The state moved Monday evening to take over two more fiscally strapped municipalities, bringing to seven – the most ever – the number of towns to have their locally elected officials replaced by a state administrator.
“I don’t think we’ve had seven total, let alone at any one time,” said Legislative Auditor Daryl Purpera, who chairs the three-member Fiscal Review Committee that decides when to install a fiscal administrator with the power to unilaterally raise fees, cut services, lay off employees and take other actions to keep communities from going broke. All three panel members must agree to ask the courts to appoint a fiscal administrator.
Local officials are reluctant to be pushed aside, but administrators have the ability to quickly make the hard choices that often are not politically feasible for elected mayors and aldermen, Purpera said. The community's elected officials become advisers to the state's administrator until the crisis has passed.
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After the meeting, Purpera, some aides and committee members started counting towns that had received fiscal administrators since the 1980s and could only come up with four names.
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The Fiscal Review Committee Monday added the city of Bogalusa and the town of Sterlington to the list of communities for which the state has asked the courts to appoint administrators with omnipotent powers. And after considering the problems in the town of Clinton, the panel gave local officials 30 days to make some changes in order to stave off a fiscal administrator in its future.
The towns of Jeanerette and St. Joseph have administrators as does a Madison Parish hospital district. In January, the committee voted to send administrators to the north Louisiana communities of Clayton and Clarence. The panel's actions Monday brings to seven the number of municipal governments brought under the authority of a state fiscal administrator.
“It’s a sign of the times,” Purpera said.
Another seven or eight communities are on the brink of getting administrators, he said. Many Louisiana communities have been getting smaller as residents move to urban centers, like Baton Rouge and New Orleans, leaving the remaining residents with large bills and not enough revenues.
That’s certainly the case for Bogalusa, which is near Slidell and whose population has dropped by half since 1970 to about 12,300 today.
“Everybody says ‘Bogalusa used to’,” said Mayor Wendy Perrette in describing problems with “right-sizing” government. Bogalusa still has as many streets to maintain as Metairie, 29 police officers and 31 firefighters. She is laying off about a tenth of the workforce, not fully funding services and redirecting tax proceeds.
But that’s not enough. The city has funded only 17 percent of its pension obligations. As point of comparison, LASERS, which handles retirements for state employees, is funded at about 70 percent, according Bradley Cryer, the assistant auditor in charge of overseeing the finances of local governments. Actuaries predict that the fund from which Bogalusa pays its pensions could empty out as early as 2021. Because the city is legally required to pay retirements, Bogalusa then would have to pay the monthly benefits for retired city employees, presently 85 people, directly from the city's general fund. The general fund is supposed to pay for everyday services, like law enforcement, and already is running a deficit.
“This retirement system is a ticking time bomb,” said Assistant State Treasurer Ron Henson, another member of the committee.
Clinton, which has 1,653 residents and is near Baton Rouge, came under scrutiny because of problems with the town’s drinking water and because Mayor Lori Ann Bell was arrested in January on accusations of malfeasance in office for failing to respond to warnings about the water deficiencies.
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Bell's attorney, Niles Haymer, called the arrest misdirected and refused to allow Bell to answer questions from the committee. But she read a statement pointing out that town officials already had addressed many of the concerns raised by the state and the town council was meeting Tuesday to go after other problems.
Clinton’s finances are not that bad, Cryer said. His chief concern is the possibility that the repairs to drinking water pipes, pumps and wells could run into the millions and town doesn’t have any money set aside for those costs, the extent of which won’t be known for a few more weeks. Town officials have been shifting revenues from its utility sales, that should have been used for maintenance, to pay for everyday expenses.
The Louisiana Department of Health ordered Clinton to immediately take care of seven deficiencies by Saturday. Dr. Jimmy Guidry, the state’s health officer, said Clinton’s officials had taken care of all seven, which included hiring an operator for the water system, and is well on its way to completing eight other action items with longer deadlines.
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The town, which is charging a very low rate of $13 per month for water, has brought in experts to study how much the system should charge in order to pay for the water as well as for maintenance and equipment replacements. Low interest federal and state loans are available to communities with rate structures that raise enough money to repay any borrowing, he added. “I’m feeling comfortable that we’re getting the movement we want to see,” Guidry said.
“We would encourage you to make these changes now rather than later,” Purpera told the town's officials, adding that the Fiscal Review Committee would revisit Clinton’s situation next month.
Sterlington, near Monroe, got into trouble by taking out $20 million in loans for a sports complex built as an economic development project. The hope was that the baseball and softball fields would attract amateur tournaments whose spending would swell local sales tax collections. The returns on investment promised by promoters hasn’t materialized and the town has fallen behind on its repayments.
That means Sterlington’s 1,700 residents are on the hook for $20 million – most communities of a similar have a debt of less than $2 million.
“Everything has to go just right to get to the point that you may be able to break even,” said Assistant Attorney General Bill Stiles, a member of the committee. “That’s very disturbing.”