BATON ROUGE, La. (AP) — The state's pool of money to pay for ongoing construction projects is running dry, and Louisiana is teetering so close to its debt ceiling that there's little room to borrow more to replenish the fund, officials said Thursday.
Without a new infusion of cash, Louisiana is projected to run out of money to pay for college building repairs, economic development projects and state-funded road work in about four months, said Whit Kling, director of the State Bond Commission that oversees construction borrowing and state debt calculations.
State senators heard the troubling news of the latest money problem in a briefing about Louisiana's finances by Sherry Phillips-Hymel, the chamber's chief budget analyst. She told senators that the capital outlay fund is "very, very low."
"The fund is broke. The fund does not have sufficient cash resources, and without a change in the legislative statute, there's no way to issue additional bonds," Kling, who watched the Senate briefing, said after the meeting.
The state can borrow money to pay for construction projects through bond sales to investors, with the debt paid off with interest over several years. But Louisiana has a constitutional limit on debt, and the state is $22 million from hitting its $605 million debt ceiling, Phillips-Hymel told senators.
Kling said that leaves the state little capacity to issue new bonds to replenish the construction fund. He said the state could borrow enough money to cover about four additional months of construction work before hitting the debt cap.
The problem stems from state officials authorizing more construction spending than what they've actually funded through either upfront cash payments or borrowing, Kling said. He said over the past decade, Louisiana governors and lawmakers have given lines of credit to $1.6 billion more in projects than the state has sold bonds to pay for.
Among the options available, lawmakers in the upcoming regular session could seek to exclude certain types of debt from the calculation of the cap, change the limit or vote to breach the ceiling. Phillips-Hymel said each proposal would require a hefty two-thirds vote.
A limit 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. The state has never exceeded the limit, and Kling said lawmakers have never voted to spend above the cap.
"There is no easy response here. There's no easy way out," Kling said.
A spokesman for Gov. Bobby Jindal's Division of Administration wouldn't say Thursday what the Republican governor will recommend to keep the dollars for construction work from running out. But Michael DiResto said the administration won't seek a legislative vote to breach the debt cap.
"We will live within our means and we will look for opportunities to achieve savings so that capital outlay projects can continue to move forward," DiResto said in a statement.
He also blamed Treasurer John Kennedy's office, which oversees the Bond Commission, for offering past inaccurate guidance on borrowing limits.
"It's important to note that the treasurer's office previously advised that the state had more money to borrow than was actually available. They have recently corrected their calculations," DiResto said.
Kling said the treasurer's office didn't miscalculate anything or provide incorrect information. He said the office delivered its annual report on state debt months ago, but since then, the state's income estimates have fallen twice, which then dropped the debt ceiling by more than $50 million.
"Once you lower the revenue estimate, the debt capacity goes down. That's not rocket science," Kling said. "I didn't think this was a blame game."
MAY 24 Blogger Robert Mann posts this entry about the Baton Rouge Chamber's recent report on Louisiana's higher education system. It's critical to economic development, and yet our system is facing a "funding crisis" with no way to resolve it, the report says. The Chamber says control of tuition and fees must be returned to the higher ed governing boards.
MAY 24 Here's a NBC33 story about Tyrann Mathieu. He has signed with the Arizona Cardinals, inking a $3 million, four-year deal. He gets a signing bonus of $265K, but gets another, larger bonus if he doesn't get cut from the team for doing drugs. The deal reportedly includes mandatory tests and meetings for the player.
MAY 24 Jarvis DeBerry posts here about the redonkulus rhetoric that would have us believe NOLA is a safe city with a murder problem. Maybe the city's crime stats don't compare with its murder stats because you can't manipulate a murder, he says: a dead body's a dead body. It just doesn't make sense, he says, and his readers agree: a poll asks if they believe the city is safe, and more than 90 percent say no.
MAY 24 Jindal administration officials announced Thursday that the privatization of public health care is going to cost a lot more than they budgeted for, the Advocate reports here. "I'm so surprised," said no one. Anywhere. The cost they're projecting now is more than $1 billion - a lot more than the $626 million budgeted for it. And, it's more than it cost the state to operate those hospitals. So why are we doing this again?
MAY 24 Blogger CB Forgotston ridicules the recent PR campaign by the state GOP in the wake of a legislative auditor's request to both major parties. The GOP (apparently unaware that the Dems got the same request) started yammering about being targeted because it had "killed" a tax increase. CB finds that laughable, but it's also pretty funny that the GOP was comparing this episode to the IRS scandal (Because the President has so much to do with our state auditor. Right?).
MAY 24 Politico details some recent fund-raising efforts by Sen. David Vitter, which have raised the question of his future political plans. This time, it is a $5,000 per head "bayou weekend" that includes "Cajun cooking" and an all-caps "alligator hunt," the story reports. Funds raised go to a super PAC that can spend money to support Vitter in federal or state races, the story points out.
MAY 24 The pink building on Royal in the quarter was sold at a sheriff's sale Thursday, this Picayune story reports. An injunction that would have halted the sale wasn't enforced because the family failed to post a $150,000 bond, the story reports. So the owner of the mortgages on the building bought it, for nearly $7 million. Now the feuding family will have to negotiate with that company to get a lease on the building that has housed their business for close to 60 years.
MAY 23 This post in Louisiana Voice tells us about a bill by a Winnsboro lege that would require all public high school students to take at least one Course Choice online class in order to graduate. (What?) Blogger Tom Aswell says it's a monument to "waste and corruption," especially in light of the problems he's exposed with the program in recent weeks. Idaho had a similar program, but voters removed it by a 2-1 margin, Aswell says.
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