There are some good ideas in this year’s proposed budget. The mayor-president wants to create an Office of Communities to support local coteries and neighborhood efforts. He plans to help finance a program to bring fresh produce to food deserts. And he’s got good ideas for Downtown. (I’m always behind investments that make Downtown better.)
But this budget also proposes some of the most fiscally irresponsible spending I’ve seen in my five years following LCG — the kind of decisions that waste opportunities and have the potential to hurt LCG’s finances for years to come.
The councils can fix those problems with amendments. Here are the five issues they need to address.
Deficit Spending
For years the parish has been financially constrained by not having a general fund balance. Now, thanks to booming retail sales and coronavirus relief, it’s projected to have $4.3 million at the end of this fiscal year in October.
LCG fiscal policy targets a fund balance equivalent to at least 20% of expenses. That ensures funding is available to respond to emergencies. To hit that mark, the parish should run a fund balance of at least $3 million. Instead, this new budget targets a $1 million balance for fiscal year 2023.
Instead of using this as a chance to build reserves after years without them, M-P Josh Guillory wants to fritter away most of that cushion — on $2.2 million worth of roundabouts: three on Broussard Road and one on Chemin Metairie Road.
Roundabouts might be good ideas, but they’re not worth the financial risk, especially with LCG staring down some expensive lawsuits right now. It’ll want that money back if the chickens come home to roost on Homewood Drive. Even if LCG wins its land-grab case there, the parish could still owe millions. More on this in my last column.
Parish government should be fiscally conservative right now. And it can easily do so by just punting those roundabouts down the road.
Unfair Allocations
The administration claims no city money is spent propping up parish government. But this budget puts city taxpayers on the hook for at least $3 million worth of parish expenses.
Parish government should be forking over $500,000 for IT equipment — its 16% share of the $3.1 million in purchases planned for this year, according to the allocation tables used in the budget to divvy up costs of consolidated services. Instead, city dollars alone are paying for equipment both sides of government will use.
Parish government should be on the hook for $200,000 to replace City-Parish Hall’s roof — its 20% share of the $1.1 million cost. Instead, city taxpayers are shouldering 100% of the cost of putting a roof over parish government’s head.
Parish government should be responsible for all roads in unincorporated areas. But Guillory wants to spend $2.3 million of city money widening Duhon Road, which is almost entirely outside of city limits, without any contribution from parish government.
And parish government should pay for its fair share of the six-figure cost of the mayor-president’s security detail, too (none of his predecessors have used the security detail anywhere near this extent).
Throwing away millions of dollars of city funding is something no mayor should do — especially when city taxpayers pay 80% of his salary.
ARPA Spending
Lafayette’s $86 million allocation from the American Rescue Plan Act is a once-in-a-lifetime opportunity to do something great and to help people in need. Instead, too much of this windfall is being blown on regular capital projects with no accounting for long-term maintenance costs.
Guillory wants the parish to spend $6 million extending roads despite not having enough funding to maintain the parish’s current backlog of road maintenance.
He also wants the city to spend $3 million digging three more holes in the ground without a comprehensive drainage plan, and another $3 million on a random assortment of capital spending like new mowers for golf courses.
The councils should dig deeper to find better, more impactful and more significant uses for that money.
$100 Million Parks
Guillory thinks the city should take on $25 million in debt to turn Brown Park and Moore Park into megaparks akin to the Broussard and Youngsville sports complexes. The long-term cost on these projects, though, is massive.
The Youngsville park costs $1 million in tax subsidies to operate. Throw in interest, and you could be looking at $100 million over the next 30 years.
But there has been no evidence of a proper market analysis to prove what the demand is for these parks to attract tournaments given every town in the region seems to have one. No business plan has been presented to show how much these parks will cost to operate.
City Council members should remove that funding until the administration shows them a detailed plan that accounts for their long-term costs, benefits and what value they will bring to the surrounding neighborhoods.
Bankrupting LUS Fiber
This budget puts LUS Fiber in a heap of trouble. Fiber will pay ILOT — a cash payment into the city general fund that mimics taxes — for the first time ever. And just in time, too. Fiber’s ILOT papers over a $3 million deficit for city government.
That puts Fiber in a vulnerable financial position. It will end 2023 with $4.4 million in cash, which doesn’t appear to be enough money to cover its planned expansion into Ville Platte.
Fiber’s pro forma for the Ville Platte expansion projects $5 million in expenses in year one (this coming year). But those numbers aren’t accounted for in Fiber’s proposed budget, Fiber Director Ryan Meche acknowledged during budget hearings. Accounting for that obligation suggests Fiber would have a negative balance of $600,000 by the end of next year. And that’s before considering any of the matching funds required for the other grants Fiber’s applied for.
The administration is taking tremendous risks with LUS Fiber’s finances and to date has not provided any serious explanation about how these risks are in the best interests of the city. Instead these expansions have been framed as being good for the region. But Acadiana doesn’t own LUS Fiber. The city does. It’s the city that’s on the hook if LUS Fiber goes bankrupt.
The Councils can fix these issues
There are exactly 10 people who can fix these issues: the City and Parish Council members. They — not the mayor-president — hold the power of the purse.
Council members can propose budget amendments at the wrap-up meeting on Aug. 30. And if they move to rein in his spending, they’ll need to buck up for a veto showdown. Guillory, and mayor-presidents before him, have not been afraid to spend money by veto, a maneuver that’s likely illegal.
They must decide: Are they going to go along with some risky and irresponsible spending? Or are they going to do their jobs and protect the public’s interests?