BRADENTON, Fla. – Louisiana is getting ready in case cash flow problems occur again this fiscal year.
The State Bond Commission Thursday passed a resolution authorizing staff to prepare for the issuance of up to $500 million of revenue anticipation notes.
“I would couch this as a ‘just in case’ resolution,” said Administration Commissioner Jay Dardenne. “Hopefully, this is not going to be necessary but we’ve got to take this step.”
Dardenne, the governor’s budget chief and a member of the bond commission, said he expects improvement in the budget’s cash flow this year because some hospital contracts were renegotiated with payments due monthly, instead of annually.
Cash-strapped Louisiana issued $370 million of RANs last year in order to pay the state’s bills timely, but the debt was paid off early after there was an uptick in revenue collections. The early move saved the state from having to pay $330,000 in interest.
State Treasurer Ron Henson said his office is in the process of updating fiscal 2018 cash-flow projections, but some agency data is still needed to determine if the borrowing will be necessary.
“We think we might need to do this again, so all we’re asking to do is be prepared to go to market,” Henson said.
The commission will publish a notice about the state’s intent to issue the RANs. That will start a 30-day period during which someone could challenge the deal. If final cash-flow projections indicate the RANs are necessary, the state will get bids from financial institutions.
The Bond Commission also approved moving forward with the issuance of $340.8 million of general obligation bonds with a final maturity in 2037. Bond proceeds will be used to fund capital outlay projects.
Although the structure of the deal is not certain, commissioners discussed the possibility of back-loading bond payments due to debt capacity constraints that are expected in fiscal 2019 after several temporary tax hikes expire, they said.
Henson said meetings with rating agencies are already taking place.
The GO bonds are expected to be issued competitively in September.