Despite Shreveport having a turkey delivered to it, election year politics threatens to compound its negative effects even more.
On the heels of budget negotiations that bandy about pay raises for city employees beyond the statutorily-required ones for police, Moody’s Ratings dropped all forms of Shreveport debt down a notch to barely investment grade. It stated essentially two reasons for doing so: the city’s dwindling fiscal position highlighted by its deteriorating fund balances that are indicative of deficit spending, and by its unwillingness to increase further water and sewerage rates to provide sufficient capital to fix the numerous and large deficiencies in its water, sewage, and drainage systems.
The rate issue is the time bomb that Republican Mayor Tom Arceneaux inherited when he took office. Although it barely was discussed during the 2022 campaign, whoever took office as a result would have to address Shreveport’s massive day of reckoning concerning an Environmental Protection Agency consent decree that has gone way over budget. Separately, S&P Global rated the newest issuance low investment grade level and kept the two other issues related to water and sewerage at the same level scarcely above junk status. Additionally, the firm turned negative on the city’s outlook, meaning it increasingly believed a downgrade of ratings was in the cards within the next couple of years.
This has put Arceneaux between a rock and hard place, because he can’t raise rates without the cooperation of a Democrat City Council supermajority that doesn’t want to do that. And, with the 2026 campaign underway, voters might not look kindly on another hike after an increase last year, already having voiced disapproval at a two percent increase of his that didn’t even go towards fulfilling the decree, which councilor criticism forced him to yank.
But making matters worse is Arceneaux has thrown his support behind pay raises for city employees. He proposed a three percent increase for all except those in public safety who would receive five percent as state law mandates at least a two percent increase. For some that is not enough as they would like to see the public safety cohort receive a ten percent hike.
Once again, election year politics may be raising its head, with Arceneaux wanting to give city employees a reason to vote for him. But clearly the city can’t afford that, costing some $4.4 million that the administration claims will come from royalties from oil and gas revenues, federal funds left over from the American Rescue Plan Act and shifting some city funds dedicated to other services, including public streets. In other words, using one-time money and beggaring some needed capital spending.
That is foolhardy, but worse is because the even more foolhardy alternative gets pitched, this makes Arceneaux look like he’s miserly as well. Even before pitching the pay increases, the budget contemplated reducing the general fund balance by $5.5 million, a deficit any recurring pay hike expense will increase even further in future years.
Politically, the pursuit of higher pay with no predictable and stable resources to back it could be an electoral winner, as only the most informed and prudent voters will gig him while city employees will be heartened, and it’s not like opponents announced and unannounced are likely to spend more prudently. Yet it serves as another example of the decades-old can-kicking habit by Shreveport politicians that is building a larger and larger fiscal mess from which not even a supposed fiscally conservative Republican is immune.
No comments:
Post a Comment