Louisiana Legislative Auditor: As part of the Legislative Auditor’s mission of accountability and transparency, we have begun posting a list of “fiscally distressed municipalities” on our website. The municipalities included on this list are those municipalities that may not be able to continue to provide basic services (utilities, police protection, etc.) to residents in the near future.
When determining the composition of the list, we analyzed each municipality’s most recent financial information, as well as financial trends compared to other municipalities. We also considered additional factors, including:
- Disclaimer – The CPA performing the audit was not able to determine if the financial information was complete or accurate (poor accounting records, fraud, etc.);
- Going Concern – The CPA performing the audit was concerned that the municipality may not continue to operate in the future, based on factors disclosed by management (significant debt, insufficient utility rates, loss of a major industrial taxpayer, etc.);
- Negative Fund Balance – The municipality has more liabilities than assets and may not be able to settle its obligations; and
- Water Infrastructure – The Rural Water Infrastructure Committee has identified the municipality as one that has significant problems with its water system, increasing the risk of a public health emergency or requiring expensive repair/replacement of equipment.
Our goal is to work with each municipality’s elected officials and provide recommendations to place the municipality on a path to fiscal stability.
The list above is different from the Legislative Auditor’s noncompliance list. The noncompliance list includes those local governments which have not submitted a required financial report to our office by the statutory deadline or which received a disclaimer rather than an audit opinion. The noncompliance list can be found at lla.la.gov/reports-data/non-compliance/