Caddo Parish avoids blunder on debt unlike Bossier City

Recently, the Caddo Parish Commission voted to send, and then not to send, to voters on May 1 a $25 million bond issue devoted to road, park, and building maintenance. In essence, it would have renewed a pair of 1991 issues that are serviced through 1.95 mills dedicated to the Debt Service Fund. Passage of this effectively would have more than doubled the amount of debt of the parish and, in terms of proportion of debt service to all general expenditures would be at an all-time high. To sweeten the deal, the Commission also voted to reduce gradually the rate over 20 years millages dedicated to funds to pay for health care, detention facilities, and public works from 10.4 to 8.45 mills.

If all these needs are genuine, there might not have been any controversy – except that the parish is sitting on over $30 million in its Oil and Gas Fund which holds the proceeds from royalties derived from this kind of activities on parish lands, or about half of the annual intake of the parish excluding royalties and intergovernmental revenues. Every indication is that, thanks to the discovery and exploitation of the Haynesville Shale, several million dollars a year will flow into this fund, meaning if the $25 million was extracted for capital needs immediately (which is unlikely) it would not be emptied and would be replenished in only a few years.

Yet commissioners voted for the issuance anyway, with Lindora Baker saying savings should be maintained as the reason why. This is despite the fact that the interest expense from the debt almost certainly will be higher than any interest earnings from the full fund. Only Commissioners John Escude and Matthew Linn who originally voted against this seemed to understand initially it made more sense that, in essence, servicing debt no longer is necessary because capital projects no longer will require debt for the foreseeable future. The entire Commission agreed eventually and pulled the item.

Proponents may argue to vote down the measure means an immediate loss of around $2.7 million a year (as of 2008) and a gradual loss of the same again in constant dollars. However, if they are so concerned about revenues, why borrow so much with a gradual tax cut? Hopefully, Caddo voters will figure out they don’t need this extra expense and won’t be fooled into thinking a renewal is inextricably linked with a tax cut – the parish can afford things both without the former and with the latter so they must defeat it at the polls.

Across the river, the $30 million figure has held prominence now for nearly 15 years. Among Bossier City politicians, it is a figure cited in sacred tones as it was the magic number proclaimed when riverboats pulled into town as to how much revenues from them had to be held in reserve (in the Riverboat Gaming Special Revenue Fund) before amounts past that could be spent. It was invoked by several elected officials when discussing the budget meltdown of last year caused by the city’s profligacy concerning money-losing, unneeded capital expenditures.

Thus, dipping into this to resolve the $6.5 million, 13 percent shortfall never was discussed, nor the tactic of paying of debt early with it to release debt service money the need for which will cripple the city for years to come. Yet this was despite the fact that there is no provision by ordinance nor in the charter that mandates such a lockbox.

Where it comes from is a mystery. The 2008 Comprehensive Annual Financial Report states that funds collected prior to 1999 were required to follow this by city ordinance – which not longer appears on the books (through the Municode update of Jun. 2, 2009). It reported nearly $32 million in the account.

Seeking the legal basis for it, over the span of a month beginning at the end of last year I made repeated inquiries of both City Attorney Jimmy Hall and members of his staff for an explanation. Perhaps befitting a government whose willingness to provide information makes North Korea look transparent, I never received any reply. (One request to the Council was acknowledged, recommending that I ask Hall.) Apparently not only is the Bossier City taxpayer overburdened, he can’t even get his employees to give him a straight answer about their tax dollars.

With even more long-term financial problems coming down the road, Bossier City must look to emptying this account to reduce debt and certainly before it acquires more debt. It will be the final chapter to the squandering of riverboat bounty engineered by the ego-driven coup counters that have filled the city’s elective positions since the opportunity arose, matching the bankruptcy of public trust already frittered away, but it regrettably is the best course of action to save the city from themselves. Caddo Parish wisely avoided the same ruinous road.