Officials say budgets holding up during COVID

Louisiana’s parish and other local governments stand to lose more than $404 million in tax and mineral revenue through 2021 because of the combined effects of COVID-19 and the continuing slump in oil prices, according to a report from the Louisiana Legislative Auditor’s Office.
But three east St. Mary municipal officials say they’re not seeing that kind of negative impact on municipal budgets.
The report, over the signature of Legislative Auditor Darryl Purpera, was sent in May to Senate President Paige Cortez and House Speaker Clay Schexnayder. It uses then-current figures and projections to calculate revenue figures for each year 2019-21 if COVID-19 hadn’t emerged.
Then it develops three estimates labeled “pessimistic” and “optimistic” along with a middle-of-the-road average.
Locally, according to the report’s supplement:
—Morgan City stood to receive about $20.8 million in sales and property tax revenue 2019-21 before COVID. Its COVID losses would total $520,000 under the optimistic scenario, $1.2 million under the pessimistic projection and $811,000 under the average.
—Berwick had prospects for $6.4 million in sales and property taxes 2019-21 before COVID. Now the losses would be $382,000 in the pessimistic projection, $163,000 under the optimistic project and an average projection of $252,000.
—Patterson was on course to receive $7.2 million in sales and property taxes 2019-21 before COVID. The COVID losses would be $526,000 according to the pessimistic estimate, $244,000 under the optimistic estimate and $345,000 in the average.
Property taxes, which are set according to assessments every four years, tend to be more stable than sales taxes.
In Morgan City, for example, the report says the three-year losses in ad valorem taxes in Morgan City amount to only about $8,000. The real impact for municipalities is in sales tax revenue.
Berwick has actually seen an increase in sales tax revenue, Mayor Duval Arthur said.
“We’re above what we collected last year,” he said.
Some residents have even found ways to diversify, selling items such as masks and sanitizer, he said.
“We can’t complain,” Arthur said.
Morgan City has seen no big dip in tax collections either.
“What surprises me is the doomsayers were saying we’d see a big drop in April,” Mayor Frank “Boo” Grizzaffi said. “It didn’t happen. Then they said May, and it didn’t happen. Then June, and it didn’t happen.”
As a result of the downward trend in the oilfield, Patterson’s revenue projections have been conservative for four years, City Accountant Reginal Weary said in an email.
“We did see a slight surplus after closing out the 2019/2020 fiscal year,” Weary wrote. “We are not sure of the effect Covid will have on our 2020/2021 budget.”
None of the three municipal governments have had to make major service cuts because of revenue shortfalls, although there have been some changes in working hours for employees.
“At this time, the City of Patterson has no plans to make up any loss of revenue,” Weary wrote. “However, our 2020/2021 budget does reflect a decrease in expenses due to the projected shortfall in revenues that Covid may cause.
“We definitely will take the warnings from the Legislative Auditors seriously and monitor our revenues and expenses closely.”
The St. Mary Parish government and the School Board also stand to lose revenue, according to the report.
The Parish Council had a three-year pre-COVID expectation of raising $43.1 million from property taxes, sales taxes, severance taxes and mineral royalties.
The average projection with COVID is a three-year loss of $2.9 million. The pessimistic estimate is $4.2 million, and the optimistic projection is $2.5 million.
About $1.7 million of the expected average loss is from losses of mineral royalties.
The School Board’s pre-COVID outlook was for $108.9 million in sales and property tax revenues for 2019-21. The middle-of-the-road average three-year loss would be $2.6 million. The pessimistic projection is $3.9 million. The optimistic projection is a loss of $1.6 million.
The wild card in St. Mary governments’ economic future may be federal COVID aid.
The federal Paycheck Protection Program provided funds for local banks to lend to businesses that agree to keep workers on their payrolls. That program resulted in loans of at least $50 million to St. Mary businesses employing more than 8,000 workers, or about half the parish workforce, according to data released by the Small Business Administration.
The loans may be forgiven if the businesses continue to employ workers and meet other requirements.
The federal CARES Act has also provided a $600-per-week boost in unemployment benefits. The federal supplement is set to expire July 31, although both Republicans and Democrats in Congress have some level of supplemental unemployment benefits in their plans for a new COVID stimulus package.