Last week, Bossier City lawmakers shot down a pay raise for employees, where having no such hikes has become the norm over the past few years. Maybe if the city hadn’t played venture capitalist in the name of economic development, this would not have happened.
This comes from about a dozen years existence of what’s now called the CenturyLink Center. Flush with cash with the introduction of riverboat casinos in the 1990s and with the familiar gnaw of Shreveport envy tugging, the city’s elected officials (with councilors Jeff Darby and Bubba Williams still with us from then, and current Mayor Lo Walker having ascended from being the city’s chief administrative officer) decided to build the mid-sized multipurpose arena on the taxpayer dime. Of course, had a market existed for this, the private sector would have obliged, but politicians charged on, telling the public it could be done for under $40 million but which ended up costing half again more.
That and controversy over its siting (which drew big opposition from residents in the areas around the Jimmie Davis Bridge) cost some city council members their elective careers in 2001. It’s just plain cost taxpayers since, with a total deficit running into the millions of dollars since its opening in 2000, as reflected by the fact that in all of those years operating revenues exceeded operating costs except for two, meaning the city has transferred in through 2013 approaching $5 million that could have been spent on other city operations.
Worse, the trend has accelerated over the past few years as one after the other minor league sports teams, unable to make money in this market, abandoned the venue as anchor tenants. It’s not been unusual over those years for a few hundred thousand to be transferred in yearly. Last year, the city made its highest transfer ever into funding operations of $750,000 — and still suffered deficit funding to leave the fund dedicated to the arena in the hole over $200,000.
That transfer could have paid for a roughly two percent raise that Walker wanted to pass out to city employees. While the city does not post its budgets online and takes its time in posting its minutes online (meaning last week’s budget ordinances are not available at the time this was written), using its 2013 Comprehensive Annual Financial Report personnel dollar figures for general government and half of the total amounts for public safety spending to stand in for personnel costs for these functions, a 2.5 percent raise for the former and 2 percent for the latter would equal only a bit over $300,000; without the arena bleeding taxpayer dry, raises of twice those figures could have been afforded with room to spare.
But that’s not all the goring taxpayers endure. This operating deficit of almost $4.6 million does not include debt payments, which are a mixture of principal and interest. Given, according to the city’s 2012 Comprehensive Annual Financial Report, which does not distinguish the debt for the arena from other governmental activities debt but does present figures overall principal and interest payment figures, that interest would be a little under 58 percent of principal, so at a cost of $60 million the final overall payment over a number of years can be estimated at $105 million.
In other words, Bossier Citians are paying hundreds of thousands of dollars a year in order to own and operate an asset that each will have paid $1,500 for. While theoretically the arena could draw some people to spend the night in the city, and that money gets deposited in the city’s Hotel/Motel Taxes Fund, which is from where city transfers to make up arena deficits come, at 2012’s figure of about $2.23 million the small fraction those revenues comprise of the whole doesn’t come close to paying for even the operating deficit, much less the debt. And even if some of the city’s sales tax revenue comes from ticket sales from arena operations, again this small fraction gathered annually even over decades pales compared to $105 million. Finally, indirect operating costs, such as extra police patrol for events, nowhere are factored in.
In the real world, when a business runs an unprofitable operation, it exits this in order to recoup current assets that can be used in more efficient ways. But in government, you get the likes of new councilor Tommie Harvey asking whether parking revenues can be squeezed out patrons. One would hope a member not invested in the mistakes of the past would recognize that to cure the patient, you don’t treat the symptoms, but the disease, but obviously in this instance one’s hopes are dashed.
That proper course of action is to sell the white elephant. Go low enough, and somebody will buy it who can operate it at a profit. The city can use the proceeds to pay off a good portion, perhaps all, of the debt, to begin to capture hidden costs such as charging the owners for added police protection for events, and to utilize the sales and occupancy taxes in other ways. This is in contrast to continuing to divert city money to subsidize operations and to carry a useless asset on its books.
Sunday afternoon I attended my employer’s fall semester graduation at the arena. If Bossier City finally smartens up, maybe when I repeat the exercise for a new class next year it finally will have stopped bleeding of taxpayers, city employees, and citizens who could use more in the way of city services or lower taxes, when our ceremony will be held this facility it will be privatized.