first.
- Under the new rules: LCG could spend up to $36 million on general fund expenses.
Another way of thinking about it: If these measures pass, LCG could spend $8 million more each year on the stuff it pays for out of the general fund like salaries for police and other LCG employees or operating recreation centers.
Why are the taxes the same but the collections different? Because the tax passed in 1961 is charged on everything. The tax passed in 1985 excludes groceries and medicine.
A key point here: This is a cap, not a requirement. LCG doesn’t have to spend 45% on general fund expenses, but the proposition says that it can. In practice, LCG typically moves the cap into the general fund, however. Confusingly, from there it can — and often is! — be spent on capital improvements. The point is the money is in the general fund and thus not set aside for any specific purpose.
OK, so is this good idea or a bad idea? That really depends on your perspective.
Both taxes were passed and dedicated to pay for new projects like roads, bridges, drainage, etc. — collectively called in the ballot language capital improvement purposes. In fact, the 1985 tax was part of a blitz of capital projects designed to stimulate Lafayette’s broken economy during the oil bust. Neither tax has a sunset.
For some people, dedicated money is the only way to keep government honest. If voters wanted the money to go to something other than new roads and bridges, they would have said so in the first place. So diverting — “rededicating” — that money to some other, undefined purpose is a recipe for waste.
On the other hand, this gives LCG a lot more flexibility in dealing with its budget. Sales taxes vary considerably year to year. And that volatility can make budgeting difficult. Allowing LCG to spend more of this money on its regular business gives it cushion for, say, when a pandemic wrecks the global economy.
Let’s recap. These two propositions are really one idea. They raise the amount of money LCG can put in its general fund from 35% to 45%.
Vote Yes: You think it’s smart budgeting to have more spending flexibility on government services.
Vote No: You think that money needs to be used on building new infrastructure as originally intended.