DALLAS - The Louisiana Legislature Saturday gave its final approval to a $29.9 billion state operating budget for fiscal 2009, along with a $4.86 billion capital outlay bill that authorizes $2.28 billion of state general obligation bonds and $1.6 billion of revenue bonds.
The measures were sent to Gov. Bobby Jindal after the House approved changes made by the Senate to the budget adopted earlier by the House. The House cut $120 million from the $30.1 billion budget submitted by Jindal in March, but the Senate restored most of the cuts and added $20 million in local projects.
This is the third year in a row that the Legislature has passed a budget without negotiating over competing versions in a House-Senate compromise committee. The Legislature was set to adjourn the current regular session last night.
Jindal can remove specific projects and appropriations from the budget and the capital outlay bill with his line-item veto power.
The budget for the next fiscal year, which begins July 1, is about 13% lower than the current fiscal year's $34.3 billion budget. However, state general fund spending will increase in fiscal 2009 by about $1 billion, or some 12%.
The current budget includes about $19 billion of federal hurricane recovery funds, but some of those programs have expired. The 2009 budget includes $14 billion of federal funds for recovery efforts and health care programs.
The $4.86 billion capital outlay bill will be financed with $2.58 billion of cash, in which the state includes $1.6 billion of revenue bonds supported by individual projects, and $2.28 billion of GOs.
The GO bonds authorized by the bill include $1.2 billion for so-called Priority 1 projects, $56 million for Priority 2 projects, and $1.03 billion for Priority 5 projects. Priority 1 projects have been approved for cash lines of credit by the State Bond Commission, Priority 2 is for projects that need some funding to get under way, and Priority 5 is basically a waiting list for future lines of credit.
Louisiana's GO debt is rated A2 by Moody's Investors Service and A by both Standard & Poor's and Fitch Ratings.
Despite the authorization in the bill for more than $1 billion of GO debt for Priority 1 projects, the state expects to issue only about $500 million of GOs in fiscal 2009 for capital outlay efforts, said Whitman Kling Jr., director of the State Bond Commission.
"We're basing the size of the bond sale solely on cash needs of the projects and not the legislative authorization," he said. "We're tentatively looking at a bond sale at the end of this calendar year or in early 2009."
The planned GO sale totaling $500 million is low, Kling said, since the Louisiana has not issued GO debt for capital outlay projects since fiscal 2006.
"We normally issue $300 million a year, so this year's sale is a little low considering we haven't issued GO bonds for three years," he said. "We didn't issue bonds since then because we haven't needed the cash. The state had other resources it could use, so it was more effective to rely on those internal resources than issue debt."
The capital outlay bill includes $1.13 billion for Medical Center New Orleans, the planned teaching hospital in downtown New Orleans that will be operated by Louisiana State University. The funding includes $900 million of revenue bonds, $30 million of Priority 1 GO bonds, and $195.5 million of Category 5 GOs.
Other projects to be financed with revenue bond proceeds include a hospital in Rapides Parish, northwest of Baton Rouge, renovation of the student union center at the University of Louisiana at Lafayette, and a university medical center in Baton Rouge.
