Mayor-President Josh Guillory has asked the City Council to approve the largest five-year capital improvement program in the city’s history as a part of next year’s budget. A total of $406 million, which is $142 million higher than any other year and an increase of $249 million over what’s in this year’s budget.
Guillory funds this spending spree largely with debt and hope. Debt in the form of $180 million in new bond sales, another all-time high by $32 million and an increase from this year’s budget of $132 million. And hope in the form of his belief that the city will realize huge growth in its sales tax revenue.
In this year’s budget, the total five-year projected sales tax revenue for capital projects is $83 million. Next year, Guillory projects an increase to $210 million. The previous highest five-year projected total was $131 million back in 2015, which was the last budget before the boom times ended for Lafayette’s local oil and gas industry.
I’ve already written about Guillory’s wildly optimistic revenue growth projections here. Now it’s time we turn our attention to Guillory’s debt-fueled capital spending bonanza.
Not surprisingly, when a politician wants to spend more than $400 million of taxpayer cash and debt, there are plenty of shiny objects to look at, a smorgasbord of pork strewn across the city. Tens of millions for drainage, millions for sidewalks, a pedestrian river crossing, two new Downtown parking garages, huge expansions to Brown and Moore Park, new walking/biking trails, and streets being widened, extended and improved. What’s not to love about all these projects? A lot.
It’s not that these projects are unworthy of funding. It’s that they’re not at a stage where anyone should be seriously considering pouring money into them yet. If I were on the City Council, before approving funding for any major capital project — especially any funded with debt — I’d demand to see a proposal that meets at least some minimum standards, like having an actual plan with at least an estimated budget that’s garnered public input (even if limited) and has a strategy for addressing any long-term maintenance costs.
But every one of those projects fails to meet that minimum standard. And most worrisome is that some of these projects create unfunded maintenance liabilities that will hamper the city’s long-term financial health even more than the debt alone will.
A perfect example of that is Guillory’s desire to borrow $25 million for Brown Park and Moore Park. No actual plans have been shared yet that detail how this money will be spent. And there doesn’t appear to have been any serious effort to garner input from the public. So that’s already two strikes.
But the biggest strike is the unfunded maintenance liabilities that these projects will create. There’s been talk that Guillory’s plan for Brown Park is to turn it into a rival to the Youngsville Sports Complex. But according to the city of Youngsville’s budget, that complex costs more than $3 million to operate but only generates $1 million in revenue. That means it requires a $2 million per year subsidy. Yet at the same time Guillory’s championing spending tens of millions on these parks, he’s also advocating that the city further cut how much it subsidizes city parks.
This math simply doesn’t add up. Guillory likes to talk about prioritizing one-time capital projects over spending more money on overhead. But he seems to be ignoring the fact that every large capital project has maintenance costs that need to be accounted for, which ultimately will increase overhead expenses unless further cuts are made elsewhere in the city’s budget.
His plan to take on tens of millions more debt to build two new Downtown parking garages suffers from the same shortcoming. The reason the Buchanan garage fell into such disrepair that it had to be condemned and the Vermilion garage is looking a little rough around the edges is these garages don’t generate enough revenue to cover the cost of operating and maintaining them. That’s in large part because parking’s too cheap Downtown.
If the City Council plows forward with building two new garages, this dynamic is only going to get worse. Because now the city will have two more garages that don’t generate enough revenue to properly maintain them. Which either means they’ll require an ongoing subsidy or they’ll fall into disrepair, just like the two existing garages have done to varying degrees. While I know there’s long been discussions about the need for more parking garages Downtown to help spur further development, our city simply can’t afford to build new garages without a clear sense for how we’re going to pay to properly maintain them, especially not with debt.
Another example of Guillory’s capital spending hurting the city’s long-term financial health is his desire to spend tens of millions of debt on new road projects. Sound planning advocacy StrongTowns came to Lafayette a few years ago and clearly laid out that most new road projects are net liabilities long term for local governments. That’s because even if these new road projects spur new development, that new development almost never generates enough new tax revenue to cover the costs of properly maintaining the new roads.
So when Guillory wants the city to spend $14.5 million widening Willow Street, or $4 million widening Duhon Road, or $4 million extending Bluebird Drive, or $4 million extending Lake Farm Road, not only is he saddling the city with tens of millions of debt, but he’s also increasing the city’s overall infrastructure deficit, which means there will be less money available to fix our existing roads.
All told, just between these roads, these garages and these parks, that’s more than $80 million of debt for projects that will add millions in unfunded maintenance liabilities to the city’s annual overhead. And Guillory has presented no plan for how to address these increased ongoing expenses.
He’s also trying to get the City Council to approve another $35.8 million for drainage projects while LCG has still not begun its comprehensive plan. Only just recently was a firm tapped to begin the process of developing one. As a reminder, he’s gotten the City Council to approve $30 million for drainage over the last few months.
If I were the City Council, I’d want to see that Guillory and his team are capable of deploying that much money on effective drainage projects first before approving more. And I would refuse to continue trusting this administration with blank checks for drainage until it produces a comprehensive drainage plan. Because spending tens of millions of taxpayer dollars on drainage projects without a plan is a great way to light money on fire without necessarily doing anything to help lower the risk of flooding.
Put simply: Guillory’s unprecedented increase in capital spending is half-baked. The plans are lacking, the public input is sparse at best, and these projects are riddled with unfunded maintenance liabilities that Guillory has not acknowledged or addressed in any way.
The City Council should demand more from this administration before considering funding any of these projects. To be clear, I’m actually not against the city increasing its capital spending. I’ve long wondered why we don’t take advantage of our financial capacity to clear out our infrastructure deficit and pursue some transformative projects. But if the City Council members approve these projects as is with their clear deficiencies, they are abdicating their responsibilities to protect the financial interests of our city government.
And the thing is, they don’t have to actually approve any of them. In fact, they could — and arguably should — amend this proposed budget to zero out funding for some or all of Guillory’s debt-funded capital projects. Not to kill them, necessarily. But to demand more from the administration before letting him max out the city’s credit card.
One Comment
It's quite possible that the City of Lafayette is already on the path to future bankruptcy because of future maintenance costs of already completed capital projects. Failure to consider future maintenance costs was a significant reason for financial collapse of Detroit. Let's learn from their history.