Yesterday, the St. George organizers put out a detailed response to a report issued by the Baton Rouge Area Chamber and Baton Rouge Area Foundation which alleged, among other things, that should St. George incorporate it would necessitate a 20.5-mil property tax increase in the new city that would cost the owner of a $350,000 house some $720 per year in higher property taxes.
That allegation didn’t sit well with the St. George people, who promised a detailed response after the holidays. Here it is, and it makes for interesting reading as an exposition of what a different view of local governance from that currently emanating from Mayor-President Kip Holden’s office could look like…
We arrived at this point today out of frustration – frustration that a school system is failing our children, failing our parents, and failing the community as a whole. We were told that the system is improving, but everyone understands, at least perceptually, that the school system has failed to gain the confidence of parents of school aged children. The majority of our middle class parents that choose to stay in EBR choose to pay for private schools. However, over the past thirty years our residents have fled to surrounding parishes or states that can offer a better quality of life.
This frustration has been compounded by the lack of acknowledgment from Parish leaders regarding our concerns. We have been called dissidents, racists, and terrorists, but we have never been called to a meeting to discuss the issues we have with the Parish. Maybe we could have met in the middle and had our issues resolved. Instead we were treated as if our concerns didn’t exist.
Once again we have been confronted with another BRAC/BRAF funded report that has been reported by the media with no fact checking. We decided to do our own fact checking and give the residents of this Parish a much more accurate depiction. Our synopsis may have not been done by a high priced firm, but we challenge anyone to dispute the truth and logic of the data. It must also be noted that polls were conducted prior to the report being published that said if taxes went up, people would not be favorable towards St. George. It is no surprise that their report indicated an increase in taxes.
In the first few months of the St. George Movement, BRAC and BRAF, contracted with Dr. James A. Richardson from LSU to complete a study on economic impact of St. George. We were told how knowledgeable Dr. Richardson was, and how the St. George movement was amateurish at best and numbers were wrong. In fact, our initial sample budget was off by only 5% of Dr. Richardson’s initial prediction.
St. George anticipated revenue done by Committee to Incorporate
St. George anticipated revenue done by Dr. Richardson
$84,652,837.00 (does not include any revenue from Gaming)
In page 21 of the Richardson Study, the second paragraph states, “Based on the estimates of tax and fee collections the proposed municipality now contributes 30 % of all revenues to the City-Parish General Fund.”
The Richardson study gave this anticipated revenue amount without including industrial areas (Exxon) into the equation because he knew that would not be in the new municipality.
According to Richardson numbers, the City of St. George, taking into account the recent annexations, would still have $70-75 million in revenue. It would probably be closer to $75 million. Going off of our proposed sample budget ($60 million), we would have a surplus of $10-15 million, showing NO NEED TO RAISE TAXES. How did we get to $70-75 million? The only property of any financial significance annexed into the City of Baton Rouge was the Mall of Louisiana (excluding the anchor stores). L’Auberge casino Casino would be included; however, Dr. Richardson did not list the casino as a possible source of revenue for the new city. All other properties were either tax exempt or insignificant. The Advocate reported, based off of City-Parish financial records, the mall generated $8-9 million a year in sales tax including the anchor stores. So we will be conservative and say $9 million was lost.
The new BRAC/BRAF report, from accounting firm Faulk and Winkler depicts the City of St. George as being way off point for per capita spending for a new government based off of similar sized cities in our country. The problem with that assertion is every city that they chose has expenses in their budget that we pay for separately. We reviewed all of these city budgets and stripped all money out that we already pay for separately and recalculated. What we discovered is that our sample budget actually places us above the average of what these other cities are spending in government per capita.
The reason being is that the City of St. George will already have fire protection provided by two fire protection districts that are currently funded by the citizens. Police protection will continue through the Sheriffs office,which is currently funded by every taxpayer in the parish. A supplement will be added through negotiations with the Sheriff. In addition, some budgets include school systems, library systems, recreation systems, garbage disposal, transportation systems, fire, police, schools and other services that are separate taxing entities in our Parish. These too will be stripped out to create an accurate picture. All of these numbers will be based upon 2013- 2014 Budgets.
