BATON ROUGE, La. (AP) — Louisiana is on track to borrow nearly $500 million in February to replenish the fund that pays for state-backed construction projects.
The State Bond Commission gave preliminary approval to the borrowing plan Thursday without objection. State Treasurer John Kennedy, chairman of the commission, said the details will be developed next month.
The plan involves selling $347 million in tax-exempt bonds and $149 million in taxable bonds to investors for upfront cash. The bond debt will be paid off over decades with interest.
The money will keep construction dollars flowing for college building repairs, economic development projects, road work and local projects financed through the state construction budget, called capital outlay.
"Our burn rate is pretty high so we've got to replenish the capital outlay escrow account," Kennedy said.
At one point, Louisiana's construction budget got so tight that some projects appeared threatened. But improved revenue forecasts and low interest rates helped give the state more room to borrow under its debt ceiling.
The funding crunch stemmed from lawmakers and governors approving more than $1 billion more in lines of credit for construction work over the past decade than they had borrowed or appropriated money to pay for. Worsening the problem, stagnated state income and the economic downturn kept the debt cap lower than expected, limiting borrowing.
Louisiana's debt ceiling, enacted in the early 1990s, requires that the state's annual debt-repayment requirements fall under 6 percent of the state's yearly income from taxes, licenses and fees.
Improved income projections gave the state more room under the cap to borrow. In addition, officials refinanced some state debt, taking advantage of lower interest rates to lessen how much the state will owe each year.
Whit Kling, director of the Bond Commission, said after the bond sale, the state will have $1.2 billion in outstanding lines of credit that have been approved for construction projects but still need financing to pay for them.
Kennedy said he's unhappy with how much of the bond sale will involve taxable borrowing, but he said that's done to comply with IRS regulations. Taxable bonds increase the costs of borrowing.
"I'm not pleased with it because we're going to pay more," Kennedy said.