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REPORT: No Tax Increase Needed for St. George

Tuesday, May 12, 2015

St. George Will Not Need to Raise Taxes
Top 22 National CPA Firm Confirms $11.4 Million Surplus, No Tax Increase Needed
The creation of the city of St. George could be the one thing that saves East Baton Rouge Parish from itself.

Carr, Riggs and Ingram, LLC (CPAs and Advisors) (“CRI”), the 22nd largest public accounting firm in America and the largest in the southern United States, concluded in a publicly released report that the City of St. George will operate with a budget surplus in excess of $11.4 million annually. The firm’s report disproves prior reports that indicated a tax increase was necessary to run the city.

In contrast to the report by Faulk and Winkler, CRI partner C. Donald Wheat CPA, CCIFP, said on Wednesday, “Our conservative view of revenues available and expenses required to operate the City clearly indicate a tax increase is not necessary".  

Mr. Wheat, CPA, CCIFP went on to say, “After careful evaluation of the revenue generated by the City, primarily sales tax, and the cost to run a modern, competitively contracted form of government, we can conservatively estimate a budget surplus in excess of $9 million dollars for the City of St. George.” Mr. Wheat, CPA, CCIFP added, “Any negative economic impact of this incorporation on the City/Parish Government of Baton Rouge can be greatly reduced with sound financial management and planning from East Baton Rouge Parish during the transitional phase post incorporation, which is likely to take several years.”

Lionel Rainey III, spokesperson for the City of St. George stated, “The goal of the City of St. George has always been to create a vibrant, transparent city that is responsive to the needs of the community while being responsible with the taxpayer dollars.” Mr. Rainey continued, “We have stated from day one that we would not have to raise taxes to run a modern, competitively contracted form of government. We are pleased to have that verified by a  public accounting firm with the stature of CRI. We reject any notion or intentional misinformation presented to the public to the contrary.”  Rainey ended with "The creation of a new, growing city will be an enormous benefit for the entire metro-area. Just imagine what a the creation of a new, growing city with great schools would do for this parish. Those who wish to stop this do not have the regions well being in mind."

Report Highlights

- No need to increase taxes in the City of St. George.
- St. George will operate with a $11.4 million surplus.
- With sound financial management and natural attrition/retirement, there is no need to raise taxes in the city of Baton Rouge.

Conclusion from the report:

A. St. George
Based on our assumptions included in the preceding analysis, the proposed city of St. George would be financially viable with an estimated budget surplus of $11.4 million (17% of Budgeted General Fund Revenues). NO NEED FOR TAX INCREASE!

Revenues are budgeted at $65.5 million, and expenditures are budgeted at $54 million, including $4 million of discretionary additional police expenditures.

B. Baton Rouge City‚ÄźParish (Consolidated Government) – (“Baton Rouge”)

Based on our assumptions included in the preceding analysis, the negative change for Baton Rouge’s budget would be approximately $17 million. This would create an operating deficit in the General Fund of about $14 million, which is approximately 6% of total Baton Rouge General Fund revenues.

There is a difference between the 2013 Comprehensive Annual Financial Report (CAFR) General Fund “change in fund balance” ($8.5 million) versus the budget information used. This 2013 actual information was used rather than the CAFR because it includes a more detailed breakdown and also breaks out City and Parish (unincorporated) information. If the CAFR surplus is correct then the effect of the incorporation of St. George would be to create a general fund deficit for Baton Rouge of only approximately $9 million.

The incorporation of St. George would result in a manageable General Fund operating deficit of $14 million or 6% of General Fund revenues to the budget of the consolidated Government of East Baton Rouge. Such amount should not result in an increase in taxes and could be minimized during the incorporation transition period, which could take two to three years, by normal employee attrition and retirement, and/or a reduction in the scope and related costs of vendor/professional contracts.

The complete report and St. George budget can be viewed and/or downloaded here.