Lafayette City-Parish President Joey Durel’s administration has proposed what is labeled as a “balanced” budget for the 2011-2012 budget year, which begins Nov. 1.
In the strict accounting sense of that term, the budget is balanced — city-parish government would not go into debt — but in reality there is an imbalance between how much city-parish government plans to spend and how much revenue it projects in sales tax, property tax and fees.
City-parish government proposes to spend more than it expects to take in, so the proposed budget, like last year’s budget, is heavily tapping savings built up in prior years to fill the gap.
The savings, called the fund balance, had been banked away in flush years when city-parish government was bringing in more money than it spent.
It’s been awhile since a flush year.
The fund balance for the city’s general fund, the lion’s share of the operating budget, has steadily dropped over the past two years as city-parish government uses the money to offset flat growth in tax revenue and rising costs in such expenses as fuel and employee healthcare and retirement.
The fund balance for the 2009-2010 year was $18.8 million. That balance is estimated to be down to $11.7 million by the end of this year and down to $7.7 million by the end of the 2011-2012 budget year.
That’s just $700,000 above the so-called “emergency reserve” of $7 million — money that is not to be spent except in dire circumstances because after it’s gone, there is nothing left.
The reality that this cannot be sustained is not lost on the Durel administration.
“There has been a history in this government of dipping into our reserves to balance the budget for an ‘easy fix’ when it has made sense to do so,” Durel wrote in a message to council members when introducing the proposed budget for 2011-12. “The last two years, we have done so out of necessity, but it cannot continue.”
Durel has taken measures to pull back expenses.
The proposed $134 million operating budget for 2011-12 includes no money for an across-the-board pay raise for city-parish employees, who have enjoyed at least a small annual boost in pay every year for the past decade.
Durel has also placed a freeze on hiring, requiring that the administration review each vacant position before it is filled.
Durel had proposed nixing employee raises in the current year’s budget, but the City-Parish Council voted late last year to give a 2 percent raise for city-parish government’s roughly 2,300 employees — a $2 million annual expense in a budget that was already borrowing from the savings account to meet the bottom line.
The hopeful bet when looking to the future is that tax revenue will begin rising again.
City-Parish Chief Financial Officer Lorrie Toups told the council during a budget hearing last month that sales tax collections are expected to rise next year but the rise will likely be offset by growing expenses and by a decline in investment income and in property taxes.
Durel has said he hopes to stop the practice of using prior year’s savings to balance the budget by 2014 and work to shore up the emergency reserve to provide a financial cushion for future years, building the reserve up to $7.5 million by the end of 2014 and up to $8 million by the end of 2015.
If tax revenue rebounds and expenses remain stable, those goals should not be difficult to reach.
If tax revenue stalls or begins dipping again, city-parish officials will have some tough choices to make.
Richard Burgess covers the Lafayette City-Parish government for The Advocate. He can be reached at firstname.lastname@example.org.