The cost of operating local government is increasing faster than the revenue it takes in through property and sales taxes. We see this born out in the budget City-Parish President Joey Durel submitted to the City-Parish Council in July — a budget the council is currently considering and one that is peppered with cuts to several departments within Lafayette Consolidated Government.
The council on Tuesday night will have an opportunity begin rectifying the disparity between the cost of operating government and lagging revenue by voting to keep the tax rates levied on property in both the city of Lafayette and the unincorporated parts of the parish the same. But it will take a two-thirds majority to make that happen.
Property values are up in Lafayette — just under 5.5 percent both in the city and the parish (read Heather Miller's blog today on that topic here)— as residents will soon begin finding out via letters from Assessor Conrad Comeaux. If the council votes to keep millage rates the same that’ll mean a more than 5 percent uptick in revenue through property taxes. However, state law requires local governments to roll back millage rates when property value assessments rise so that local government takes in no more than it did the year before. But the law also allows councils through the vote of a super majority to keep the millages the same and effectively allow taxes to rise with inflation.
According to LCG Chief Financial Officer Lorrie Toups in a memo to Chief Administrative Officer Dee Stanley, the taxable value of property in the unincorporated part of Lafayette Parish is up 5.27 percent over 2011 — from just over $1.6 billion last year to 2012’s $1.73 billion. For the city the value rose 5.32 percent — from $1.2 billion to just under $1.3 billion.
As Toups points out in the memo:
It is critical that we take this opportunity to adjust these dedicated revenues to the rates originally approved by the voters because of the current growth in demands for our services. In most cases, the existing dedicated millage rates do not provide sufficient revenues to meet the cost of the dedicated services. For the same reasons that we periodically adjust utility rates to equal cost-of-service, these rates need adjustment to more closely meet costs. As rates are moved closer to actual cost, the general fund subsidy for these purposes can be reduced and applied to general operating purposes as intended.
Simply put, if the council doesn’t vote to keep the millage rates the same, the cost of operating LCG — and the services it provides to residents — will continue to outpace the revenue local government is taking in, making a tight budget situation even tighter moving forward.
But for some council members — the self-styled “fiscal hawks” — that’s a good thing as it will allow them to continue their annual assault on such budgetary "extravagances" as funding external social service agencies, festivals and the arts. Consequently, sources close to the council tell The Ind these tax votes could be a tedious process as ideological imperatives regarding taxation bubble to the surface. Will the Tea Party-backed councilmen vote to keep tax rates the same, which in effect is to raise taxes? Will the councilmen representing Lafayette’s most economically strapped districts vote to roll back the millage rates, thereby ensuring that LCG’s revenue stream through property taxes doesn’t increase, which will affect the level of service provided by LCG in the future?
More important, from the perspective of many city residents who voted for deconsolidation last year and even those who voted against but recognize the need for the city to have more autonomy in its financial affairs, will city folk catch a whiff of the foul odor created by council members who don’t live in the city of Lafayette and pay no city of Lafayette property taxes voting on tax rates paid by city residents — taxes, in other words, that don’t apply to them?