Study: Fiscal issues grim if BR loses St. George

If supporters succeed in their quest to create the city of St. George, they will carve off a quarter of the residents in areas covered by the city-parish government but take 40 percent of the sales tax revenue, according to a study by LSU economists released Sunday.

The 28-page study, paid for by the Baton Rouge Area Chamber and the Baton Rouge Area Foundation, takes no formal position on the effort to incorporate St. George but still paints a grim picture of the ultimate effect the proposed new city would have on city-parish finances.

St. George would lead to a $53 million budget shortfall for Baton Rouge — nearly 20 percent of the city-parish budget — driven largely by the loss of sales tax revenue from two major retail centers: The Mall of Louisiana and Perkins Rowe. The creation of the new city also would spur competition between municipalities and could ultimately lead to a breakdown in services in the parish, the study’s authors claim.

A critical issue, the study notes, is whether the diminished tax revenues in Baton Rouge would “be sufficient to pay for city-based services that are ultimately enjoyed by all residents in the parish, especially given that many residents of the proposed municipality work in the city of Baton Rouge.”

The report portrays the push for incorporation as an overkill response to a quarrel over schools.

“If the entirety of their concern is about education, creating a new city is a very blunt and dangerous way of addressing it,” said public administration professor Roy Heidelberg, who worked on the report with professors James Richardson and Jared Llorens.

St. George supporters announced last week that they have about half of the 18,000 signatures needed to let voters decide whether the unincorporated area south of Baton Rouge’s city limits should become its own municipality. There’s no timeline to get the required signatures, which represent about 25 percent of the registered voters in the proposed city.

The St. George effort began as a push for a new school district, but it snowballed into the effort to create a new city after the state Legislature repeatedly brushed off the school proposal. The Legislature this year approved the new district but didn’t fund it, effectively killing the effort again. The school district boundaries approved by the Legislature don’t match the proposed new city’s limits, but organizers say they will ask lawmakers to redraw the lines if they are successful in incorporating St. George.

With 107,000 residents at stake, the St. George effort is the state’s largest municipal breakaway attempt in recent history. Central, which set off as its own city in East Baton Rouge in 2005, was about a quarter of the size of St. George and had a much, much smaller retail base.

Leaders of the St. George movement say education is still the key priority, and they believe the Legislature will move forward with the new school district if they create their own city.

“First and foremost, people want better schools, but what they recognize is that we can have a great city as well,” said Norman Browning, one of the main St. George organizers.

He and other St. George supporters argue that the city’s creation will be better for the parish in the long run.

“People are going to Ascension (Parish), they’re going to Livingston,” Browning said. “We want to keep our young families in East Baton Rouge. The only way we can do this is if we have a great education system. A great school system will encourage economic development.”

But Richardson said the St. George-Baton Rouge divide could spur fights for economic development leading to bidding wars over businesses.

“You have incentives and all sorts of things that could come up,” he said.

For now, the study concludes that Baton Rouge residents “will be disproportionately paying taxes to the proposed municipality,” because they’ll be shopping at stores in that area. In Louisiana, sales tax revenues make up a large proportion of government funding.

Removing one of the highest growth areas of the parish and nearly a quarter of the parish population from the consolidated city-parish system “could entail the dissolution of the present system of governance,” the authors write. “East Baton Rouge Parish, with two large cities so close geographically and economically, would have to consider returning to a parish-level government.”

The study also raises several questions for Baton Rouge, the parish and St. George that span from“Who pays for assets that benefit everyone?” to “Who’s responsible for the long-term costs of retirement benefits for public employees?”

“It is absolutely imperative that these long-term financial liabilities … are appropriately shared with any new governmental entity for the sake of fairness among all the citizens of the parish and for the sake of the financial sustainability of the city of Baton Rouge,” the study states.

Also unclear: How the new city would fall into the overall parish governmental structure and whether there would be a duplication of services or lack of cooperation among public entities.

St. George’s top organizers last week released a $60.2 million budget proposal for the new city, but Richardson said it doesn’t answer all of the questions about how the new city would function or what it would cost to make sure that services for its residents aren’t interrupted.

“At the end of the day, you may not be better off at all,” Richardson said.

Browning disagrees with the economists’ concern over the potential for conflict between Baton Rouge and St. George.

“Why do you need to compete with one another?” he said. “There’s no wall.”

He said St. George residents will still come to Baton Rouge for shopping, work and other activities, and vice versa.

“People shop at the mall from all over. Does Baton Rouge send the tax dollars back to those areas? Not at all,” he said. “It’s a give and take.”

Browning said he believes a pushback against the St. George effort is growing.

On Nov. 20, the planner behind the city-parish’s FutureBR master plan told the Baton Rouge Rotary Club that the new city could cause “chaos,” over-complicating planning and other functions for the parish.

“The idea of creating a city like this — I can’t find another place in the United States where it would cause so much turmoil,” John Fregonese said.

But St. George supporters have largely dismissed the claims of concern and predictions of calamity.

“Typically, the only comments you hear are those that try to create fear,” Browning said. “They never support it with any documentation to make those claims.”

BRAC President Adam Knapp said the business group hasn’t yet taken a formal position on the St. George efforts but likely will do so after members have a chance to review the study.

St. George’s creation would make East Baton Rouge Parish home to two of the state’s largest cities — cities that would share a border and depend on each other but have residents with little in common. Race and economics have constantly rested just below the surface of the debate.

“The truth is: no community, no population was left out,” Browning said. “This will be a wide open city and school district.”

But the economic study highlights the stark contrast between the affluent St. George and urban Baton Rouge, with differences in average household income, employment rates, and percentages of black and white residents.

The study urges St. George supporters to listen to input from those outside the proposed city limits: “Perhaps the most important point to be made is that the institution of this proposal will not affect the residents of the proposed geography alone. This is a decision that will impact the entire parish.”

There may be few options for those outside the proposed city limits who want to prevent the St. George incorporation from moving forward.

If enough signatures are gathered, only those who live within the proposed boundaries will be able to vote in the special election on incorporation.

“I think what’s happening now is the citizens realize that (incorporation) is what needs to happen. This is what they want,” Browning said.

Still, others continue to look for ways to stymie the effort.

Metro Councilwoman C. Denise Marcelle said she may push an attempt for Baton Rouge to annex some of the revenue-generating areas that would be taken in by St. George.

Past annexations have been initiated by homeowners in those areas, and the Baton Rouge Plan of Government backs the property-owner-initiated model.

Marcelle, who doesn’t live in the proposed St. George area, plans to explore Baton Rouge’s options further, but she said she has heard from residents who don’t want to be part of the new city and would rather be annexed by Baton Rouge.

“It’s still something that I think is viable,” Marcelle said. “It is possible for us to do things that can help us protect the city’s interests.”

Marcelle said her main concern is the impact St. George would have on Baton Rouge, and she believes the plan as unfair, given the investments the Metro Council has made in the area.

“If they pull away from Baton Rouge, it will affect everyone,” she said. “We’ve spent millions of dollars on improvements out there and making traffic better, and now they want to be their own city?”