The 2015 operating budget that Mayor Mitch Landrieu presents to the City Council on Wednesday will in some ways be no more than a first draft.
That’s because the mayor won’t know until early next year whether voters will approve a property tax hike for additional police and fire coverage. Also, Landrieu’s administration is still in the middle of courtroom negotiations over how much he will have to pay the city’s firefighters for their pension fund, the clerk of Criminal District Court for his staff and Sheriff Marlin Gusman for reforms at Orleans Parish Prison.
So while there is always an element of guesswork in a budget proposal, this year’s spending plan will come with an unusually large grain of salt.
The good news is that revenue is growing. City Hall expects to bring in nearly $537 million for the general fund next year, up from an estimated $520 million in 2014. Property values have climbed and new retail outlets — Wal-Mart, Whole Foods, Costco, the reopened Riverwalk — are boosting sales tax collections beyond official expectations.
“That is just a huge, huge boon to our city’s finances,” said Andy Kopplin, the mayor’s chief administrative officer, during a meeting of the city’s Revenue Estimating Conference last month.
At the same time, the city’s obligations continue to grow as well. And they remain unpredictable.
After fighting for more than two years, Landrieu has exhausted his appeals in a lawsuit brought by firefighters who argue the mayor has been shortchanging their pension fund. The fund’s trustees have agreed to tweak their accounting methods in a way that will reduce what the city owes. But the two sides are still far apart on what the real figure is — either about $24 million or $56 million. They are due back in court next week to continue hashing it out.
Landrieu also will have to budget extra money for Orleans Parish Prison. A federal judge in charge of a consent decree over the jail recently approved Sheriff Marlin Gusman’s plans for holding inmates with mental health needs at a state prison in St. Gabriel. The plan will cost the city $200,000 a month, or about $2.4 million for the year.
And that arrangement is for just a few dozen prisoners. The consent decree mandates much broader changes, which could be costly as well.
Finally, Arthur Morrell, the clerk at Criminal District Court, has managed to use the courts to shake a few more dollars loose from the city as well. Or at least he is still trying. Morrell says Landrieu’s administration owes him nearly $3 million, citing a state law that requires funding for his staff. A Civil District Court judge will be deciding on that soon.
So far, the mayor hasn’t signaled how he plans on dealing with these potential costs in his spending plan for 2015.
Last year, he simply left out any extra funding for the jail or firefighters, a gamble that has yet to catch up with him. Court proceedings in both cases have dragged on inconclusively. And the relatively small sums he has had to hand over this year haven’t caused too much pain; a better-than-expected tax haul and a shrinking payroll at the Police Department have provided some cushion.
At the beginning of 2014, Landrieu’s administration was banking on revenue of about $505 million this year. By last month, it was looking as though City Hall would collect more than $520 million instead.
A surplus at the Police Department, where officials have been struggling to recruit officers as quickly as they leave, gave the city a few million extra dollars to put toward the firefighters pension fund.
The big wild card heading into next year is whether voters will approve a tax hike. The Legislature gave its blessing for a vote on an increase in the property taxes that help pay for police and fire protection, but the measure has to survive a statewide referendum on Nov. 4 and a citywide vote in 2015.
If approved, the increase could bring in nearly $32 million a year, though it remains unclear how much freedom Landrieu would have in spending it.
The constitutional amendment enabling the increase stipulates that it can be used “solely for fire and police protection services that directly contribute to the safety of the residents of Orleans Parish.” Whether that would include pension costs for retired firefighters remains a question.
Landrieu’s budget plan probably won’t factor in the extra cash in any case.
Perhaps complicating its chances at the polls, the same ballot will include a somewhat controversial request from the Orleans Parish School Board, which wants to repurpose an existing property tax to pay for long-term upkeep of the city’s school buildings. That measure would not actually increase taxes, but it would prolong an existing tax.
After the City Council receives Landrieu’s budget on Wednesday, it will debate the plan at a series of hearings, which are scheduled to begin Oct. 27 and run through Nov. 20. The council has typically approved the mayor’s annual budgets with only minor alterations.