Expenditures Rev we do not pay via city budget Population Per Capita Spending
Sandy Springs, GA: $87,853,342 $57,553,342 100,000 $575.53
Roanoke, VA : $260,033,000 $111,298,669 98,641 $1,135.00
Macon, GA: $71,187,700 $27,620,500 90,000 $306.89
Gainesville, FL: $127,796,924 $53,154,500 127,988 $415.31
Clarksville, TN: $78,449,914 $18,473,519 142,519 $129.62
Wichita Falls, KS: $162,995,428 $40,187,619 104,553 $384.38
Clearwater, FL: $264,454,925 $34,384,123 107,685 $319.30
Columbia, SC: $124,655,240 $45,801,453 133,358 $343.45
St. George, LA : $60,297,278 na 107,000 $563.52
Average per capita spending with similar sized populations: $451.12 (St. George: $563.52)
How are the numbers of the Richardson Study and the new study so vastly different?
Faulk and Winkler Study
Proposed SG sample Budget:
Sales Tax: $67,686,600
Gaming Taxes: $7,000,000
License Tax: $3,160,000
License and permit fees: $1,228,800
Franchise Fees: $900,000
Insurance Premium Tax: $760,000
Planning and Zoning Fees: $92,000
Faulk and Winkler revision post annexations (They also remove $14,000,000 for Industrial area. That dollar amount was never included in our sample budget).
Sales Tax: $45,700,000
License Tax: $2,560,000
License and permit fees: $1,228,800
Franchise Fees: $900,000
Insurance premium tax: $760,000
Planning and zoning fees: $92,000
Faulk and Winkler derived their sales tax calculations using two methods. The first was based off of population. They attest that St. George makes up 67% of the population of currently unincorporated EBR, so they must generate 67% of the sales and use tax for unincorporated EBR. According to this method, they will have you believe that almost $20 million in sales tax is collected in unincorporated EBR outside of proposed new city. For that to be correct, they want you to believe that $1 billion is spent in Town Center, a few residential neighborhoods, and in the northern rural part of the Parish. The same report will tell you that the mall only represents approximately $9 million in sales tax generated.
Mall of Louisiana= $9 million in sales tax (approximately $450 million dollars spent)
Town Center, residential neighborhoods, and Rural parts of EBR= $20 million in sales tax (approximately $1 billion dollars spent)
The second method that Faulk and Winkler used to derive sales tax data was by zip code. Utilizing that method, Faulk and Winkler settled upon $50,898,188.00 in sales tax generated in St. George. The problem with this method is that, according to the study done by Dr. Richardson (page 21), he followed this same methodology and came up with a much different number. Dr. Richardson, the expert opinion that BRAC and BRAF utilize frequently, came up with an original sales tax amount of $68,011,627. If we remove the loss of the mall, that will still leave the City of St. George will approximately $59 million in sales and use tax dollars. Strange…it is almost like BRAF and BRAC paid two separate contractors to tell two different stories. The Dr. Richardson story tells its readers that St. George will destroy the City-Parish because we will strip away 30% of the revenue, and the Faulk and Winkler story tells us that St. George doesn’t have enough money to survive without tax hikes.
Sample proposed St. George Revenue utilizing Dr. Richardson’s data (eliminating mall money from revenues and based off 2013 budget)
Sales and Use Tax: $59,500,000.00
Gross Receipts business Tax: $3,840,000.00
Occupational License Tax: $3,700,000.00
Insurance Premium Tax: $875,000.00
Interest, Penalties, and audit collections: $892,500.00
Total Taxes: $68,807,500.00
Licenses and permits: $1,404,000.00
Charges for Service: $5,752,310.00
Fines and Forfeits: $5,000.00
Misc. Revenues: $172,400.00
Total Revenues: $76,141,210.00
Once again, this is using Dr. Richardson’s numbers.
There is a $25 million disparity between the two studies, both contracted by the same organizations, depicting the anticipated revenues of the new city.
In Dr. Richardson’s study, he didn’t factor in the money we had allotted in our budget to pay for 100% of the Constitutional Offices, non-governmental agencies funded by EBR, and our fair share of other Parish services (totaling $28.1 million dollars). We wanted to do this as a show of good faith that we wanted and still want to be a viable partner and financial contributor in East Baton Rouge Parish. However, Dr. Richardson and our opposition routinely reminded us that we were not elected officials and didn’t possess the legal authority to shower the Parish with such good will. By not showing this financial commitment in the Richardson Study, the financial deficit for the EBR was made to seem much larger then what we had proposed in our sample budget.
In the Faulk and Winkler study, our initial financial commitment to the Parish was included in the numbers. All of a sudden we had the authority to make this decision. We suppose that this was done to portray the future City of St. George beginning in a deficit on day one.
