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LAFAYETTE – Lafayette City-Parish President Joey Durel introduced his 2009-2010 budget at a 5:30 p.m. Council briefing at Lafayette City Hall. Below is Durel’s budget message:

INTERNAL MEMORANDUM

City-Parish President (120)
L.J. "Joey" Durel, Jr.
Telephone: 291-8300
Fax: 291-8399

June 30, 2009

TO: Purvis Morrison, Council Chairman

FROM: Joey Durel

SUBJ: President’s Message
FY 2009-2010 Adopted Budget

We began work on this year’s proposed budget with a very conservative approach to forecasting the revenues that control the services we are able to provide to the people of Lafayette. It is clear that we are now feeling some of the effects of the national recession. Unlike the national economy, we believe what we have seen locally is primarily the result of a slowdown in the oil and gas sector. It is true that our economic diversity (including health care, technology, and retail sectors) has insulated our economy somewhat from the impact of the recession. Lafayette’s unemployment rate has increased, but it is still well below the State’s average, and is about half of the national average. Our retailers have noticed a change from the historic increases they enjoyed during the months and years since the hurricanes of 2005. That modest decline has had an impact on the current budget year and will have an impact on this proposed budget.

Sales Tax Forecast
The FY 08-09 budget was adjusted to account for an overall sales tax decrease of 2.5%. I’ve instructed Chief Financial Officer Becky Lalumia to assume no growth in the City Sales Tax Fund and a 2% decrease in the Parish Sales Tax Fund for the coming fiscal year.

Proforma
The result is a very lean proforma which protects the City and Parish emergency reserves. Total city fund balances are estimated to remain in the $8-$12 million range over the next four budget years. Parish fund balances and available revenues continue to present the challenges that come with funding Parish operations and services without a sufficient revenue source.

Reductions
As part of our efforts to “balance” this year’s proposed budget, I instructed CFO Lalumia and CAO Dee Stanley to review each line item and to recommend reductions wherever possible without regard to the “size” of the cut. The result yielded reductions ranging from “hundreds” of dollars to “thousands” of dollars across the budget. The Administration is also recommending the elimination of 14 vacant positions, with an annual savings to the City General Fund of approximately $500,000. These cuts should not impact the services provided by the affected departments. Improvements to the LCG pay plan last year and the availability of many experienced prospective employees have allowed the departments to dramatically reduce the number of vacancies historically experienced. So while these recommended cuts are significant, the labor force within each respective department is measurably better than it was just one budget year ago.

Departments with requests to fill vacancies already in the Civil Service “pipeline” will be allowed to complete that process. This is important, since some of these requests are to fill positions created by the retirement of experienced employees and it makes sense to continue that process.

Police and Fire Departments were not affected by this reduction of personnel.

Employee Pay
It is also important that we continue to properly fund the respective LCG pay plans if we are to remain competitive. Consequently, I am recommending a modest 2% across-the-board increase for LCG employees. To do nothing this year, would only compound pay issues in future years and would threaten the progress we’ve already made.

Infrastructure + Public Service
The performance of the City Sales Tax Fund has also negatively impacted the LCG CIP; however, there is still funding available for departmental requests, as well as a limited amount of dollars for projects to further improve our infrastructure. Without a significant new revenue source, we must do what we can to maintain our system of roads and bridges. The wise expenditure of funds now for this purpose will save the people of Lafayette millions of dollars in more costly improvements later on. We will continue the implementation of the 5-year CIP using a combination of PAYG funds and bond proceeds, such as the City bond sale you recently approved. During this budget year, voters authorized the sale of $26 million in Parish general obligation bonds without increasing taxes. We expect to seek your approval this budget year for the bond funds needed to build those projects which will improve Parish roads and bridges in “critical” condition.”

Not included in this proposal is the $900,000 in “directed capital” funds for each of the nine Council districts. Some of you have taken advantage of this funding by directing projects for your district, others have not. While I do believe this was a successful plan, I do not believe that the current state of City and Parish CIP funds will allow it to continue this year. It is certainly worthy of consideration in future budget years.

The Cajundome
My proposal also includes a change in annual funding for the Cajundome. As you will remember, earlier this year the Administration and Council agreed to increase the Cajundome subsidy by $250,000 (to a total not to exceed $750,000) this budget year only. Given the economic conditions we face, the Administration is not in a position to recommend this level of funding this coming year. After meetings with the Cajundome staff, we are recommending amendments to the Intergovernmental Agreement that would reduce the subsidy provided by LCG to an annual amount not to exceed $400,000.

Furthermore, after meetings with the Lafayette Convention and Visitors Commission, Gerald Breaux is prepared to recommend that LCVC contribute an annual amount not to exceed $200,000. Should the Cajundome subsidy requirement not reach these levels, the proportionate share of LCG/LCVC funding would be reduced by this 2/3-1/3 split. The net result is that LCG’s contribution to the Cajundome will be reduced, and we thank our partners at LCVC for recognizing the importance of the economic impact that the Cajundome has on our community by participating in its funding needs. Of course, the funding recommendations and the revised Intergovernmental Agreement will require approval of LCVC and the City-Parish Council.

Use of Fund Balance and Emergency Reserve
The proforma predicts the use of $6.3 million in fund balance to balance the General Fund budget for the City and “zero” use of fund balance for the Parish. Annualized payments of $883,333 to settle the Bailey litigation is shown as well.

We also continue funding of the City’s emergency reserve at $7 million. The Parish emergency reserve remains funded at $3.5 million. Additionally, we anticipate a total projected fund balance at the end of FY 2009-2010 of $10.7 million, including the emergency reserves mentioned above. We expect that number to increase in the final year of the proforma to $12.0 million. During that same period, we expect the use of fund balance to “balance” the budget to cease and we will begin a “surplus” of revenues in excess of expenditures in 2012-2013.

Comprehensive Plan
This Administration has also recommended significant funding for the implementation of the Comprehensive Plan. I am suggesting that we use recognized experts in this field, working side-by-side with Council members and staff to implement the plan that has eluded this government for two decades. It can only be accomplished with Council members being included in the process. My proposed budget includes $400,000 to be funded by revenues generated by building and construction. It makes sense that the plan that will guide our future development should be funded by that very source. We know from history that the economic climate is only temporary and plans for the future are best made during times like these. Lafayette is the only major city in Louisiana to experience population growth this century. I am excited about this trend and I join you in planning for the future.

Once again, I thank all department directors for their work on this budget. Specifically, I would like to single out CFO Becky Lalumia, Budget Manager Sharon Borel, and the entire finance staff again this budget year.

Sincerely,

L.J. Durel, Jr.
City-Parish President