DALLAS - Louisiana House committees have given initial approval to capital outlay bills for fiscal 2010 that allocate $3.2 billion in cash and hundreds of millions more in general obligation bond proceeds to state and local projects.
HB 2, the comprehensive capital outlay bill, and HB 3, which outlines the GO allocation, passed quickly with no debate in the House Ways and Means and the Appropriations committees and without public testimony.
Floor debate on the capital outlay measures will begin Thursday in the House. The bills are almost certain to be amended during deliberations in the Legislature, and Gov. Bobby Jindal could veto specific projects before signing the legislation.
The bond portion of the state's capital outlay in the next fiscal year is not specified in the measure, but Rep. Hunter Greene, R-Baton Rouge, told the Ways and Means Committee that the state should have capacity to issue approximately $335 million of GO bonds in fiscal 2010 for capital outlay projects. Greene is sponsor of the capital outlay legislation as well as chairman of the Ways and Means Committee and the Joint Legislative Committee on Capital Outlay.
Louisiana's constitution limits annual debt service on state tax-supported debt to no more than 6% of expected general fund revenues.
The portion of the capital outlay to be financed through GO proceeds totals $2.2 billion but that includes a long backlog with many low-priority projects that probably will never receive funding.
"The key thing to take away from this is that we did not add any new projects" to the high-priority list, Greene said. "We are reducing the backlog of high-priority projects from $1.2 billion to approximately $600 million."
"If we can keep chipping away at this backlog, very soon we will be able to entertain new projects," he said.
The cash portion of the capital outlay bill includes $1.2 billion of revenue bonds, which do not count against the constitutional limit on debt service.
The comprehensive capital outlay bill totals $5.3 billion, up from $4.9 billion last year because it includes more federal funds and the state's $785 million surplus from fiscal 2008, Greene said.
"This bill accounts for all the [fiscal 2008] surplus," he said.
Louisiana limits the allocation of budget surpluses to reducing state debt, coastal restoration efforts, and facility and road construction projects.
The outlay from the surplus includes $15 million to the state Agriculture Department to reduce its $88 million of outstanding debt issued by the Louisiana Agricultural Finance Authority for a sugar mill and other facilities.
The capital bill provides $300 million for coastal restoration work, $246 million for road and bridge projects, $98 for higher education facilities, and $24 million for port projects.
The capital outlay bill also allocates $85 million for renovations to the Louisiana Superdome as part of the effort to retain the National Football League's New Orleans Saints as tenants through 2025 while reducing the state's annual contribution to the team.
The state is currently paying the team $23.5 million a year, but that would be reduced over the next two years before being limited to $6 million a year under a revised plan agreed to by the team and Jindal.
The plan calls for the establishment of a sports development district adjacent to the stadium. Saints owner Tom Benson has agreed to buy two hurricane-damaged office buildings in the district, renovate them, and lease the space to state agencies for $24 per square foot.
Louisiana's GO debt is rated A-plus by Standard & Poor's and Fitch Ratings and A1 by Moody's Investors Service.