BAY ST. LOUIS, Miss. – Five months after Katrina ravaged the Gulf Coast, the hurricane continues to plunder the coffers of local governments.
“The county’s fiscal health is very fragile right now,” said Hancock County Administrator Tim Kellar. “I don’t want to call it a critical position” but it’s “certainly not a stable position.”
Since Katrina struck Aug. 29, Kellar, along with Bay St. Louis Mayor Eddie Favre and Waveland Mayor Tommy Longo, have cobbled together reserves, loans, state and federal grants, and outright gifts to keep their municipalities afloat.
The problem is twofold: Katrina’s winds and waves not only left the municipalities with unfathomable bills to repair and restore everything from streets to fire trucks, but also slashed revenue from sales and property taxes, a casino and utility sales. Much of the damage to streets, bridges and buildings will be fixed with federal dollars, leaving the county and the cities scrambling to figure out how to make payroll for police, fire, parks, administrative and other employees.
While a $29 billion federal hurricane relief bill approved in December will provide billions for Katrina-hit homeowners, highways, schools and federal facilities, “I didn’t really identify anything that is actual subsidies to the local governments,” Favre said. “If there is money in there, I wish someone would point it out to me.”
In the case of the county’s $35 million annual operating budget, about $16 million comes from property taxes and most of the rest from a variety of state and federal programs. Although the property tax revenue for this year should be based on assessments from January 2005, eight months before Katrina hit, the county trimmed those bills by a third “for people who had substantial or total damage,” Kellar explained.
Reservoir of red ink looms
As a result, “we’re estimating a $4 million shortfall this fiscal year.” For next fiscal year, the picture is even bleaker, Kellar said, because newly slashed assessments reflecting the storm damage will apply for the entire year. “We’re estimating an $8 million to $10 million shortfall next year,” he said.
And those estimates don’t include another post-Katrina reality: Many property owners are unlikely to pay their tax bills, this year or next or perhaps ever. Why would they if they owe large, uninsured mortgages that far outstrip the value of what is now bare land?
That unpleasant fact aside, Kellar is looking to a $5.4 million loan from the Community Disaster Program to make up some of the shortfall.
On a more controversial front, the county has begun using funds from a federal Department of Labor program to pay some new employees and Kellar wants the Hancock County Board of Supervisors to consider transferring some existing workers to that program. It’s a politically unpalatable move, however, because “the employees would absolutely lose some things” in terms of vacation, sick pay and holidays, Kellar said.
Kellar is not certain if and when the board will make a decision on switching county employees to the federal program, but Supervisor Steve Seymour says, “To me, that’s one of our last options.”
Noted, says Kellar, but “either we cut employees or we cut programs or we take advantage of some of these (federal) programs. … If you don’t explore these options, then we’re still $4 million short this year and $8 million to $10 million short next year.”
Layoffs 'the absolute last thing we'll do'
In Bay St. Louis, Mayor Favre says cutting employees or benefits is “the absolute last thing we’ll do. We have a dedicated group of employees that has been killing themselves since before the storm and most of them lost everything."
“As far as I concerned, the city will be shut down before we lay people off,” says Favre during an interview in his Spartan office in Bay St. Louis’ temporarily relocated City Hall at the Old Depot.
Bay St. Louis’ $7 million general fund budget took a triple hit from Katrina. Nearly half of the city’s revenue, $3 million to $3.5 million a year, came from gaming taxes generated by Casino Magic, which was destroyed by the storm and remains closed indefinitely. Sales tax revenue will fall from $1.5 million to about $400,000 this year, Favre estimates, and the city may see about $600,00 million of the $1.5 million in property tax it would have collected absent Katrina, and substantially less next year.
So “we may be looking at maybe $1 million between sales and property taxes,” Favre says, merely one-seventh of normal operating revenue. The city’s separate utility budget should take care of itself with sales of water, gas and electricity.
The city’s answer to the fiscal nightmare has been to ratchet spending down to its $300,000 monthly base payroll for a workforce that has fallen from 145 before Katrina to just over 100 now. FEMA money pays for hurricane-related overtime and “we’re not doing much of anything that’s not hurricane-related,” Favre says. Beyond that, “If we can break that pencil in half and share it, we’re going to do that.”
Favre’s ace in the hole is about $9 million remaining on a credit line with the Mississippi
Development Bond Bank. Theoretically, that could carry Bay St. Louis, ratcheted back to operating expenses of less than $4 million a year, for some time. But that’s a bare-bones scenario, Favre points out, and there’s a lot of work to do.
'We need some help'
“The bottom line is that … loans are fine but ultimately loans have got to be repaid,” Favre says. “We need some help over the next three, four, five years, non-loans … subsidies, grants, whatever.” Like Kellar, Favre is looking into using the federal Department of Labor grants to add staff, especially in the city’s hard-hit utility department.
So is Waveland Mayor Longo, who has perhaps the most optimistic outlook about future fiscal health of any municipal administrator in Hancock County despite taking arguably the hardest hit to infrastructure when his city’s center was scoured clean by Katrina.
