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ITS THE LIFEBLOOD | Parish President gears up for renewal of road program & detention center's 1-cent sales tax in spring of 2020

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Roadwork Continues

Road work in the Dunn Road area at Creekside Estate Subdivision will wind down and work will move toward the Duff Road area in Walker for projects in the 2018 Livingston Parish Road Maintenance Program, according to Livingston Parish Planning Director Sam Digriolamo.

LIVINGSTON – In April of 2020, just over a year from now, Livingston Parish voters will decide the fate the parish's 1-cent sales tax renewal, 75% of which goes into the road fund and the other 25% provides revenue for the Livingston Parish Detention Center operations, and its debt.

Parish President Layton Ricks is aware of the anti-tax climate in Livingston Parish, having watched drainage taxes, recreation taxes, and a school resource officer proposal all fail just in the past year. So, Ricks and Parish Finance Director Jennifer Myers are intent on getting in front of the public and informing the parish’s citizenry on how the money they collect gets spent.

Why? Because the road fund is, according to Ricks, too important to fail.

“It’s the lifeblood of a lot of the parish services,” Ricks said.

“I can’t imagine what we would do without it,” he added with a sigh.

The majority of the $16 million total in tax-based funds come from the 1-cent sales tax. The 75% share for road revenues equates to about $13.5 million per year. Also included is a 5-mill property tax, which generates $2.4 million. Finally, the parish receives an allocation from the state general fund, which is based on population.

 '05-'06 '17-'18 
Total sales tax collections  $56,338,600 $103,041,275
 Road program share $6,937,275 $13.5 million

“And they (the legislature) can add or subtract from that, or take it away, whenever they need it,” Ricks said, alluding to financial instability at the state level. Out of the $90 million appropriated in the parish-based share of the state general fund, Livingston Parish received $250,000 in 2017.

The focus remains on the tax revenue of just over $16 million and its use. According to Ricks, $10 million of the funds go toward financing the Department of Public Works, which employs 75 people to service potholes, ditches, larger drainage projects, and smaller road projects throughout the parish. That $10 million figure includes the cost incorporated with yearly projects, new vehicles, and equipment maintenance.

The 2019 budget, accepted by the parish council, lists the road fund expenses as:

1) $2,776,894 – Salaries

2) $7,159 – Taxable Fringe Benefits

3) $212,432 – FICA

4) $201,949 – PERS (Public Employees' Retirement System)

5) $687,944 – Benefits

6) $325,000 – Workers Compensation

7) $0 – Unemployment claims

8) $0 – Salaries, Demolition/Condemnation

9) $2500 – Advertising, Dues, and Subscriptions

10) $40,000 – Utilities

11) $50,000 – Environmental Fees and permits

12) $500 – Printing and Postage

13) $475,000 – Rentals

14) $600,000 – Maintenance of Vehicles and Equipment

15) $35,000 – Maintenance of Grounds and Buildings

16) $7,650,000 – Maintenance of Roads and Streets

17) $500,000 – Maintenance of Ditches

18) $200,000 – Maintenance of Bridges

19) $5,000 – Insurance, Fire & Casualty

20) $10,000 – Office Supplies

21) $15,000 – Computer Supplies and Service

22) $40,000 – Operating Supplies

23) $4,000 – Operating Supplies, Janitorial

24) $500 – Travel, Transportation, Mileage

25) $95,535 – Long-Term Debt Redeemed

26) $4,375 – Interest on Long-Term Debt

27) $4,000 – Agent fees

28) $250,000 – Capital Outlay

29) $0 – Demolition/Condemnation

30) $201,094 – Communications

31) $117,664 – Misc. Retirement Deductions

32) $3,769,686 – Grants

33) $10,097,273 – Grants – Capital Outlay

34) $0 – Declared Emergency Purchases

35) $600,000 – Transfers to Administration Fund

36) $4,661,067 – Transfers to Road Sinking

According to Ricks and Meyers, those expenses leave $6.1 million for the road overlay program itself – a list of parish roads from all nine districts which are considered for maintenance and overlay each year and voted upon by the council. These contracts are farmed out to third parties.

And the list has remained short since 2012 due to a $50 million bond issued in 2006 which came with an annual debt service payment. While sales taxes continue to rise, year-over-year, with the parish taking in nearly $500,000 more per month now than they were in 2006 for the road program, that debt service ate into the remaining funds for road overlay – leaving just $1.6 million.

