Report: Pandemic, Hurricane Laura may hit local gov's with loss of $522.9 million, $860.1 million for next two fiscal years
BATON ROUGE - A September 17 report from the Louisiana Legislative Auditor's office updated the anticipated impact of COVID-19 and Hurricane Laura on the finances of local governments in Louisiana and revealed an expected loss of $522.9 million and $860.1 million in fiscal years 2020 and 2021 as a result of decreased sales and ad valorem taxes, as well as lower mineral-related and gaming revenues.
According to the report created by State Auditor Daryl Purpera, this financial hit is expected to impact parish governing authorities, municipalities, school boards, and sheriff’s offices.
Purpera created and analyzed three different models to anticipate a likely financial outcome for the state. The three models were an average scenario, an optimistic scenario, and a pessimistic scenario.
The pessimistic scenario assumes a large initial drop in economic activity and a slower recovery, resulting in lower tax collections. The optimistic scenario assumes the state will experience a smaller drop and a faster recovery, resulting in higher tax collections and revenues. The average scenario falls roughly in the middle of the optimistic and pessimistic scenarios.
Based on the average scenario, Purpera says the ten most affected parishes would be: Orleans, Jefferson, East Baton Rouge, St. Tammany, Caddo, Calcasieu, Lafayette, Bossier, Ascension, and Ouachita.
The report also pointed out that "more than $156.8 million in property taxes and $19.3 million in sales taxes affecting 46 of the state’s 64 parishes will expire at the end of calendar year 2020 unless renewed by voters. Non-renewal of these taxes could result in additional revenue losses for local governments, but could also provide relief for taxpayers. The most affected segments of local government would be school districts, law enforcement, fire districts, drainage, and libraries if these taxes are not renewed."
This September report is a follow-up to a similar report submitted on May 7 of this year. According to the auditor's calculations in that document, it was projected that local governments would lose between $404.7 million and
$1.1 billion in sales, ad valorem, and severance taxes and mineral royalties in fiscal years 2020 and 2021 due to a decline in economic activity.
The most recent September report describes projections that anticipate a larger reduction in ad valorem taxes than those contained in the May report. The updated numbers also anticipate a smaller reduction in sales taxes and overall revenues.
Click here to view the auditor's report in full.