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.