Sales tax revenue for the first quarter of the year is up 7.5 percent over last year in East Baton Rouge Parish, which suggests the city-parish could end up with some additional money above what was budgeted for the year.
Some council members have taken notice of the unexpected cash flow and are encouraging Mayor-President Kip Holden’s administration to free up funds for different parish needs, including law enforcement and summer youth programs.
However, Holden, who last week celebrated what the administration called “a sales tax boom” for the month of March, said his office would be cautious when deciding how and if it would appropriate additional funds in this year’s budget.
“Whereas we have seen growth, we must remain cautious in how we proceed,” he said in a statement.
The 2012 general fund budget is projected at $281 million, which is a modest 1.87 percent increase from the previous year. About 56 percent of revenue in the general fund budget comes from a 2 percent sales tax.
If monthly sales tax revenue continues at the current pace, the general fund could grow millions of dollars above what was originally projected.
Holden said the administration is considering some potential allocations for law enforcement.
“We are still analyzing where we are in regards to sales tax collection,” Holden said. “We are also looking to see what we could do in the areas of police, fire, EMS, and needed infrastructure. Whatever we do, however, we are going to maintain a cautious approach to make sure we maintain the conservative fiscal policy that we have followed for the last eight years which includes having adequate reserves in case of any emergency.”
When the sales tax numbers were released last week, Holden issued a statement celebrating the increases. He attributed the boost in collections to the U.S. Bowling Congress, which began in February and will end in July, and to the growing film industry.
A Tom Cruise movie filming in Baton Rouge is pumping $56 million into the local economy, according to a city-parish new release. The release noted that Holden created the Baton Rouge Film Commission after taking office to attract film projects to Baton Rouge.
“This is great news for the city of Baton Rouge and East Baton Rouge Parish, but it’s no accident,” Holden said of the increase in sales tax revenues. “... Our economic development strategies are truly paying off at the cash register for our local business economy.”
Councilman Mike Walker, who is running against Holden for mayor-president, criticized Holden for taking credit for the growth in sales tax revenues and challenged him to appropriate the funds toward law enforcement.
“Kip Holden’s victory lap on March sales tax revenues to the City-Parish coffers deserves a caution flag,” Walker said. “Rather than taking credit for a Tom Cruise movie attracted by the State of Louisiana’s tax credit program, the mayor should make a mid-year appropriation of these unexpected funds to law enforcement to immediately put more cops on our streets — instead of waiting until next year.”
Only the Mayor’s Office can create budget supplements to appropriate new money, but such budget supplements require approval by the Metro Council.
Several council members have said they’d like to see the Mayor’s Office take advantage of the hike in sales tax revenue to provide summer youth programs to keep children out of trouble in the months when they are out of school.
Earlier this month, four Metro Council members proposed separate summer youth programs that competed for funding from the council’s discretionary account. The Metro Council, unable to agree what the funds should be used for, rejected all four proposals.
Among the proposals was $200,000 for a summer employment program administered by Big Buddy, authored by Councilwoman Donna Collins-Lewis.
Councilwoman C. Denise Marcelle said she will ask the council on Wednesday to consider a proposal “urging and requesting” the mayor-president to allocate $150,000 for Big Buddy using “city-parish surplus funds” as opposed to using the council’s discretionary fund.
Councilwoman Ronnie Edwards also said she’d like to see the Mayor’s Office do more to meet the demand for summer youth programs, noting that there is an urgency because summer break begins this week for many schools.
“I’d love to see the mayor put together a budget supplement to fund some of the initiatives, or several of the initiatives,” she said. “Not having the capitol city sponsor, encourage and embrace summer youth programs places a big hole in our ability to fight crime.”
Marsha Hanlon, city-parish finance director, cautioned that surplus funds in this year’s budget would be needed to replace $7 million of nonrecurring funds that were used to balance the 2012 budget.
The city-parish will also be responsible for an unexpected police pension increase of 5 percent, or $1.7 million annually, beginning July 1, she said. Hanlon also said the administration expects it will need an additional $1.5 million to cover increasing prison expenses for the Sheriff’s Office.
Copyright © 2011, Capital City Press LLC • 7290 Bluebonnet Blvd., Baton Rouge, LA 70810 • All Rights Reserved