Service cuts not needed

• By STEVEN WARD
• Advocate staff writer
• Published: Oct 5, 2009

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Sales tax revenue for the city-parish’s general fund was down 2.5 percent for the first seven months of the year compared to the same time period last year, but services in East Baton Rouge Parish have not been cut or negatively affected as a result, officials said.

The lack of service cuts is due to conservative budget sales tax projections last year, said Marsha Hanlon, the city-parish’s finance director.

“Everybody is still on budget so services have not been affected,” Hanlon said.

Sales tax is 9 cents on the dollar in most of the parish, except for Baker and Central where it is 9.5 cents.

The sales tax rate includes 4 percent for the state and 5 percent for local government. The local portion includes 2 percent for the East Baton Rouge Parish school system; 2 percent for the city-parish’s general operating fund; and a half-cent each to the Green Light Plan road improvements fund and to city-parish sewer services.

The city-parish’s general fund portion of its operating budget covers Baton Rouge police and fire, and parishwide public works, court system operations and city-parish administrative offices, Hanlon said.

Last year, when Hanlon and city-parish officials were putting together the proposed 2009 operating budget of $700.3 million, she used a sales tax growth projection of 3 percent. Hanlon said that number was a conservative estimate.

In addition to sales taxes, the city-parish operating budget includes revenue from property taxes, other taxes and fees.

Sales tax revenue for the city-parish would have to dip below 4.7 percent this year compared to last year for the city-parish budget to run a deficit, she said.

Since the sales tax revenue dip for the first seven months of this year compared to last year has only been 2.5 percent, Hanlon said, there have been no problems with the budget and no cuts to services.

Hanlon said she does not expect sales taxes to dip lower than 4.7 percent at any point in 2009.

Hanlon said her projection by the end of the year is for sales tax revenue to be down 4.4 percent. That amount would still not affect the budget or services, she said.

The two dedicated sales taxes — a half-cent each for roads and sewer — have been down as well but services have not been cut as a result, said Mark LeBlanc, assistant public works director for capital improvements.

Sewer services for the city-parish are based on two streams of revenue — the half-cent sales tax and a monthly sewer usage fee, which is based on volume of usage, LeBlanc said.

LeBlanc said the lower sewage sales taxes have not caused service interruptions or problems but do provide officials with slight “heartburn.”

Because the city-parish sells bonds for sewer improvement projects, a dip in sales tax revenue — one of the two sources of sewer service income — can have a negative effect on the ability to sell bonds.

But LeBlanc said the lower sales tax revenue this year shouldn’t impact that.

“Now if things don’t pick up in 2010, that could become a problem,” LeBlanc said.

LeBlanc also said the lower half-cent sales tax revenues for road improvements have not had a negative affect.

“The Green Light Plan has been moving along and there are no plans to stop any of that,” LeBlanc said.

There has been at least one area of revenue for the city-parish that’s been up this year over last year — casino gambling.

Before January 2009, the city-parish would receive $2.50 for every person who boarded a riverboat casino in Baton Rouge instead of a percentage of net gambling proceeds.

Under a law approved by the Louisiana Legislature in 2007, riverboat owners and city-parish officials could negotiate a contract based on net gambling proceeds instead of boarding fees. The maximum levy would be 4.5 percent of the proceeds.

Under an agreement approved by the Metro Council last year, the city-parish receives 3.5 percent of net gambling revenue from the two riverboats — based on the boats’ annual  revenue.

Hanlon said that for the first seven months of this year, the city-parish’s revenue from casino gambling revenue, which goes into the general fund for city-parish operations, has been up every month over last year.

For more information on the budget, visit http://www.brgov.com/dept/finance/09BudgetIndex.htm.