BRADENTON, Fla. - Louisiana said it plans to move forward with this week's competitive issuance of $335 million in state general obligation bonds amid ongoing questions surrounding the state's budget deficit.
"I don't know what kind of reception we'll get on Wednesday," said State Treasurer John Kennedy. "We had worked very hard on the preliminary official statement to disclose everything, warts and all."
Kennedy said he had wanted the State Bond Commission to hold a special meeting on Tuesday "to discuss the market and the different options that we may have" in advance of the GO sale.
Kennedy wanted the meeting to be held in executive session and closed to the public to encourage commission members to speak candidly, he said.
That meeting was cancelled Monday night.
"I was advised not to have the meeting and go into executive session because our open meetings law doesn't allow that," Kennedy said. "I think we disclosed everything we need to, to do the bond sale."
Nearly two pages of the POS for Wednesday's GO deal describe the state's projected $1.6 billion deficit for fiscal 2016 and measures proposed by the governor and Legislature to close the gap.
Those measures include proposed budget cuts for public universities that are now exploring contingency plans to deal with potential shortfalls, including declaring financial exigency. Such a declaration would enable universities to take actions to reduce fixed costs, such as eliminating tenured faculty, according to the POS.
The document also discloses that Louisiana State University postponed the issuance of $114 million of revenue bonds on April 24 after executing a bond purchase agreement "when a number of investors cited concerns over budget instability" amid reports that LSU was preparing a financial exigency plan.
Kennedy said he hopes investors would not penalize the state for disclosing its budget problems.
The Bond Commission will meet Wednesday morning to decide whether to accept or reject the bids for the GO sale, he said.
On April 28, Standard & Poor's placed all five of the Louisiana universities that it rates on CreditWatch with negative implications "due to the proposed reductions for higher education in the fiscal 2016 state budget for Louisiana."
S&P said it would determine if the ratings would be downgraded in the next 90 days, after it considers the impact of the new budget on the universities.
Lamont Financial is financial advisor. Adams & Reese is bond counsel.
Louisiana's GO bonds are rated AA by both Fitch Ratings and S&P, and Aa2 by Moody's Investors Service. Moody's and S&P assign negative outlooks.