Citizens question why city continues to borrow money

Published 4:45 am Saturday, February 23, 2019

During Tuesday’s meeting of the Bogalusa City Council, the council approved a routine, administrative occurrence that took on additional scrutiny.

It is common for city governments to take out a line of credit called a Revenue Anticipation Note (RAN). This is a short-term loan that allows municipal governments to borrow up to a certain amount under low-interest terms, and then repay the loan as property tax revenues come into the city later in the year.

This year, the Bogalusa City Council approved an ordinance to apply to the State Bond Commission for the approval of a RAN of up to $950,000. City council member Oneita Graham explained Tuesday that the city may not necessarily borrow all of that amount, but the opportunity is there if the city needs it.

In addition, although the city approved the ordinance, it will not actually be able to apply for the RAN until it has passed its budget for this year.

David Wolf, the city’s tax and bond attorney, said that the loan would be subject to a floating interest rate, but that rate will never exceed more than 6 percent. In addition, there is no interest charged at all on the first $100,000 borrowed.

“It’s a cash management tool, and it’s one that the city has done routinely for as long as I’ve been working with the city,” Wolf said. “And that goes back to the late 1980s.

“It’s always been paid back on time, and there’s never been any issue with it.”

During public discussion on the ordinance, several citizens questioned why the city would borrow any money, considering the events of the day before. On Monday, the state Fiscal Review Committee announced that Bogalusa would have its locally elected officials temporarily replaced by a state fiscal administrator.

The fiscal administrator is being named because of the city’s difficult financial situation, especially in regards to its pension program for retired city employees. It is estimated that Bogalusa will have to cut about $1 million from its budget this year in order to meet its financial obligations.

“I think it would be real foolish to adopt this bond right now,” citizen Fate Ferrell said. “Because you’ve got the state coming in to take this city over. The city has already got problems going on. Why would you go off into something else if you’ve already got problems going on? It doesn’t make any sense.”

“You don’t need to borrow more money,” citizen Adam Wright agreed. “You need to get out of the mess you have already gotten us into.”

However, not all citizens spoke out against the RAN ordinance.

“I think y’all have spent so much time tonight working on it, go ahead (and approve it),” Laurie Steinwinder said. “I understand the function of it. It’s strictly administrative.”

During council comments, Graham and council member Mark Irvine each noted that the state fiscal administrator would ensure that Bogalusa does not borrow any more than it can afford, through its RAN line of credit.

The ordinance was approved, 5-1. Gloria Kates voted against it, stating that she would prefer to wait until the fiscal administrator was in place, and Teddy Drummond was not present.


In other business, the council:

  • Introduced an ordinance to amend Ordinance No. 1911 authorizing the Bogalusa Police Department to charge a fee for processing bonds in criminal matters and placing collected fees in a special account to roll over early and to be used solely for police equipment. This ordinance will be up for public discussion and a vote at the council’s next meeting on Thursday, March 7, at 5:30 p.m.
  • Approved an ordinance employing Adams and Reese LLP, of New Orleans, as special bond counsel to the city of Bogalusa for an initial term of one year.

Several citizens asked why the city should employ a special counsel when it already has city attorney Dale Branch. Perrette said that the special bond counsel is only used for matters pertaining to tax and bond matters, and has specific expertise in that subject.

“Unfortunately we do not have anyone in Washington Parish that is a bond-tax attorney,” she said. “This would be, also, Adams and Reese’s fifth year with the city of Bogalusa. I just wanted to make that clear.”

The ordinance passed 5-0, with Kates abstaining.

  • Approved an ordinance by a vote of 6-0 to amend Ordinance No. 2578: Section 1330, concerning duties of the Parks and Recreation Commission.
  • Heard Perrette proclaim February as Veterans Suicide Awareness Month.
  • Approved by a vote of 6-0 for Stacy Seal to join the Planning and Zoning Board.
  • Kates introduced a resolution amending Resolution No. 1455, Rules of Procedure for Council Meetings; Chapter VI, Agenda, Section F; Public Participation; Adoption Rules of Procedures of the Bogalusa City Council Meetings. The resolution failed for lack of a second motion.

The meeting lasted for about two hours and 15 minutes. The next meeting of the Bogalusa City Council will be Thursday, March 7, at 5:30 p.m. at Bogalusa City Hall, located at 214 Arkansas St. All members of the public are invited to attend.