Monday, May 27, 2024

Estimate: COVID-19 pandemic may cost Louisiana local governments up to $1.1 billion

by BIZ Magazine

By David Jacobs | The Center Square

Fallout from the COVID-19 pandemic may cost Louisiana local government entities between $404 million and $1.1 billion by the end of the next fiscal year, the Louisiana Legislative Auditor estimates.

The pandemic, and the deliberate economic slowdown meant to contain the pandemic, are leading to lower tax and royalty collections for municipalities, parishes, school boards and sheriff’s offices.

The federal government has allocated $1.8 billion to help Louisiana governments, and 45 percent of that money is supposed to go to local entities, while the state can spend 55 percent. However, officials say the money must pay for efforts to fight the disease and cannot be used to plug budget holes.

Auditors based their projections largely on sales tax and mineral revenues, because those two categories make up 23.6 percent of local government budgets and are more sensitive to the economic downturn caused by COVID-19 than other revenue sources, the LLA says.

Also included were hotel occupancy taxes, because of the impact lost tourism and travel will have on some local economies, and property taxes, which account for 20 percent of local government revenue and tend to grow slowly following economic downturns.

Auditors estimated local government income from sales and ad valorem taxes and mineral-related revenues would decrease between $172.4 million and $305.5 million in fiscal year 2020 and between $232.3 million and $833.2 million in fiscal year 2021.

The auditors projected sales tax collections would decrease by an average of at least 4.2 percent in fiscal year 2021 in every parish except Cameron, which has no local sales tax. Orleans Parish, the state’s top tourist destination, would see the largest declines – 11.2 percent in fiscal year 2020 and 30.4 percent in fiscal year 2021, the LLA says.

The projected losses would amount to between 2.3 percent and 6.9 percent of total revenue, the LLA says. Louisiana’s fiscal year runs from July 1 to June 30.

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