“We’re in good shape,” Longo says. “There’s no problem with possible bankruptcy or anything like that.”
Of his city’s $6.5 million annual operating budget, $1 million came from property taxes with the balance from sales taxes, grants and federal funds. With the city cutting bills to reflect damage from Katrina, “Our property tax has been cut by 25 percent” for 2005 and will be far less next year.
“Sales tax revenues were obviously cut drastically,” Longo says. “The first month (after Katrina), it was zero.” Currently, sales tax revenue is approaching 20 percent of pre-storm levels.
But Longo says the planned April opening of a new Lowe’s home center, the reopening of Kmart/Sears and Wal-Mart’s reopening of the remaining two-thirds of its sales floor will go a long way toward restoring the rest.
“We know that Lowe’s is so needed they’re going to break all sales records just like the Sonic (drive-in) in Waveland is breaking all sales records,” he says.
Longo has held stitched city finances together with $3 million in cash reserves that were in the bank when Katrina hit and millions more in grants and appropriations for capital upgrades that were approved before the storm but that now may be spent for replacements.
And, “as tough as it is, the one bright spot … is that all of our city structures were declared 100 percent destroyed by FEMA so they will pay us that amount of money to rebuild less our insurance.”
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man...i'm glad i don't have these guys jobs...it would be tuff...but stick in there guys....we are all behind you
andy,ms (Sent Jan 29, 2006 7:39:11 PM)
Mayor Favre, it does our hearts good to see that you plan no layoffs and that you think this highly of all us. Together WE can build a new and better Bay St. Louis. So don't you think now would be a good time to release the gifts and money donations that the Chief of Police has been sitting on that came in specifically intructed by the donors to assist and help the Bay St. Louis police officers and their families so they can rebuild their lives and homes as well? Many are still here without their families whom most are still out of state and displaced, some of these officers are completely homeless and a majority of them need desperately that funding to give them a chance to rebuild and survive in Bay St. Louis too. We understand the fact that you needed the interest on this money for the City but I believe they have waited long enough, don't you? As for the equipment, they did purchase their own equipment and gear before the storm can't you at least replace what they lost before the rest of the donated gifts are stockpiled in the department for the future operations of being departmental issued?
Police Officer, BSL (Sent Jan 29, 2006 8:11:06 PM)
Everybody has their hands out on this one. Wonder what happened to that $200-billion Congress set aside? This is turning into a big hole in my wallet and I for one am ready to stop the bleeding.
Joe Beckman (Sent Jan 30, 2006 12:49:09 PM)
These problems should be addressed to by the state of Mississippi first; then, if serious problems continue, the federal government should help. My state of Ohio takes care of their own. We pay dearly to make sure our citizens are okay. We only get back a small portion of the taxes we send to Washington. What do you get??
Paul Speight, Akron, Ohio (Sent Jan 30, 2006 2:43:54 PM)
You don't have to give money to the BIG charity organizations - there are other ways. If you can't go down there and do just a bit of recovery work then you can pick out a LOCAL organization to send money or supplies to. The Humane Society in Gulfport is in desperate need for help of any kind, also schools and libraries. The list goes on and on. Friends of mine from California got in touch with relatives living in Long Beach and obtained the names of two deserving families and have adopted them for some long term help. If there is anyone out there interested I think this is one big way to help. If groups or towns just adopted families they could be assured that their money and effort was being wisely used.
sisco, huntsville, al (Sent Jan 30, 2006 3:55:49 PM)
If they get that ferry running across the Bay of St. Louis which will be a quicker way (and more scenic) to get over to the Bay/Waveland area - you can bet they will be getting my money. Even with just the few places that are open again we will be returning to those restaurants and shops and helping the economy.
shena, pass christian (Sent Jan 30, 2006 3:58:20 PM)
Buch spent that $200-billion in Iraq Boys,and figure this one out -they haven't gotten much rebuilt that we bombed out fixed either.
The Auditors are stateing the money was squandered and gone-Wow Chaney out to have a good Carabian Cruse packed away I Bet.
Buck Bullard (Sent Jan 30, 2006 4:08:21 PM)
There are several ways to look at budget shotfalls. When you subtract the amount that would be allocated to schools, normally about half of the budget, and figure that the people whom are displaced no longer use those facilities the shortfall is not as bad. The recovery is not going to happen overnight. I do feel bad for all those who have suffered such loss but I cannot feel sorry for those who were so foolish as to build so close to the flood plain.
Gil (Sent Jan 30, 2006 5:14:00 PM)
Lets bring some of those truck loads of 100 dollar bills from Iraq. If you can get Hilliburton to cough it up.
Randy Foster Colton Or. (Sent Jan 30, 2006 6:39:56 PM)
I think there are some realy ignorant people out there if they truly think that our president and vice-president can gain monitarily from the Katrine disaster. All they are getting is a bad rap because they didn't have emergency help there 2wks in advance.
