The State Bond Commission on Thursday approved more than two dozen local elections for the October ballot in which voters will be asked to approve tax hikes and fees to fund everything from schools and hospitals to debt payments and operating expenses.
State Treasurer John Schroder said he was concerned about the financial health and management of some of the local governments. He suggested legislators and other state officials should look at how policies might be tweaked to encourage better management.
One municipality that is now under state financial management didn’t even know a property tax used to pay its bills was expiring, Schroder said.
“The hard, cold reality is, maybe they ought not be in that business [of running a local government],” he said. “Maybe the parish ought to be running their business.”
Senate President John Alario suggested Schroder’s office might begin to maintain a database that keeps track of when millages are set to expire and inform local governments when the expiration date nears. Schroder said the Louisiana Municipal Association has a similar service, though not every local government is an LMA member.
The commission also gave four political subdivisions permission to take out loans to pay for operating expenses. For example, the Vernon Parish Law Enforcement District will borrow up to $1.5 million.
According to Thursday’s discussion, the district has struggled financially because the correctional facility it operated lost money. The facility was closed last year, but the district still is paying expenses associated with it and needs to borrow money to make payroll in July.
Schroder said Louisiana is one of the only states that allows local government entities to borrow money to pay recurring expenses, which he believes raises a “big red flag.” He suggested lawmakers should revisit that policy over the next few months.
“It’s not a healthy way to operate,” he said.