The first report in the BGR Outlook on Jefferson series (The Parish Council, April 1997) addressed several issues confronting the Parish, one of which was road construction and improvement needs and funding. Parish officials are now asking voters to extend a one-cent sales tax, scheduled to expire in 2006, and rededicate 7/8 of one cent to include road projects. One-eighth of the one cent would continue to be dedicated to law enforcement. The purpose of this report is to review that proposal.
Traffic congestion is one of the most visible problems Jefferson Parish residents face. The Jeff 2000 priorities conference identified over $100 million in road projects needed to improve the flow of traffic. According to parish officials, however, there is not enough money for major road improvements under the current tax structure.
Various
funding options were reviewed as part of the Jeff 2000 priorities
conference. The Transportation Revenue Subcommittee recommended
two, a 1/4 cent sales tax increase or an annual vehicle
registration fee, or road-use tax, on cars and trucks.
Rather than attempt to levy a new tax or fee, however, parish officials have opted to extend and rededicate a one-cent sales tax, 7/8 of which is used to fund sewerage projects and 1/8 of which goes for law enforcement. On the ballot for a special election January 17 will be a proposition extending the tax to 2022, leaving in place the 1/8 portion for law enforcement in place and rededicating the 7/8 portion to sewerage and road projects. The tax would otherwise expire in 2006. For the ballot language, see Exhibit 1.
The Need: Road Improvements
The Jeff 2000 Transportation Action Committee
identified road construction and improvements needs for across
the parish. It was estimated that the East Bank needed $61.5
million in projects, and the West Bank needed $49.5 million. An
additional $2 million worth of work on Lapalco Boulevard was
added to the list at a special council meeting on December 3.
(See Tables A and B.) The Transportation Action Committee was
chaired by Parish President and composed of civic leaders.
The only significant priority need identified by the Transportation Action Committee that does not appear in these tables is the Causeway Boulevard corridor.
The Proposal: Sales Tax Extension
Parish officials are asking voters to rededicate and extend to the year 2022 a one-cent sales tax, slated to expire in 2006. The extension would allow for the completion of the 1984 Capital Sewerage Program and would fund an estimated $125 million in bonds for road projects, as well as continue the 1/8 cent dedication to law enforcement.
Voters approved the sales tax in 1984 primarily to pay for a $380 million sewerage improvements program. The population boom prior to 1984 had overburdened the sewerage system, resulting in the threat of federal fines if improvements were not made. Eighty-eight percent of that work has been completed.
In October, the Parish Council called a special election to rededicate and extend the one-cent sales tax to 2022. The measure will be on the ballot January 17, 1998.
The proposition rededicates the proceeds of 7/8 of the one-cent tax for two major purposes. It will continue to fund the purchase, construction, acquisition, and improvement of sewerage projects contemplated under the Sewerage Capital Program and the cost of maintenance and replacement of sewerage facilities.
In addition, proceeds would fund the construction, improvement or maintenance of public roads, streets, or highways located in the parish. The work would include reconstruction, rehabilitation, base stabilization, drainage, adjustments, and related sidewalks and curbs.
The Council on December 3 adopted a resolution listing $113 million in specific road projects (shown in Tables A and B). An ordinance listing the projects is scheduled for adoption by the Council on December 17.
Once adopted, the projects could only be changed by amending the ordinance, a process that requires introduction of an amending ordinance, a layover to a second council meeting, and an opportunity for public comment before the council vote. Parish officials have stated that a formal public hearing will be held on any proposed changes to the program.
If the proposition passes, the parish would borrow $125 million for road improvements through the issuance of bonds backed by revenues from the tax rededication and extension. Sale of the bonds is expected to be phased in over several years, but not before March 1999. The Parish Council has already advertised for bond underwriters and bond counsel and could select them as early as the first council meeting after the election. Each bond sale will have to be approved by the State Bond Commission, which meets approximately monthly. Initial engineering work for the road projects will be financed directly by the proceeds of the tax, with bonds being issued once actual construction is to begin.
Seven-eighths of the one-cent currently generates $32 million in revenues. The Parish owes about $22 million a year through 2006 in debt service on the existing bonds. The excess is presently used to pay for "pay-as-you go" sewerage projects, as was intended under the original plan.
