Utility plans need funding

When Jefferson Parish politicians agreed this week to put two property tax millages crucial to the parish’s water and sewerage departments back before voters at a lower rate than originally proposed, there was little discussion of the impact that decision would have on future capital improvements.

But parish officials say there is a long list of projects, including improving the east bank water plant, installing automated water meters and repairing sewer lift stations, that will now be postponed — even if the lower rates are approved Oct. 19.

Twice in the past 20 years the parish’s sewerage and water departments have benefited from a revenue bump that resulted when voters passed 5-mill property taxes for both sewer and water services. They’ve used that bump in cash to repair broken pipes and modernize other aspects of the systems.

If voters on May 4 had approved the millages as officials had hoped, the departments could have added between $6 million and $8 million to their annual budgets. But residents resoundingly rejected the taxes, and now the council has decided to ask for lower millages in the hopes that voters will reconsider. Even if voters approve it this go round, the parish has lost out on any potential windfall.

“We keep staying at the same income while all the prices go up,” said Linda Daly, the director of a sewerage department that must upgrade its plants and lift stations to comply with state mandates and avoid federal sanctions. “I don’t want to say (projects) won’t happen because of the millage, but they’ll get pushed back further in time.”

Water Director Doug Vincent agreed with Daly, and said that as parish infrastructure ages, the risk of a catastrophic problem increases.

“Absent the full millage, those projects probably get put on the back burner,” Vincent said. “The only difference is our priority list changes. Something might get moved up the list because it’s an emergency and a lot of things get bumped down the list.”

Parish politicians have made it clear that the 5-mill rate is off the table. Voters will consider taxes of 3.54 mills for water and 3.58 mills for sewer. A competing proposal, which would have set the maximum rate at 5 mills but required the council reduce it this fall, failed as well.

Councilmen Mark Spears and Chris Roberts supported seeking the maximum rate, but said their support was conditional upon the subsequent reduction. Spears said he never supported a bump, and Roberts said it has become obvious the full millage rate is unacceptable to voters.

Councilwoman Cynthia Lee Sheng opposed seeking the maximum rate, even though she saw its value, because voters made it clear they didn’t support it. Declaring an emergency and presenting them with the same tax felt dishonest, she said.

“For me it was more of a philosophical thing that we shouldn’t go right back when the voters have told us no,” Sheng said. “The whole thing is different. It’s different that the voters turned us down.”

Sheng is right about how different the May 4 election turned out. In 1993 and 2003, voters approved 5-mill taxes for water and sewerage, and residents paid their taxes at the 5-mill level until property was reassessed and mandatory rollbacks reduced the rates. In 1993, the delay between the election and the reassessment was three years. In 2003, it was just one.

However, that one year still produced $1.5 million in additional revenue for the sewerage department and nearly $2 million for the water department. It also meant that future rollbacks were based on the revenue created by a 5-mill tax, and not a lower rate. That new baseline affects the overall budgets for the departments and their ability to create reserves for projects, Chief Operating Officer Chris Cox said.

“You are missing out on that bump,” Cox said. “The money isn’t there.”

Daly and Vincent said the cost of chemicals, equipment and contracts has grown substantially since 2003. The cushion provided by assessing at the full millage makes it easier to handle the current costs and plan for the future ones, they said.

It also affects the parish’s ability to borrow money. Parish officials made it clear they needed the current millage to qualify for a $35 million loan from the Louisiana Department of Environmental Quality to make sewerage repairs, but Daly said that if the full millage had been approved, she might have been able to borrow an additional $20 million.

That money could be used to do more repairs at the parish’s 500 lift stations, address issues at its six sewerage treatment plants and other projects. The goal is for the parish to make progress as quickly as possible on its own to avoid the possibility of federal intervention, she said. If federal officials get involved, they could mandate immediate, substantial increases in the monthly rates residents pay, she said.

“Obviously we have a lot of problems in the sewerage department. We need to get a lot of things done,” Daly said. “At some point EPA will step in, and when they come in, you have no choice. You have to do it.”

However, Roberts and Councilman Ricky Templet said it’s hard to sell residents on the idea that the parish’s tight budgets require higher taxes when residents are being squeezed just as badly if not worse. That’s the classic balancing act politicians face, said Walter Lane, the chairman of the Department of Economics and Finance at the University of New Orleans. Not only must they assess the political climate, but they also have to figure out the best way to make their case, he said.

“Part of this is the needs of the parish and part of this is political ... Certainly reducing it will make them popular but the downside is there will be less revenue,” Lane said. “That’s a marketing issue. How do you convince the public that it’s worth having to pay higher taxes to provide services?”

Although the parish’s hands are tied by state law to a certain degree when it comes to how forcefully it can campaign, Richard Brown, a member of a local watchdog group, said the initial comments by politicians were confusing and felt dishonest. Brown, who voted against the water millage, said he could have been swayed to consider a tax increase with the right message.

“I voted no because I felt they were not being honest,” Brown said. “I voted no because it was a tax increase and they were trying to pass it off as a simple renewal.”