Bossier City graybeards seek votes via imprudent budget

Having heavily mortgaged the city's future on low priority infrastructure, fearing voter reactions graybeard councilors recklessly want to put salary increases on a credit card using a budget deficit.

Fearful that the public has caught on to their misrule of the past quarter-century, the longest in the tooth of the Bossier City Council graybeards now seek to complete the destruction as a method to save their political careers and legacies.

Last week, the Council took up the 2025 budget. In its introduced form, it would have given pay raises adhering to a compensation study recently completed for the city, meaning equity raises for some city employees, parity pay raises for police, and one-time bonuses for fire personnel up to a minimum of a five percent increase. But this plan would require taking back holding the line on property taxes decided this year by instead increasing rates back to pre-assessment levels that would hike property taxes paid by just about every land owner in the city as well as blow a $2 million deficit hole from greater spending tied to the city’s general fund.

Bossier City currently doesn’t have the means to give out pay raises, which the study confirmed was needed in a number of cases to keep up with peer cities, without raising taxes and engaging in deficit spending because of the enormous amount of debt it carries. At the end of 2023, the city had $392 million in debt, but adding in interest means (minus premiums and deferrals) actually the city is on the hook for $514 million. In the past quarter-century, approximately $200 million was spent on low-priority items that tended to benefit private interests: a money-losing arena, a high-tech office building (with the parish and state), a parking garage for a developer, and, most recently, a road mostly to nowhere that hardly diminishes traffic or travel times, which features a statue that cost hundreds of thousands of dollars on which is emblazoned the names of the Bossier City establishment over the decades – including graybeards Republican councilors David Montgomery and Jeff Free, Democrat Bubba Williams, and independent Jeff Darby.

This extravagance explains why this year interest costs alone just for the debt associated with governmental activities is almost $8.5 million (and for business activities, essentially water and sewerage provision, another about $4.5 million). That’s nearly three times the amount the raises/bonus would cost.

This spending choice of monuments over people critics of the graybeards – Williams and Darby have served since 1997, Montgomery since 2001, and Free since 2013 (his predecessor Republican David Jones was just as spendthrift as Free or any of the others) – increasingly have pointed out as detrimental to the city’s fortunes, joining if not supplementing a chorus from the ranks of first responders and others arguing that city salaries lagged. And now it has become apparent that the graybeards think such critiques are hitting home, from what at least three of them backed at the introduction of the budget.

Montgomery asked to amend it to deliver a flat $500 a month pay raise to all city employees, which would almost double the added expense. After some back-and-forth with Chief Administrative Officer Amanda Nottingham, with minor modification this was the gist of an amendment that reset the budget for a new introduction next meeting. Graybeard ally Republican Vince Maggio and the GOP’s Chris Smith also voted for it, although Smith said he was suspicious of it and voted affirmative only to move the process along, while Republican Brian Hammons voted an outright negative.

There was great reason for Smith to have his doubts and Hammons to oppose. Montgomery said the extra millions needed could be had through budgeting with even higher built-in deficits. He reasoned that since through the post Wuhan coronavirus pandemic period of 2021-23 the general fund through surpluses grew before the impact of transfers – general fund revenues exceeding expenses by $4.8 million in 2021, $9.2 million in 2022, and nearly $8 million in 2023, going from $28 million to an anticipated $53 million at the end of this year – that the city could handle budgeting a deficit and then anticipating enough revenues would materialize not to get into trouble in perpetuity.

Reviewing the era where the graybeards first entered the Council, 1997 (Williams and Darby), for the first two decades after deficit spending in the general fund was the norm. In fact, in the period 1997-2017, the combined deficit spending out of the general fund was an eye-popping $93 million. The only way the general fund balance, which ranged from around $4 million to $8 million, didn’t go to zero was by massive transfers from other revenue funds such as the Riverboat Gaming Special Revenue Fund, which contains revenues from local gaming and legally has a minimum of $30 million, and the Public Health and Safety Permanent Fund, which contains the proceeds from the sale of Bossier Medical Center and legally must have a minimum of $18 million (and permission of the state for its use).

Transfers continue to this day, but they are almost exclusively bookkeeping in nature. For most of its recent history, Bossier City had to rely on infusions from other sources besides designated general fund receipts to keep out of the red in addition to these bookkeeping moves. However, history shows deficit spending has been the norm, not the exception, in the general fund, which may portend rougher economic times for the future.

As a result of chronic deficits, by 2013 (when Free joined; Montgomery entered in 2001; two other former graybeards whom voters tossed out in 2021, Republicans Tim Larkin and Scott Irwin, came in for the former in 2001 and the latter in 2002), the general fund balance stood only around $9 million. It wasn’t until 2018 that general fund revenues outstripped general fund expenditures on their own.

But when that happened, budgeting started to misfire. The years 2019-21 saw underestimations of spending but half again higher misses on revenue. Fortunately starting in 2019, as opposed to the past twenty-plus years where budgets only narrowly had revenues exceeding expenditures (when in reality spending was usually double or more underestimated than revenues) if at all, budgets were built to leave a few million in cushion (save for 2021 during the pandemic), escaping a deficit posture enabled a very slow building up of general fund reserves up that from 2018 it almost doubled in size by 2020 and then well more than doubled by 2023. At this point, and for the past three years the city has underestimated revenues more than expenses, and for the past two underestimated revenues and overestimated expenses, which led to the huge runup in reserves.

