You can tell it’s election season in Shreveport when pay raises for all coexists with a budget that looks as if it’s running on fumes.
Last week, the Republican Mayor Tom Arceneaux Administration presented a preliminary piece of the city’s 2027 budget. After having previously announced a round of pay hikes concentrating on public safety commencing before the next budget cycle, here comes another. Actually, two.
One will focus on issues of salary compression, which occurs when starting wages creep upwards without periodic adjustments to salary for existing employees, meaning relatively speaking green employees make more than seasoned. As well, Arceneaux’s last budget unwisely hiked city pay at the lowest levels to a minimum wage of $15 per hour, exacerbating the compression as well as inducing budgetary strain with millions of dollars in new recurring costs.
Parity increases will occur for a few hundred employees to sort that out (as well as streamlining the city’s compensation system because the lowest rungs became empty after the minimum wage hike). Some of that the 2026 budget accomplished, where the minimum wage jump cost $4.4 million. No cost figure was revealed for the latest round, which would see those wages increase in a range from 4 to 8 percent.
But wait, there’s more. The upcoming budget also bakes in a contemplated 3 percent increase for all city employees beginning in March. No cost estimate was provided for this spike upwards, either. And keep in mind a small number of workers, in sanitation, already got a raise this summer to create yet another new ongoing commitment.
No doubt the City Council, with a majority running for reelection along with Arceneaux in 38 days, will lap this up even as the unrestricted general fund reserve for 2025 dropped below the targeted 8 percent of general fund spending. Arceneaux has expressed confidence with new data center activity in and near the city that revenues will increase to support the first round of raises announced earlier this month.
However, its Annual Comprehensive Financial Report due to the Legislative Auditor – and late again for 2025 – confusingly tells another story. Its text would indicate the general fund came in $10 million under its revenue budget and $22 million over on spending, which would cut the reserve in half, and then says the first half of 2026 saw another $20 million gap, which if that were maintained would drain reserves entirely and send the city scrambling for other sources of money. And while the text – written by the auditors but approved by the city’s Finance Director Sheila Faour – doesn’t make such a drastic prediction, it does say “This shortfall means the continued use of operating reserves will again be necessary to sustain operations.”
Not so said Faour an interview nearly three months after the aged data cited in the report. She said, even though she vetted the reported numbers, that it was all a mistake, asserting the actual numbers were each about $18 million in higher revenues, after transfers, and lower expenses.
She also now claims, giving the timing of revenues and expenditures, that the former at $331 million will exceed the latter by about 2 percent. That difference plus slicing out $48.4 million to serve as reserves, of which those for the Water and Sewerage Rate Stabilization Fund will total $25 million, comes in at $282.6 million which at a projected unencumbered balance of $23.4 million is 8.28 percent.
Note the tapdancing going on here. The ever-increasing amount of dollars going into the stabilization fund intends to pay off future debt related to the black hole of the water and sewerage consent decree that is streaking towards $1 billion in costs and is necessary to remain legally compliant. The only difference is this spending will take place in future years, not the present. Including this amount as current spending would put the proportion at 7.6 percent.
More of concern, revenue coverage from last year would have to shoot up almost 10 percent (minus contemplated transfers) in this scenario. That appears to be a big ask given almost half of city revenues come from sales taxes and other sources should be relatively flat.
But more for all nabs votes. Whether it represents realistic budgeting is another thing.
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