The significance of the Bossier City Council’s passing a balanced budget this week lies more in the fact of what ideally it should signal for the future.
When originally introduced, the general fund portion tapped into a small number of reserves, projections of revenues looked a bit optimistic, and the separate enterprise funds showed future strains ahead. The version passed this week had a few tweaks, but most prominently wiped out the dipping into general fund reserves.
This matters because it shows the Council and city taking responsibility to not unduly erode a margin of error in uncertain fiscal times. The general fund has plenty of reserves, mainly due to knock-on effects from massive federal government spending in the pandemic period that increased government revenue collection, causing the reserve to about triple from $23 million in 2019 to $66 million in 2025, so a hit of nearly $2 million wouldn’t have broken the bank.
Viewed that way, closing the gap represented more a symbolic statement than had substantive impact – and a refreshing one at that. For three decades the city ran up debt on dubious projects intended to appeal to the appearance of economic development rather than save and cut taxes to create a low-tax haven that would have created actual progress and population growth. That became reflected with through city debt that exploded from $57 million at the end of 1995 to $484 million by 2019 even as the population grew just a bit over ten percent.
Fortunately, as new elected councilors began replacing the bunch behind the debt bomb, the trend has reversed. As of last year, that had fallen to $352 million and after this year should be only about two-thirds of what it had been seven years earlier. Most significantly, governmental activity debt had fallen from $233 million to $157 million.
This ratcheting down produces free cash flow. From 2020 until 2025, servicing governmental activity debt cost between $17 million to $21 million annually. Over the next four years including 2026 it will drop into the $15 million range, and then from 2031-35 closer to $12 million, freeing up nearly $30 million for all of those years.
It’s 2030 that may pose a problem. The city projects a whopping $55 million will come off the books along with $21 million in interest, or a hike of $61 million more required than in 2029. It could refinance all or a portion of this, but in an environment that may not be friendly to debt issuance, and it possibly could add more for future projects by then.
Thus, the best strategy would take the general fund reserve and transfer a good chunk – maybe half as city ordinance requires keeping the reserve at 25 percent of annual spending – and create a special fund to pay off future debt, with a supermajority vote required to withdraw from it. That should leave enough reserves if revenue numbers fall short to tide over the city and not breach the floor (recently increased from 15 percent). Such a fund isn’t anything new; only this summer the Council created one for what it deemed as bonus sales tax avails, which as it expires in 2031 could be another source for scheduled 2030 debt defeasance.
That’s why it’s important now to balance the budget to facilitate making this big payoff. Keep in mind that unfavorable present trends for the enterprise funds also will need reversing or greater attention to that in the near future, so it would be good to take this other issue off the table.
If successful, Bossier City could enter a golden era that it fumbled away over three decades ago. That’s when it struck deals with then-new casinos to bank tens of millions of dollars in short order (back then, more than was spent each year from the general fund), but then that’s when its obsession started with continuing to run a government hospital, adding a government-run arena, and serving as a venture capital outfit. By 2036-40, governmental activity debt service will drop to fewer than $4 million a year. Undoubtedly, other things will crop up that will necessitate debt issuance, but there’s no reason it should balloon to the figures of 20 years earlier, and the free cash flow thereof should permit tax relief that will kickstart natural organic growth through economic development, rather than the forced, fingers crossed, attempts to achieve that that have plagued the city until recently.
Balancing this budget is a necessary step in this process, indicative of an attitude going forward that understands that smaller government has a better chance of producing economic development and population gains. May the city’s elected officials continue to maintain this worldview.
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