BATON ROUGE, La. (AP) — Louisiana will borrow $100 million to repair and improve rural roads around Louisiana, in a plan scaled back Thursday by state officials grappling with a shortage of construction funds and trying to stay under the state's debt ceiling.
The Bond Commission agreed without objection to sell bonds to investors for upfront cash for road work in 37 parishes. But the plans were cut from $250 million to $100 million because of concerns about breaching the debt cap.
Commission member Rep. Jim Fannin sponsored the bill that authorized the rural road borrowing and pushed for the bond sale — even at the smaller size.
"It's not just rural roads. It's about putting people to work and doing the right thing for the state," Fannin, D-Jonesboro, said.
The dollars will pay for construction on roads not eligible for federal matching money in the highway program. The debt will be paid off with registration and license fees and taxes on commercial trucks and trailers.
Commission members reduced the rural road borrowing as part of overall discussions of how to deal with a shrinking pool of funds for construction work and with a limited amount of borrowing capacity remaining under the state's constitutional debt limit.
The state borrows money to pay for construction projects through bond sales to investors, with the debt paid back with interest over decades.
That pool of funding, which pays for items like road improvements, college building repairs and economic development projects, is running dry. And the state is teetering so close to its debt ceiling that the ability to borrow more is limited.
The construction project fund will run out of cash within five months, said commission director Whit Kling.
He said the state has enough borrowing capacity under the state debt limit to keep construction work going for another nine to 12 months with another bond sale.
But he warned that without a multiyear plan to restructure the debt, the state will be on track to breach its ceiling in the 2014-15 budget year if it borrows up to its full capacity in the next few months.
"You can address the liquidity issue now ... but if you don't address the structural imbalances and the legal constraints with a work-out plan, you'll hit the wall. You will not be able to issue any more debt," Kling told the commission.
The funding crunch stems from lawmakers and governors approving $1.1 billion more in lines of credit for construction work over the last 12 years than they borrowed or appropriated money to pay for, Kling said.
Meanwhile, stagnated state income and the economic downturn kept the debt limit lower than expected. The limit 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 Jindal administration, top lawmakers and Treasurer John Kennedy — all members of the Bond Commission — planned to discuss ways to refinance and restructure Louisiana's existing debt to keep the state clear of breaching its debt limit.
Kennedy, chairman of the commission, said he expects the panel next month to consider a bond sale to keep the construction fund filled with enough money to avoid projects grinding to a halt.
"I will feel a lot better when we know that we have enough money in the account to get us through the year," he said.
MAY 22 This post was written the day after the second line shooting in NOLA, by Brentin Mock. Mock is a friend of Deb "Big Red" Cotton, a blogger who was shot in the back and was seriously injured. It is a raw, emotional piece of writing, something the writer obviously felt he needed to get off his chest. But it raises questions that can't be easily dismissed, and might give some insight into where the source of these events truly is.
MAY 22 In this Baton Rouge Business Report post, Rolfe McCollister considers the privatization of bus service in Baton Rouge. After decades of under-funding, it is a mess, and although a tax (partially) passed last year, improvement hasn't happened yet. McCollister apparently feels it is time to let private business get in on the transit business.
MAY 22 This post on Bayou Buzz by Jeff Crouere urges the defeat of a bill that would grant modest pay increases over the next several years to the state's judges and clerks of court. The state is in no position to fund pay hikes, Crouere argues, with the pay increases costing a total of $9 million over several years. It sends the wrong message to the (proverbial) hard-working people of Louisiana, he says.
MAY 22 The Advocate reports here that State Treasurer John Kennedy is complaining about a meeting of the corporation that oversees the state's tobacco settlement. The Governor wanted it restructured, and he has some support, but not a lot. The corporation agreed with his plan, but Kennedy didn't, and it appears that the meeting was noticed in a manner completely different than that of all previous meetings. Kennedy's given to hyperbole, but in this case the fish don't smell too fresh.
MAY 22 In this Advocate story, Carencro Police Chief Carlos Stout says the recent federal indictment of a strip club owner is all wrong. The indictment alleges that drugs and prostitution went on with impunity because club staff made arrangements with "local" police. Stout says it never happened, and while his cops do work security in the parking lot, they're not allowed inside.
MAY 22 This amusing post in DIG Baton Rouge recounts an ad that ran on Craig's List recently; the advertiser was seeking tenants for a Beauregard Town house. He knew his market, and wrote an ad that the most ironical hipster couldn't resist. Apparently, he really did know his market, because the ad worked like a charm.
MAY 22 In this post in The Lens, Mark Moseley comments on the rhetoric Gov. Jindal employed in trying to save his tax "reform" package. One interesting point concerns Jindal's use of his brother, Nikesh, in a little story. Nikesh left Louisiana because of his inability to get a decent job, the story goes, but the story won't hold water: Nikesh lives in DC, which has an income tax level comparable to Louisiana, Moseley says. If income taxes caused the dismal situation, it should exist in DC too. Right?
MAY 22 This post by columnist John Maginnis traces the trajectory of the bill that would fund construction at community and technical colleges -- and bypass the Board of Regents and traditional higher ed funding mechanisms. Sure, it will bust the legislature's self-imposed debt limit, but some leges feel that there's more need (because there is more growth) in the community and technical college area than in the university area, he says.
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