Significantly, despite the decades of actual deficits under the graybeards, while some budgets in this era were exactly balanced none ever gave in to planned deficit spending as does the Republican Mayor Tommy Chandler 2025 version, and on steroids as the Montgomery amendment has altered it. Yet, since there will be still in the neighborhood of $48 million in reserve if reality matches projections – not assuming the recent pattern of underestimated revenues and overestimated expenses there could make for more – what could go wrong?

Plenty. For one, any raises will become an ongoing commitment that will have the property tax hike partially backing it, but in the face of a decline in sales taxes that is projected to be lower than 2022 funding creates a more precarious fiscal climate than ever, besides the necessity of servicing the large debt. There is no assured uptick in any revenue stream projected to support this. That doesn’t mean revenues can’t surprise on the upside and cost-cutting couldn’t occur on the other end, but it is risky to intentionally budget a deficit triggered by increased recurring costs without corresponding cuts or a bigger revenue stream appearing elsewhere.

As well, plenty of bad revenue surprises could occur. When the national economy experienced headwinds in the latter 2000s, the city’s deficit ballooned a couple of years to nearly $10 million (indeed, whenever Montgomery wants to assert fiscal conservatism credentials, he brings up this period as an example of crisis the city had to solve). That it did happen means it can happen again which in just a few years could wipe out reserves (which, given Ordinance 41 of 2014 that sets the minimum reserve at 15 percent of general fund revenues creates a floor of around $11 million at present, which the city didn’t even reach until 2017), and with pay locked in would demand cuts from other areas.

Then there’s potentially increased costs. Expenses have run lower than anticipated in recent budget cycles in part because the city has unfilled positions. Excluding 2016 when contracting out engineering radically altered budget assumptions, the city over the past decade typically runs about 33 positions under budget per year, and within public safety about 14. By raising salaries, this should lower these numbers but which will have the perverse impact of disproportionately hiking expenses.

Finally, Montgomery’s amendment is a crude, thoughtless approach to boosting salaries. Unlike the Chandler Administration approach, the flat, across-the-board approach takes none of the information gleaned from the salary study which the amendment jettisons in favor of a blatant reelection ploy – give everybody a raise in the hopes they remember that in a few months and push the button accordingly. It shows no prudence in balancing taxpayer interests with genuine pay distortions solved by targeting positions underpaid in the marketplace.

What’s especially curious about raiding the piggy bank as Montgomery proposes – with the apparent support at least of graybeards Darby and Williams, if remarks made at the meeting are any indication – is there are alternatives that put citizens at far less risk. Far more prudently, reserves should be positioned to generate long-term returns that cover increased pay.

Both the Gaming and Safety and Health Funds provide object lessons within the 2025 budget. Each is budgeted at a pittance of revenue, which hardly exceeds projected investment advisory expenses, a sensible approach given the vagaries of the marketplace.

But why not use these as vehicles to implement Chandler’s pay raise plan without any deficits? In reality, the Gaming Fund earned about $1.5 million in 2023, with just over half of that in interest, and is on track to make $1.2 million, most of that on interest, in 2024. The Safety and Health Fund made almost a million in 2023, about half in interest, and a little less projected for 2024, almost all from interest. Why not transfer $38 million from the general fund to give the Gaming Fund $70 million and with that and the $20 million in the Safety and Health Fund every week invest in risk-free seven-day zero coupon Treasury bills, currently running around 4.5 percent? That’s over $4 million in interest delivered per year without any principal reduction (and saving nearly $50,000 annually in investment advising fees), or more than enough to pay for the Chandler pay raises without any property tax hikes or deficit spending. And if years from now revenues from other sources increase enough to support the raises, then empty the funds to their legal minimums and use the proceeds to pay off debt, which will free up additional dollars.

Or, cut to the chase and use the general fund surplus reserves to pay off debt now, reducing interest payments that otherwise would come from general fund reserves (via a transfer to the Capital Projects Bond Issue Sinking and Reserve Fund), leaving more dollars to fund pay raises. It’s more prudent to have a continuing source for continuing payments, but it would call attention to debt levels.

Which is what the graybeards want to avoid. Having mortgaged the city’s future on low-priority infrastructure but which serves as reminders of their government service to the voting public that has prevented spending on high-priority items such as salaries, they have come to the realization that the idea they have mismanaged the city’s bounty with needless debt at the expense of employees and citizens is gaining traction among voters, and after years of inaction on salaries they now want to put on a credit card pay increases with no certainty they can afford these, as a means of distracting voters and buying city employee votes.

It's doubling down on their mismanagement, throwing good money after bad the consequences of which would be felt only after they have retired from office but leaving citizens on the hook for their mistakes. Such speculative finance has no place in conducting prudent municipal fiscal management, so the Council should reject the amended 2025 budget as it now stands.