DALLAS — Louisiana will transfer at least $500 million into the general fund from its capital outlay escrow fund to pay its bills for fiscal 2010, which ends June 30.

Treasurer John Kennedy told the State Bond Commission on Thursday that there is not enough cash in the general fund to repay inter-fund borrowing that has occurred since last fall due to the continuing decline in state revenues.

Bond Commission director Whit Kling Jr. said a minimum of $500 million will be shifted into the general fund from the capital outlay escrow fund.

“I’m hoping it will not require much more than that,” Kling said. “There are only a few more days left in this fiscal year.”

The escrow fund contains almost $800 million, which is replenished whenever there is a state surplus at the end of the fiscal year. The capital outlay fund is used to finance new state facilities and maintenance on existing state buildings.

“Normally we move the surplus from the general fund into the capital outlay escrow account,” Kling said. “This year we’ll reverse that.”

It’s normal for the state to shift money between various sub-funds within the general fund during the fiscal year to match expenditures with revenues, Kennedy said.

The tapped funds must be reimbursed and balanced by Aug. 15. Kennedy said there will not be sufficient revenues for that to happen this year.

“We are bringing this up because I want the members to be aware of this,” Kennedy said at the bond commission meeting on Thursday. “The proposed solution we’re looking at would affect capital outlay and the Bond Commission.”

Kennedy said the state has had a monthly operating deficit since October 2009 of between $200 million and $328 million.

Kennedy chairs the bond commission. Other members include House Speaker Jim Tucker, R-Terrytown, Senate President Joel Chaisson, D-Destrehan, commissioner of administration Angèle Davis, Lieut. Gov. Scott Angelle, and legislative finance committee leaders.

Tucker said the transfer was “a bookkeeping maneuver to get us through the fiscal year.”

Kling said the interfund borrowing is used to smooth the state’s cash flow in the first six months of the fiscal year. Most state revenue comes in before the end of the fiscal year, but expenditures are steady throughout the year, he said.

A state law that went into effect in 1993 required that any inter-fund borrowing be repaid shortly after the new fiscal year begins.

“We’ve always been able to do that,” Kling said. “This year, that didn’t happen.”

Kling said it was highly unlikely that enough revenue could come in by August to avoid the funds transfer.

“The amount is so much that any other solution is not possible,” he said.

“And it is only a one-time solution,” Kling said. “Next year, that fund will not be available if we use it this year.”

Last week, state economists reported to the Revenue Estimating Conference that Louisiana’s revenue shortfall for fiscal 2010 had ballooned to $580 million.

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