Initially, the Parish Council in 2006 bonded the funds after parish voters agreed to split the one-cent sales tax between funding the new jail and the road fund. The council wanted to speed up road work, to the tune of roughly 50% of roads in Livingston Parish over a three-year period, and believed that sales tax revenues would continue to grow in the wake of new population from Hurricane Katrina - which had pushed over $1 million in new revenue, per year, into the parish coffers - funding the debt service.

By the council's math, the $50 million bond issuance would cover 276 square miles of roadway, or half of the 500 square miles of parish-maintained roads in Livingston.

At first, arbitrage – or the difference between the interest rate charged to the bondee and the interest rate earned on the bond investment – favored the parish, to the tune of $5.5 million over the first five years which was forfeit to the IRS, according to Jim Ryan of Governmental Advisors, Inc. Ryan said that municipalities cannot make money off interest gained on bonds, so IRS law requires the entity to pay that difference back.

Ryan-Ricks-GOMESA

Jim Ryan of Government Consultants Inc. (right), seen here with Livingston Parish President Layton Ricks, discusses a bond proposal through GOMESA, which could possibly help the parish with flood control. He made the proposal during the Livingston Parish Council meeting Sept. 27, 2018.

However, the economic recession that began in 2007 eventually hit bond markets, causing interest earnings to fall – leaving the parish on the hook for the full bond payment. In 2014, the Parish worked with Ryan to refinance the bonds, dropping the debt payment down to $4.6 million annually (Expense No. 36).

According to Ryan, that's normal in his experience.

"A local government gets an influx of money and decides to bond and, at the time, the market might be favorable," Ryan explained, "but, as you saw in 2007 and 2008, the economy might cycle back and the sales tax may not cover the initial debt.

"But what happens after that is, usually, the fed drops interest rates and there's a chance to re-finance the bond at an even more favorable rate."

“The bonds will be paid in 2021,” Myers said. “At current sales tax levels, that will put $4.6 million extra in the road fund, per year.”

According to Myers, the parish’s current budget process focuses on getting more bang for the buck – in many cases by holding on to the cash, instead of spending it. The logic, she said, was twofold – the parish could overlay longer stretches of roads when the money was spent and, more importantly, cash-on-hand gave the parish better consideration when applying for state and federal grants.

That’s not an unfamiliar process, as both the City of Walker and Denham Springs follow the same guidelines to keep money in the coffers for state and federal grant matches. Denham Springs, in lieu of a true road fund, applies for state overlay grants ever year. Meanwhile, Walker has translated those funds into upgrades to their wastewater treatment facility and a water tower.

The ratios are usually 90/10 or 80/20, with the smaller portions being paid by the local government.

The new savings practice allowed the parish to jump on grants to help rehabilitate or rebuild bridges throughout the parish, including most recently the bridge on North River Road in Denham Springs, and one in Maurepas.

Ricks said the grant process requires a lot of paperwork and patience, and he added that its tough to publicize every single move that’s made during the application.

“Sometimes there’s just nothing to report, we’re in a holding pattern waiting for this person to get back to us, or another approval,” Myers added.

In the end it allows the parish to do more projects with less money, without the traditional incurrence of debt. That mantra came to fruition in 2018, but not until after a rough 2017 in which Ricks and Myers held back road fund money in hopes of a ‘silver lining’ – a move that was met with scrutiny.

“There’s always a windfall of federal dollars after a natural disaster,” Myers said, “We knew the feds and the state were going to open up for local government’s benefit.

“We just had to wait, and be prepared with matching funds available.”

The savings paid off, as the budget was adjusted to reflect an $8 million influx, per year, in grant money for infrastructure projects, including the important road overlays. That money will carry over through 2019, but in 2020 the road tax comes up for a renewal vote. The exact figures were $8,425,000 in 2018, and $7,650,000 in 2019 (Expense No. 16).

Road Work

Alton Hart of the Livingston Parish Public Works Department fills a pothole in Livingston.

Myers sees another silver lining just one year after that decision.

“The bonds will be paid in 2021,” Myers said. “At current sales tax levels, that will put $4.6 million extra in the road fund, per year.”

A number that doesn’t include grant funding.

The pair said that they seek to move the parish to better financial footing after those bonds are paid in 2021 and would forgo any bond requests for any project type for at least two years after they are retired. In that vein Ricks and his administration would bring no new bond requests to the Parish Council, especially, he said, for roads.

“You just don’t finance your groceries,” Myers said, alluding to the road overlay program.

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