Will the City of Bogalusa Continue Governing Itself?

At the invitation of Mayor Wendy Perrette, representatives from the Louisiana Legislative Auditor's Office spoke to the Bogalusa Council Tuesday (July 17, 2018). Bradley Cryer, Assistant Legislative Auditor and Director of Local Government Audit Services, informed the Council of the very real possibility that the City would be placed under a fiscal administrator.

Cryer said the City is not the worst city in Louisiana with regard to repeat audit findings; it is the second worst. The City is in the category of being financial unstable and, therefore, subject to financial administration.

What would this mean? The City would lose State of Louisiana funding, personnel and services would be cut, the mayor and council would be removed from decision-making positions by a judge, and an appointed fiscal administrator would come in to make all decisions.

At issue is not the City's operational budget or management by the current administration. As revealed by Auditor Robert Neilson, the City is operating in the black, with more revenue than expenses. And, some $400,000 in expenditures were cut in 2017. The problems are issues that date back many years, issues that the Mayor advises she needs cooperation from the Council to address. Getting the facts from the Office of the LLA and being given a deadline to act may indeed spur action.

The City has until September 30, 2018 to provide a firm corrective action plan.

(See excerpts of the minutes below of Cryer's comments at the meeting)

Re City of Bogalusa Fiscal Crisis July 17 2018 from Mt. Hermon Web-TV on Vimeo.

BY BRAD CRYER: I’m the Director of Local Government Legislative Auditors Office. I appreciate having the opportunity to talk to ya’ll tonight. You got your audit report from Mr. Neilson and going to sit down to talk to you for a few minutes but there are somethings I kind of want to get cleared up with you. We have been working with Bogalusa since 2013. We came in with the prior Mayor deal with some financial problems back then some findings that were outstanding and we are still here five years later. And a couple of things I want to point out the audit report when we came in here five years ago there were six findings in that report. The largest one by far is the pension liability issue the underfunding in that liability. There was also some issue with that reserve funding, there were issues with General fund borrow from other funds and all that was related to financial problems receiving having a time. But those finding are still in this year’s report. There is new findings in this year’s report. They also deal with fiscal issues. In 2014 the Legislature passed a law that we call the Three Strikes Law and what that Law says is that if you have repeat findings without good reason for three more years in a row then our office can bring the Legislative Auditor Advisory Council and ask them about the hard questions about what you are doing to fix those findings and if they don’t like the answers for getting they can take away all of your state funding. That was the key that was put in that wall because we had repeat offenders year after year after year not fixing those problems. We are about to start enforcing that law, it has been three years now. Bogalusa is not the worse city in the state as far as number of findings, it is the second worse in the state regarding the number of findings. The first we are going to have on our upcoming varsity meeting, I’m sorry our upcoming Advisory Council Meeting. The reason we are not bringing Bogalusa yet because we are working with you guys for a number of years we want to continue working with you to try and resolve some of these issues but I kind of want to be respective of where the city is at with the pension issues with the Landfill issue and other things that are coming up in the audit report and of course that big elephant in the room is the pension liability. That has been out there for thirty years. It is not something that you created, it is not something the prior administration created but it is still there. As elected officials you have an obligation to try and fix those problems to try to fund that liability. Now we haven’t seen a lot of progress in that regard since we have been involved with Bogalusa for the last five years. Another section of Law the Legislative passed a number of years ago it talks about fiscal administration and what fiscal administration means is that there is a committee formed by the Legislative Auditor, the State Treasure, and the Attorney General and that committee has the ability to appoint a fiscal administrator to take over a town and run that town from top down. That situation the administrator has complete power to make decisions day to day. The Council, the Mayor, Chief of Police, all of those are only advisors to that fiscal administrator. Now we don’t want to get in the position where you have that happen but we have to have some action on some of these different issues coming up pension liability and particular the landfill liability I know is still a big issue out there and some of the other issues as well. Right now the pension liability worst case scenario you will be out of money in that system as early as two or three years. More than likely your auditor is funding five to six years but it has gotten to the point where you cannot put it off any longer to try and make a decision of how to fund it. And it is really simple the same question the Legislature has for the last two years the state budget either raise money or you cut expenditures. If you have a fiscal administrator that comes in here they can’t raise taxes. You can raise taxes you can put it on a ballet, you can raise fees. They can’t do that but they can cut services, they can cut personnel, they can sale property but they are going to make those books balance one way or the other. It takes the power out of your hand as government, as elected officials. We don’t want that to happen but we had that happen right now. We have a City of Direct System Administration, City of St. Joseph, we have a hospital in North Louisiana, and this is not a rare occurrence it does happen but once again they are trying to work through these issues one at a time. But what we need to see is some action. There has been a lot of talk we have five years of talk about fixing things. We are not seeing any effort of being made actual big dollars on the papers to say this is going to fix our problem. Whether cutting those expenses or raising the revenues and I understand the millage that ya’ll put on the ballet back in March failed 22% to 78%. You can’t wait nine months to put another mileage on the ballet and hope that one gets the one percent it is not just responsible. Right now we believe it falls in the category of being financially unstable. Therefore it is subject to fiscal administration. What that means is that you don’t have efficient revenue to pay your current expenditures. And if you say well we are keep our lights on we are paying our bill and members aren’t complaining but you are only paying the bills you can afford to pay. You are not paying a pension cost which is running five or six hundred thousand dollars a year more than you are paying in right now. You are not dealing with the Landfill issue in resolving that and some of the other things I feel like reserves that has not been funding for many years. Those things you have to take some action on. I am here tonight to really kind of put the respective in you with the Three Strikes Law that can cut off state funding fiscal administration that can do a complete take over. What we are asking and the reason we are here tonight is to say we are going to send a letter to them about both you and the Mayor and we are going to be asking for a firm correction action plan. A real (inaudible) says a timeline of what we are going to do and when we are going to do it and we are going to ask for a response back on that by September 30^th. Once we get that plan we are going to look at it we are going to talk with you but if we don’t see real action if we don’t see real solutions being purposed then the Three Strikes Rule state funding principal administration all of those are options on things that will keep in our back pocket as the ways to fix the problems. We are not here to represent the Council we are not here representing the administration or anyone else except the taxpayers in Bogalusa and that is our perspective and that is why I am hoping that you will work with us that you will come up with the solutions that we can all agree to that can work for everyone. So if ya’ll have any questions for me in general we are not here to talk about some specifics tonight but I will be glad to talk with you further.