Legislative Auditor: Louisiana needs easier way to dissolve dying cities

Should Louisiana’s dying towns be kept on life support? The long-standing question dominated much of the discussion during Monday’s Press Club of Greater Baton Rouge, with Legislative Auditor Daryl Purpera calling for lawmakers to find a simpler solution to dissolve local municipalities deep in debt.

Many entities throughout the state are on the brink of financial ruin, Purpera says, necessitating the intervention of a fiscal administrator to temporarily replace the mayor and city council. While he didn’t immediately know how much money his office spent on fiscal administration efforts for cash-strapped cities in the past year, he says most dollars go toward his advisory services division, which trains local leaders on how to have a proper accounting system, prepare a budget, hold public meetings and other tasks.

“Some of these villages and small towns can’t operate or provide services anymore because they don’t have enough citizens to do so,” says Purpera. “In order to dissolve, there has to be an election and vote to dissolve themselves … but somebody has to take on the debt. Then you have to ask, why would the parish take on the debt?”

(Click here to read a recent column from Executive Editor J.R. Ball on the topic.)

In another matter, Purpera says worker misclassification has also become a major statewide problem, particularly in the construction industry, where employers often classify employees as “contract workers.” A report the auditor’s office last week found that, from 2014-2018, employers failed to pay the state nearly $3 million in unemployment taxes and $9 million in state income taxes.

Meanwhile, Purpera also delved into why he is suing the Louisiana Department of Revenue for withholding certain state income tax records of Medicaid recipients the auditor is seeking as part of an investigation into Medicaid fraud. 

He’s asking a judge to require Revenue Secretary Kimberly Robinson to turn over the data to the auditor’s office—which she has not yet done—on the grounds that it is permissible under state law because it will be used only for statistical purposes and doesn’t violate privacy rights. However, Robinson says her department doesn’t have the legal authority to relinquish those records because doing so could violate Medicaid recipients’ privacy rights.

In the meantime, Purpera’s staff is developing a medicaid audit unit, which is currently investigating several providers believed to be engaged in fraud as well as 50 believed cases of recipient fraud.

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