INDReporter

It's November, and the sheriff's office isn't broke

by Christiaan Mader

With public finances, it's never as simple as it seems. But from the looks of it, LPSO is not in immediate danger of default.

The Traditional Housing Facility is part of the $26 million Willow Street Public Safety Complex, which was completed in 2014.
Photo courtesy LPSO

Back in September, the Daily Advertiser ran a story with the click-grabbing headline “Could LPSO go broke in November?” Not to pick on our colleagues on Bertrand Drive, but our generally skeptical disposition prompted a phone call to the Lafayette Parish Sheriff's Office's chief financial officer, Keith Sibille, to check in on the sheriff’s piggy bank. With finances, of course, nothing is particularly simple, but the takeaway is that LPSO is not going broke and is expected to begin recharging cash reserves once property tax bills are paid this December.

“We haven’t needed to borrow any money at this time,” says Sibille. “We’ll take $2 million next week, because the bank will require it. But we’ll turn around and pay it right back on Dec. 1.”

As part of a budgetary loan agreement requested from IberiaBank in August of this year, LPSO took on a $2 million loan as a hedge against possibly ballooning expenditures through the end of the year. The deal also afforded LPSO an additional $2 million line of credit that Sibille does not expect to tap, but could use should the agency be at risk of default.

While the agency did not necessarily need a loan at the time, stipulations by IberiaBank required that the desired $4 million credit line — more than Sibille anticipated the department could need — be taken as half loan and half credit. Hence the resulting $2 million loan on the books.

With property tax revenue expected to rise this year, Sibille says LPSO will be able to repay the $2 million loan with accompanying 2 percent interest three weeks after the loan hit the balance sheet. The whole deal is a short-term loan that reflects a cash-flow hiccup more so than careening insolvency.

Sibille denies that the department’s current financial situation is a crisis caused by budgetary mismanagement, a criticism recently levied by sheriff candidate Chad Leger.

“We had to worst-case-scenario for this thing to make sure we had what we needed,” Sibille says. “I was just preparing. Mismanagement would have been to sit around and hope for the best.”

At the heart of this issue was a budget bet made to pay for LPSO’s Public Safety Complex on Willow Street. The $26 million project, completed in 2014, was paid with $21 million in bonds, with the balance made by LPSO’s cash reserves. The state bond commission originally approved $23 million in bonds for the project, but Sibille decided to pay more out of pocket to avoid saddling the department with more debt and more interest in the next fiscal year.

Tax roll income has been delayed due to tardy millage reports by agencies like the Lafayette Parish School Board. The department’s fiscal year ends in June, but it has to wait for all millage reporting agencies to set their rates before anticipated income can be determined. That means public agencies that rely on property tax often aren’t fully aware of their expected income until months after expenditure decisions must be made.

Sibille admits they cut it too close against standing cash reserves. Declining sales tax revenue and increased health care outlay pinched the agency’s cash reserves more than expected, forcing the sheriff’s office to consider the loan as a precaution in August. According to Sibille, departmental loans like that can’t be made overnight, so his office needed to ensure a loan was available months before budgetary issues actually materialized, hence the belated question marks around November’s fiscal outlook.

Of course, this means the department ends up in a situation it tried to avoid with the decision to pay with cash on hand rather than additional bond revenue. It's got a loan to pay with interest, but one that should be paid before the next sheriff assumes office.

Moving forward, Sibille expects to recommend to the incoming sheriff — who takes office in July 2016 — that the department raise the remaining $2 million in bonds already approved by the state bond commission to replenish cash reserves. From there, it’s up to the new sheriff to decide if he wants to take the money.