Interest on the debt for the $125 million in twenty-five year bonds would total an estimated $172 million, bringing the total cost of the bond program to $297 million. This estimate assumes a 5.5 percent tax-exempt interest rate. According to parish officials, the parish has the highest bond rating of any parish in the state, thus is able to get low interest rates.
Current outstanding debt service for sewerage is $22.1 million per year and remain at that level until 2006 (See Table C, Column C). The debt service requirements for the $125 million bond issue will range from $2 million in 1998 to $3.9 million in 2006 (Column D).
After 2006, debt service on the new bonds will increase to $15.7 million a year, averaging a one-percent-per-year increase until the final payment of $18.2 million in 2022 (Column D).
In 1998, after the debt service is paid, an estimated $7.9 million for direct spending on sewerage projects will be available. This amount will increase to an estimated $8.5 million in 2006 (See Table C, Column F). In 2007, and the following years, that amount will decrease to $8 million annually, an amount the sewerage department says will be adequate for sewerage upkeep.
In 2007, the cash available after
debt service will more than double to $19.3 million (Column E).
The reason for this large increase is the fact that the debt
service on sewerage projects will be paid off entirely. The cash
available for projects is projected to cap at $22.4 million in
2022 (Column E) and will be used to fund both sewerage and road
projects.
It is estimated that $8 million per year will be needed for sewerage upkeep (Column F). Beginning in 2007, $4.6 million annually for five years is designated for future sewage capital needs (Column H).
The remaining amount (Column G) will be available as needed, for street maintenance, new street projects, new sewerage projects, and as local matching funds for state and Federal monies.
Parish officials state without hesitation that the rededication will not hamper completion of the 1984 sewerage improvement program and that the projected annual $8 million for sewerage upkeep after 2007 is adequate. An additional $23 million is designated for future sewerage capital needs after 2007.
The only major traffic problem identified by the Jeff 2000 Transportation Action Committee and not covered by the proposed projects is Causeway Boulevard. The Jeff 2000 committee identified $36 million in construction projects just along the boulevard in Metairie and in the Jefferson community.
Causeway Boulevard Improvements
Jefferson Parish, St. Tammany Parish and the Causeway Commission are planning a $100,000 study of possible traffic improvements, including those along Causeway Boulevard. The Regional Planning Commission will oversee the study.
The study will suggest two tiers of improvements. The first five years of the improvement plan will focus on simple, immediate means of improving traffic flow. The second will focus on lane additions and other capital-intensive projects. The study will also make recommendations on how to fund the projects.
Although parish officials hope to use tolls on Causeway users to fund the Causeway Boulevard improvements, a spokesman for the Regional Planning Commission has stated it is too early to focus on any one source.
The parish currently has an engineering firm under contract to produce a major street plan for the West Bank. The need for such a plan was reinforced recently by a recommendation from researchers preparing a land use and zoning plan for the Barataria Corridor on the West Bank. The current major street plans date from 1981 for the West Bank and 1984 for the East Bank.
Issuing bonds rather than performing road work on a pay-as-you-go basis will result in an estimated $172 million in interest costs for the $125 million bond issue.
Delaying projects until the cash is available, however, could result in a net increase in total costs. Roads would further deteriorate, making projects more costly. Inflation would also add to the costs of projects.
The Jeff 2000 Transportation Action Committee considered various funding alternatives for the road needs it identified including a sales tax increase, millage tax, gasoline tax, and registration fee. The Transportation Revenue Subcommittee recommended two, a 1/4 cent sales tax increase or an annual vehicle registration fee, or road-use tax, on cars and trucks.
Recent legislation gives the Parish Council the option to levy a parish road-use tax on vehicles. Act 1425 enacted in the 1997 regular session of the state legislature authorizes the Parish Council to levy and collect a parish road-use tax of $20 a year for cars and $25 a year for trucks. This tax would be subject to voter approval. The proceeds could be used to finance street improvements and infrastructure needs. It is estimated that the tax would generate about $10 million annually in revenues. Jefferson Parish officials have no plans at this time to seek voter approval for this funding option.
The most likely means of funding Causeway Boulevard improvements, in particular, would be a causeway toll increase, which has been favored by the Jefferson Parish officials as a way to fund Causeway Boulevard projects.
