The parish council is about to make a big mistake. The mistake isn’t calling for a vote to rededicate CREATE’s millage. That part has been a fait accompli ever since Mayor-President Josh Guillory took office; he campaigned on moving that money.
The mistake is rededicating that money to other restricted funds.
As written, the resolution will set an election on this fall’s presidential ballot to move CREATE’s $500,000 property tax to rural fire protection and parish roads and bridges. It’s not that those aren’t worthwhile uses; they absolutely are. But the already-broke parish budget is about to face massive cuts because coronavirus has wiped out so much revenue. If the council wants to move the money, it should go to the parish general fund to allow flexibility that could help the parish budget stay solvent.
Just yesterday, Guillory revealed that city sales tax revenue is now projected to drop 35%, falling $10 million short of where it’s budgeted because of the pandemic-induced economic recession. If that proves true, the parish general fund’s $4.4 million in sales tax revenue will likely drop a corresponding amount and fall $1.5 million short of what’s in the budget.
The parish general fund is currently projected to end this year with a fund balance of $100,000. Losses that big could require cuts of an additional $1.4 million from this year’s $12 million budget. And that’s after years of budget cuts and a growing list of unfunded mandates.
The parish’s general fund has already been at a breaking point, and the coronavirus is threatening to bust right through it. The threat is great enough that the administration wants permission to sell $5 million worth of bonds — take out a loan, essentially — in case parish government needs the cash to fund basic operations.
And making matters even worse is no one has any idea where we’ll be next year when CREATE’s funding becomes available for the parish council to spend, assuming the public votes to approve this rededication in November. Maybe we get lucky and it’s not that bad. Or maybe we’re in the midst of the greatest economic downturn since the Great Depression and parish government is having to take on debt just to pay its bills.
It’s that uncertainty that makes locking up any money in one fund or another a bad idea. What we need right now is for the parish council to have as much flexibility as possible.
That’s why if we’re going to rededicate CREATE’s millage we should do so to the parish general fund.
The $500,000 per year that’s at stake could make a big difference in helping maintain the parish general fund’s solvency. And if the money is in the general fund in the event the economic malaise doesn’t turn out to be that bad, there’s no reason the parish council couldn’t go ahead and spend it on rural fire protection and roads and bridges anyway.
But if we lock that $500,000 up into dedicated funds, the parish council won’t be able to use it to offset new debt taken to pay bills if revenues fall too short. The council also won’t be able to use it for drainage if another flood hits.
And even though rural fire protection, roads and bridges are all well-deserving of additional funding, this $500,000 in funding isn’t enough to make that much of a difference for either. Rural fire protection needs $3.5 million per year, according to the tax that was proposed in 2018 that failed, yet its share of CREATE’s millage would only produce $350,000 per year. And roads and bridges in unincorporated Lafayette have a backlog of $50 million worth of work, yet its share of CREATE’s millage would only produce $150,000 per year.
Rededicating CREATE’s millage to the general fund offers much more bang for the taxpayer’s buck. Because now is the time to be battening down the hatches and preparing for the financial storm that’s only just getting started.