Because both of these reports, funded by BRAC and BRAF, are so different regarding who will actually pay for the constitutional offices we decided to rely on Louisiana State law to give us direction. State law informs us that municipalities are not required by law to pay for Constitutional Offices. The price tag of these offices is to be paid by the Parish. This is the reason why currently all Constitutional Offices are 100% funded by the Parish of EBR, not by Baton Rouge or any other municipality in EBR.
We have stood by our commitment in our original budget to fund the Constitutional Offices 100%…but once again we are constantly reminded that we are not elected officials with legal authority to make such a decision. However, if the future City of St. George revenue stream dwindles due to annexations, the future elected officials will have to potentially reconsider our initial attempt at good will. The point continually being that the City of St. George will be financially viable, and that the future elected officials of the City of St. George will have to decide on whether to extend that same good will.
According to the Faulk and Winkler study the city of St. George would need to raise taxes 11.5 mills in order to be financially solvent and the potential school system would have to raise taxes by an additional 9 mills. As shown in previous pages, we disagree with the necessity to raise taxes, but we will show you the maximum tax raise you would pay without a vote of the people.
The glaring omission left out in this declaration is that the citizens would have to vote on the majority of these tax hikes. This omission is no real surprise considering our opposition’s distaste with the voting process. According to state law (RS 33:2801), a municipality can levy a maximum of seven mills without voter approval. Using the millage rate determined in Faulk and Winkler study, a mill for a $350,000 dollar house is worth $35.00. So a 7 mill increase would equate to a $245.00 yearly increase for a homeowner that lives in a home valued at $350,000. Lucky for us, most of us live in homes valued less than $350,000 so that potential amount would be less.
The school issue is always thrown into this argument to muddy the water financially. The following are the steps that would have to happen in order for taxes to go up for school system:
Step 1: Incorporation of City of St. George (Possibly 2015 then held up in court for as long as humanly possible by Mary Olive Pierson, who is just volunteering her time to the Parish for $50,000, or John Delgado holding the Parish together with his bare hands).
Step 2: Go back to legislation, probably not until 2016 and get legislation passed to create new school district.
Step 3: Statewide vote in fall of 2016 to actually create new school district.
Step 4: School system will not change management until the earliest of 2017.
Step 5: If taxes will need to be raised, it will go to the people for the vote (probably 2018), despite our opposition wishes…we still live in a democracy where residents get to vote on their futures.
Remember these are the same people that are trying to pass a $350 million dollar tax hike next year….interesting.
We are sure that the newly elected officials of St. George will work out some type of agreement with legacy costs once we incorporate. However, the idea that the new municipality would be on the hook for pension and post-employment benefits for Police and Fire is absolutely absurd. The Faulk and Winkler Study and the Dr. Richardson study will have you believe that because you may work or shop in the City limits of Baton Rouge that you are somehow obligated to pay for these services. Using this logic, every parish and municipality should set up toll booths collecting money for these services as we travel. It has been standard practice, since the beginning of taxes, police, and fire that you pay for the service where you reside…not where you work….not where you shop.
Though not logical, even if for some reason we had to pay the full amount of legacy cost detailed in the Faulk and Winkler study ($3.6 million a year), we would have no problem accomplishing that without raising taxes. We have already proved earlier in this report, using Dr. Richardson’s research and numbers, that we would have a surplus of $10-15 million.
We are simply middle class Americans that refuse to worship at the altar of the Baton Rouge status quo. There was a time when the current form of government was probably the best way to conduct business. We believe that time has passed. Furthermore, please do not take our word on all of these numbers, do your own research like we have done. Refuse to be force fed the twisted truth to further the agenda of the elite. We want the same thing that we wanted in the beginning of this journey—a vote of the people. Let the people decide their fate.
Don’t muddy the waters with inaccurate data that is not investigated by local media before being published. If you want people to really decide, give them the real truth. We have grown tired of name calling, personal attacks, and just plain nastiness; however, we remain resolute in our mission. We will not go away quietly; we will finish what we started one way or another.
We have never professed that we have all of the answers, what we have done is given the people in the St. George area another option. An option to become the trustees of their tax dollars, an option that will hopefully lead to the creation of a new school district, an option that we believe will benefit their children and grandchildren. If you don’t agree with the St. George option, the process is simple – just vote against it…this is America.