MORGAN CITY — Voters here will go to the polls on Nov. 19 to determine whether a three-tenths cent sales tax should be implemented to help fund road improvements throughout the city.
The city council unanimously agreed Monday at a special meeting to seek voters’ approval to issue up to $4 million in revenue bonds for possibly 12 years — 10 years for the bonds and then the remainder to pay off interest.
The monies will be bonded to mainly handle repairs on thoroughfares that all citizens use, specifically, Second Street, Federal Avenue, Sixth Street, Victor II Boulevard and Ditch Avenue. The funds will be used to repair potholes and subsequent overlays.
Estimates for the overlay of these streets was between $3.2 million and $4.3 million.
“We’re not limiting ourselves to those streets (thoroughfares), but those are the one’s that we’ve identified at this particular point,” Mayor Tim Matte said.
Matte also noted that Front Street would need to be addressed at some point as well as concrete roads, particularly at David Drive, Veterans Boulevard and Youngs Road.
The mayor said the sales tax was necessary because the monies the city has received from the parish’s Road Royalty program have diminished as funds are used to pay off monies that were bonded in 2000.
In 2000, the city received a little more than $1 million, but this past year, they received $80,000 — $23,800 from the Road Royalty fund and another $60,000 from the parish’s Amelia Belle gaming fund, which the city uses for roads.
“It’s getting tighter and tighter for them (parish) to do the things that they need to do and as well as provide the city with its funds,” Matte told the council.
To fund overlays at the current Road Royalty rate, Matte said the city has to accumulate two to four years’ allocations.
“That’s kinda how we’ve been doing them,” Matte said. “It’s not really a real efficient (and) effective way to take care of what we have.”
While Matte initially offered a quarter-cent sales tax that, according to figures the mayor provided, would generate about $683,000 based on budgeted sales tax collections for the remainder of the 2011 fiscal year, Councilman Larry Bergeron offered a motion for the three-tenths cent tax. The council unanimously approved Bergeron’s proposal.
The slight increase would mean that the city would generate about $819,000 during the rest of the year, according to figures Matte supplied the council.
For 2010, that figure would have been $790,000 using the three-tenths cent tax compared to $659,000 using the quarter-cent tax, according to Matte’s figures.
“I feel the need to take care of other streets rather than (just) the main thoroughfare,” Bergeron said in justifying the slight increase, adding it would give the city extra money if it needed.
A three-tenths cent tax also would give the city more bond options, too, said city bond attorney Jerry Osborne of Foley and Judell, a New Orleans bond attorney firm.
According to city figures, a three-tenths cent tax equates to 3 cents of tax for every $10 spent in Morgan City and 30 cents in taxes per $100 spent here.
Of the monies generated from the tax, Matte said he would like to see 75 percent of revenues from the tax used as debt service while the remainder, coupled with parish monies and any excess sales taxes, would be used to continue whatever street work needs to be complete.
“You can go out and do the Freret Streets, the Everett Streets, the Firsts the Brashears,” the mayor said.
The monies also could be accumulated over a few years to do a major project, Matte said.
If passed by the voters, the tax will be added to the three-tenths cent sales tax the city already collects on sales within the city.
If not for the tax, Matte said the other alternative would be to use the $80,000 in funding the city receives from the parish as best they can, lobby the parish for additional funds or wait for increased monies that would be remitted to the parish for severance tax collections tied to oil and gas collections in the state. When tax collections reach record levels of 2008, funding levels increase.
“Nobody’s going to get any extra money until that threshold is met,” Matte said. “The earliest that that’s going to happen is the year that begins in 2013 and ends in 2014, so that money’s not coming anytime soon.”
When the money is available, Matte said that the parish has other streets that it will have to take care of as well as funding holes they are trying to plug.
“The likelihood of us getting a pretty big check out of that is going to be probably pretty slim,” Matte said.
If the tax passes, collections — required by law — could not be instituted until Jan. 1. The first payment the city would receive on initial taxes collected would not be until around March 1.
As for interest rates, Osborne told the council that the 10-year treasury rate, the one the municipal bond market looks at most often when issuing bonds, is at 2.28 percent interest.
He said anything under 4 percent is good.
“We’re not in a particular good economic situation, but the nice part of it is interest rates are down as low as they’ve been in your lifetime. Even in my lifetime,” the longtime bond attorney told the council.
In order to proceed with the issuance of bonds, the city must complete an engineering and economic feasibility study. The city agreed to pay Miller Engineers & Associates in Franklin $5,754 to complete the study.
Also during Monday’s meeting, the council agreed to transfer a city utility truck to the Morgan City Housing Authority via an intergovernmental agreement. The price of the vehicle, which will be used for housing authority work to trim trees and change lights, among other chores, will be paid at the fair market value.