The fight around city/parish allocated costs is rearing its head as the budget process nears a close.
What is city/parish allocation: On joint budget items, like LCG’s IT department, costs are split according to a set of allocation formulas. For example, all IT expenses are split 84% city funds and 16% parish funds. That split changes from item to item.
Allocation is at the heart of debates about consolidation. At a budget wrap-up meeting last week, City Councilman Thomas Hooks raised an amendment to adjust IT allocated costs for software between the city and parish, to 78% city and 22% parish, a more favorable percentage split to the city.
Hooks wants to line up cost with usage. He says usage data from LCG’s finance department shows roughly a 78-22 split between city and parish use of the software in question. He wants to change allocation to reflect this.
“The percentages proposed by Councilman Hooks were based on the historical volume of financial transactions for the City and Parish funds that are run through Lawson, our current financial system,” says Karen Fontenot, LCG’s finance director.
Parish government would pay $185,000 more under Hooks’ proposed split.
The administration proposes allocations in each budget. The councils can adjust them, but only if both approve. This creates a roadblock for either side that tries to push allocation spending in its favor.
The M-P, in that sense, holds all the power, by initially drafting the budget. Neither council has an incentive to accept an allocation to its detriment. Case in point: Parish Councilman Ken Stansbury objected to Hooks’ amendment, and the proposal looks to be DOA.
This political battle is about a lot more than a 6% change in one-time software spending. In the current proposed FY 24/25 budget, the city is running a $5.3 million deficit, money that would pay for police salaries and more. (In this case, the squabble would be over capital dollars not available to the general fund.) But that raises the stakes of what city advocates argue is an unfair subsidy of parish government. The city plans to spend $25.5 million of general fund money toward different allocated services, while the parish is only on the hook for $5.6 million.
Direct fights over cost-sharing have been seldom since the councils were split in 2019. City Council members tried to hire their own legal counsel in 2020 to debate cost sharing and other consolidation issues. The Guillory administration blocked the move and sued the City Council’s would-be attorney. Allocation died as an issue from there.
Hooks likely won’t succeed. But that’s not the point. The only recourse is to not pass the budget. While an unappetizing prospect in such a tightly knit political community, it could be the City Council’s only way to swing attention to allocation before next year’s budget is passed.
What to watch for: Several LCG officials say a larger discussion around allocation will take place, after the budget process. The question that remains is whether an unadjusted allocation schedule for the FY 24/25 budget set an unchallengeable precedent on allocation for the rest of the four-year cycle.