In The News › Our Views: Orleans’ proposed rainy-day fund could provide parish the financial base needed

Our Views: Orleans’ proposed rainy-day fund could provide parish the financial base needed

The Advocate Editorial

November 18, 2017

There are several issues and races on the ballot throughout south Louisiana for today’s election, including a statewide contest to pick the next treasurer and a high-profile race for mayor in New Orleans. We urge everyone to go to the polls and vote.

One measure that deserves support is a proposed change to the governing charter in Orleans Parish that relates to a rainy-day fund for the city.

The current city administration is about to become a lame duck as voters cast ballots for a new mayor and remaining runoffs for the City Council.

But New Orleans’ outgoing public servants have a right to be proud of their role in righting the financial ship and improving the city’s bond ratings. The city was once flat broke because of the 2005 hurricanes and government mismanagement — some of it predating the Nagin administration, but probably made worse during his corrupt and negligent tenure.

Since 2010, tough financial decisions have been made by Mayor Mitch Landrieu and two councils. Today, voters have a chance to put into the charter a final financial improvement: a “rainy day” fund that will protect the city’s financial base.

The proposed amendment to the charter protects a portion of the city’s fund balance as a “rainy day” fund. The council would be required to maintain the balance equal to 5 percent of the average general fund expenditures over the preceding five years. That is recurring expenditures, not one-time money.

That would be about $27 million today. As with all rainy day funds, the money can be tapped in a genuine emergency — flooding or hurricanes or both, for example — by a two-thirds majority of the council. Other events might be a financial emergency, such as the national financial crash in 2008, or unexpected costs required of the city by the U.S. government.

With a fund balance of around twice the amount affected by the charter change, this proposal does not tie the hands of the new administration coming in May. Currently the fund balance can be spent by a simple majority vote of the council.

The Bureau of Governmental Research backs the charter amendment, saying that while it is not an ironclad savings account, it is in line with best-practices in other city governments. “The requirement of a supermajority council vote for appropriations from the Savings Fund offers a check on misuse,” BGR said. “Still, it is imperative that the council adhere to the amendment’s clear intent and limit appropriations to times when the city faces a critical financial need.”

James Madison once said that if men were angels, there would be no need of government. And if all public officials were angels, there would not be a need to write financial prudence into city charters. Common sense would do.

Alas, we’re not there yet. We urge city voters to approve the charter amendment.

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