BRADENTON, Fla. – Louisiana faces new fiscal hardships, and not only from the recent historic flooding.
On Thursday, the State Bond Commission will meet to consider issuing $500 million of revenue anticipation notes for cash flow and working capital in the general fund, and later in the day a report on the deal will be presented to the Joint Legislative Budget Committee.
If the RAN deal is authorized, it would be the first time in 30 years that Louisiana has used short-term financing to meet cash flow needs, according to state Treasurer John Kennedy, who chairs the bond commission.
Some or all of the $500 million of notes may be needed because of the inherent risk in revenue forecasting, and a decline in cash the state used for interfund borrowing in the past, Louisiana's financial advisor, Renee Boicourt, told the bond commission last month.
"It's pretty close to call at this point," said Boicourt, of Lamont Financial Services. "Our recommendation is to be in position to issue RANs."
Boicourt also recommended that the deal be structured similar to a bank line of credit due to uncertainty about how much funding would be needed.
The bond commission last month gave the go-ahead for staff to solicit bond council and bids from institutions, both of which will be discussed at this Thursday's meeting, which begins at 10 a.m. Central time.
At 2:30 p.m. Thursday, the Joint Legislative Budget Committee will hear a presentation about the state's plans for the $500 million RAN issuance.
This week's JLBC meeting is a continuation of a session from last week, which some members could not attend due to bad weather.
In a preview of the state budget, the JLBC was told on Friday that the current spending plan is in "relative balance," according to Barry Dussé, director of the governor's Office of Planning and Budget.
However, temporary funding measures propping up the spending plan are slated to "roll off" by the end of fiscal 2018.
"Your shortfall comes in fiscal year 2019, of almost $1.5 billion," he said.
Many of the funding measures passed during legislative sessions earlier this year, including a one-cent increase in the state sales tax, expire in two years.
The impact to the state budget from last weekend's flooding and historic rains remains unclear.
On Monday, state offices in 27 parishes remained closed due to widespread flooding with some areas getting more than two feet of rain in 72 hours.
At least six people died, and thousands forced from their homes remained in shelters.
On Sunday night, Gov. John Bel Edwards announced that President Barack Obama had declared a major disaster for Tangipahoa, St. Helena, East Baton Rouge and Livingston parishes.
"I have traveled to affected areas and have seen the destruction caused by this unprecedented flooding," Edwards said. ""I fully expect that more parishes will be added to the declaration on a rolling basis."