The 1997 regular session of the Legislature, moreover, placed two major restrictions on use of the Causeway Commission (Greater New Orleans Expressway Commission) to collect tolls for non-Causeway road work. Act 1469 requires a two-thirds approval of each house of the legislature for any toll increase collected for a political subdivision to use for road work. Act 855 requires that any agreement between a political subdivision and the Causeway Commission to collect a toll on behalf of the political subdivision for non-Causeway road work must be approved by voters in Jefferson, Orleans, St. Tammany, Tangipahoa, and Washington Parishes.
Other Traffic-Reducing Options
Although mass transit as an option for reducing traffic congestion and easing traffic flow was mentioned at the Jeff 2000 conference, the committee gave that option no serious consideration.
Parish officials anticipate
completion of the planned road improvement projects within five
years. Management of the projects will be the direct
responsibility of the Engineering Department. Construction will
be contracted out, and construction contracting must be carried
out in conformance with the State Bid Law.
If additional staff is needed to manage the projects, the usual practice, according to the Parish President’s Office, would be to engage independent consultants for the duration of the projects. Under the parish Code of Ordinances, the Parish Council selects such outside contractors.
Architects, engineers, and surveyors are required to be selected according to the procedures outlined in the Parish Code.
The selection of professional services in connection with the proposed program is governed by the Parish Code of Ordinances (Article VII, Chapter 2).
The Parish uses a Request for Qualifications method, under which cost is not one of the criteria for selection, for architectural, engineering, and surveying services.
For other professional services, the Council may specify, in addition to criteria listed in the Code, "any other criteria for selection deemed to be relevant or desired by the Council," presumably including cost.
The procedure described in the Code provides for a technical evaluation committee to "confer and evaluate all submittals for all architectural, engineering and surveying projects" { Article VII, Sec. 2-929(a)} .
There are financial, insurance advisory and coordinating, and data processing committees to evaluate other submittals; and the Council can designate advisory or evaluation committees to evaluate other projects.
The technical evaluation committee for architectural, engineering and surveying services submits to the Council a list of all persons or firms the committee regards as having demonstrated adequate experience, competence, and expertise. The list is submitted "without additional classification," that is, without ratings or recommendations.
The Parish Council makes the determination of which person or firm is "best qualified" to perform the needed or desired professional services. The technical evaluation committee or other evaluating committee determines only "adequacy" to perform.
v There is little doubt that Jefferson’s Parish’s traffic congestion and road conditions need to be remedied. Since the parish has no available revenues under the current tax structure, alternative funding sources are required.
v The extension of the one-cent sales tax, to fund an additional $125 million in bonds for road projects, would be a source that would add no current additional tax burden to citizens. In addition, law enforcement would continue to benefit from the 1/8-cent dedication to that purpose.
v The proposed tax rededication and extension allows for completion of the originally-intended sewerage work.
v Although the proposal does respond to documented road improvement needs, future proposals and specific projects lists should be generated in the context of up-to-date major street plans. These street plans should also be tied to a comprehensive land use and development plan for the parish.
v The proposal uses a reliable funding source.
v Citizens would continue to be able to know where the 7/8-cent would be spent, since the Parish Council is scheduled to adopt an ordinance specifying the road improvements on December 17. If and when parish officials desired to deviate from the projects as listed in the ordinance, the Council would be required to amend the ordinance, with the usual requirements for notice and public comment. In addition, parish officials have committed to holding public hearings to determine alternate projects.
v Finally, because an ordinance will identify specific projects and the proposal is projected to generate excess cash for dealing with emerging needs, the proposal provides a responsible balance of accountability to voters and flexible fiscal management.
v The Jefferson parish proposal to be on the ballot January 17 would extend to 2022 a one-cent sales tax currently set to expire in 2006 and would rededicate the tax to add road improvements to the approved purposes.
v The tax currently generates about $36.6 million a year, about $4 million of which goes to the sheriff and to cities for law enforcement and about $22 million of which is needed to pay off sewerage program bonds. Most of the rest is being used for sewerage repair and replacement.
v The Parish Council plans to use the tax to issue $125 million in bonds to pay for road projects.
v Specific road projects are identified in an ordinance scheduled for Council action on December 17.
v By 2022, the tax is expected to generate about $46.4 million a year, about $22 million of which will be cash available to pay for road and sewerage projects.
v By 2022, the tax will generate a projected $5.9 million for law enforcement.
v The proposal will pay off the existing sewerage capital bonds, complete the sewerage projects associated with the bonds, and pay for the road improvements identified as priority needs by the Jeff 2000 Transportation Committee – with the exception of Causeway Boulevard improvements.u
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