Dave C. Sullivan, Mo. (Sent Jan 30, 2006 8:16:48 PM)
I wonder where the president kinder gentle heart really is? I guess if Mississippi would hire a friend of Bush or Cheney or a relative of theirs to be their lobbyist they would get alot of money.
Bill (Sent Jan 30, 2006 8:19:32 PM)
I haven't heard about any Katrina funds being "squandered".... If there is proof of that, I'd love to see it. It seems that sort of information would be very damaging to our current administration!
As far as recovery goes, everyone is and must remain in this for the long haul. It will be years before we achieve a full recovery from such a hit. In areas affected directly, it will take time and money to rebuild, and people involved in that rebuilding process have a long hard road ahead. My heart goes out to all those who have suffered such great losses -including the administrative folks having to deal with the financial aftermath of all this destruction.
On top of that, though, both Katrina, Iraq, and all the other tough things we've been dealing with have a serious impact on our long-term economy. I work in the aerospace industry, mainly on government contract jobs, and I'm watching as the work seems to keep getting held out like a dangling carrot. We chase it, but Uncle Sam inevitably must pull it farther away to fund other things in dire need of attention. -Not that I consider this something that can compare with the direct devastation experienced by those immediately affected by Katrina, but the point is, we all feel at least some of the pain -and we will continue to for some time to come.
That being said, I must also note that I am thankful for and proud to be a part of this country. It is a wonderful thing to have the support we do receive, and even greater that we have had this sort of support for so long that we citizens have grown to EXPECT this support and KNOW it will always be there. Let us not forget how much we do have, and let us focus on what we will have when we are done rebuilding.... NOT on what we don't have now!
Mike Jones, Tampa, FL (Sent Jan 31, 2006 8:04:35 AM)
To comments concerning perceived greed on the part of
local officials -
Let's assume you have a house with a small lawn. You
have kids, a mortgage and other debt. So long as you
have your job, you're fine.
Then you lose your job. Now what are you going to
do?
Then, someone gives you a million dollars. You
take it. Unfortunately, there is a restriction on
how you spend that million. You cannot support your
family, or pay your mortgage or anything else. You
must spend that million dollars on lawn maintenance.
Nothing else.
This is essentially what is occurring with the
so-called federal largesse that people are tired of
paying (as if though our local officials have
their hands directly in your pockets). The money
comes with strings attached, and
often the strings are so restrictive as to be almost
useless.
In the meantime, your citizens are scattered, your
businesses are shuttered, and your tax base is
virtually nil. The city might have a cash reserve,
the very same cash reserve that people had complained
about because "it should be returned to the
taxpayers." Your employees, who have been working
tirelessly since the storm, just want to get paid.
What do you do?
M., Bay Saint Louis MS (Sent Jan 31, 2006 5:55:07 PM)
I feel for everyone who has lost there homes and loved ones due to this horrible tragedy, I pray that everything works out for everyone. i'm not ganna point fingers at who's fault it is, its the lord that wanted this to happen, to pull the united states together, to prove that we all care. we have had many horrible things happening within the past 5 years, but we all stand together and get past it together, so why dont we all do that now. If you have the money to share with those in need from the huricane, then forget about your family trip to disney land, and help a family out that actually NEEDS that money. May the lord be with all those in need, and my heart goes out to you and so do my prayers.
Amanda, St. Louis Missouri (Sent Feb 1, 2006 5:40:01 PM)
A response to M,. in Bay St. Louis: You become part of a solution not part of the problem! Oh and one more thing...those employees you mention...would help to fight that battle if everything wasn'nt...CIA! You would understand it...if you would only look at the bigger picture than the one your painted. You might even surprise yourself with what you would discover.
P Bay St. Louis (Sent Feb 9, 2006 12:03:01 PM)
To P. in Bay Saint Louis, who wrote:
A response to M,. in Bay St. Louis: You become part of a solution not part of the problem! Oh and one more thing...those employees you mention...would help to fight that battle if everything wasn'nt...CIA! You would understand it...if you would only look at the bigger picture than the one your painted. You might even surprise yourself with what you would discover.
I'm afraid you lost me. What is "CIA" other than
Central Intelligence Agency (which I don't think you
are referring to)? And how does one become "part of
the solution"? My initial post was in response to
those that think that the city officials are
wallowing in federal funds.
Platitudes don't do much.
M, Bay Saint Louis (Sent Feb 10, 2006 6:57:20 AM)
My fiance and I were living in Mandeville,LA when the storm hit. My Dad,sister and brother, along with many neices and nephews still live in Bayside Park,Waveland area. My neice was in Iraq when the storm hit so she had no home to come back to. She was sent home because she became the sole survivor to 3 children, the father was killed in Iraq after the storm. There are so many stories these people could tell. There are all types of people living in these areas, not all are poor,or uneducated. They are regular folks like most of us just trying to live a good life and raise their children. My heart goes out to anyone who went through this terrible disaster. Their lives will never be the same.
Mary, Great Mills, MD (Sent Aug 26, 2006 9:51:24 PM)
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