St. George, expansion studies come up short

Just as they did with a study of the financial impact of Medicaid expansion in Louisiana, a pair of researchers threw another gutterball when reviewing projected finances of the planned City of St. George.

Earlier this year, Louisiana State University faculty members James Richardson and Jared Llorens, with another academician, produced a study at the behest of the Gov. John Bel Edwards Administration purporting to show a net economic benefit to expansion. But the analysis completely ignored the cost side and made errors in the revenue picture, both in terms of the data used and not accurately accounting for federal policies.

This produced a misleading picture and, even using its own flawed methodology, would predict in a few years that expansion would serve as a drain on state finances. Of course, rather than sloppiness or bias it’s entirely possible that whatever contract the authors signed with the Edwards Administration limited them in a way, such as in not including costs, that preordained the results casting its policy in a favorable light.

Perhaps the same thing occurred when Richardson and Llorens accepted money from special interests representing those opposed to the creation of St. George to study its finances. Backers of the new city encompassing essentially all of unincorporated southern East Baton Rouge Parish earlier had released a study by an accounting firm showing a nearly $25 million annual surplus, based upon revenues of $58 million.

Naturally, since Baton Rouge would lose power, privilege, and tax revenues as the biggest dog by far under the consolidated city-parish arrangement that also partially includes the existing other municipalities of Baker, Central, and Zachary, Mayor-President Sharon Weston Broome came out against forming St. George and disputed its revenue numbers. The study came up with a figure close to Broome’s, about $45 million. They differed from the St. George study, which just took a proportion of total parish-generated tax dollars by population, by computing the exact payers in the projected St. George boundaries.

Unfortunately, the academicians study failed to do such targeting on the cost side. The accountancy firm used the proportion, by population, of current costs to other parish agencies that a city legally must fund to figure out St. George’s projected costs, or 19.2 percent, to capture what it would pay to have the same services performed on its own dime. But the academicians used 22.2 percent to estimate that, only counting the unincorporated area plus Baton Rouge and excluding the other three cities.

That approach, which inflated the number by $1 million, makes little sense. If the other three already pay their own tabs for courts, prosecutors, jails, autopsies and the like, why would St. George have to double them up?

The academicians also made another questionable assumption on costs. For provision of other services, which would comprise over 80 percent of the total, they said they looked at similarly-sized cities. The St. George consultants also did that, computing expenditures that came in at just under $400 per capita annually, noting the mean of the comparison sample was about $461. Yet the academicians came up with an estimate of nearly $600, as they chose unshared costs 57 percent higher. That led to their saying the anticipated St. George budget would be out of whack by almost $5 million annually, requiring higher taxes to bridge.

By way of comparison, nearby Central – about a third of St. George’s projected population and using an administrative model the planned city looks likely to emulate – has a cost a shade under $500. Those numbers seem much more convincing; even at $500, St. George still would have the lower revenue figure exceed spending by more than $2 million. Central’s performance would suggest that, as it racked up a $6 million surplus in 2017.

Some separate items in specific cost computations also seem unlikely. The academicians claim the incipient city would owe $8.9 million in legacy pension funds to the city-parish. But a 2014 report on that issue indicated a figure less than half of that.

These studies illustrate the tightrope researchers must traverse: trying to conduct dispassionately reasoned and balanced studies that validly and reliably capture the real world while encountering the real-world problem that he who pays the fiddler calls the tune. Some – notoriously, many dealing with climate change – have allowed funding sources to corrupt their science. To provide the best information available for optimal policy-making, analysts must avoid that.