BRADENTON, Fla. - Louisiana plans to alter the way capital projects are prioritized and financed because of the state’s fiscal problems.
There will be $1 billion less to fund projects in fiscal 2017, and the administration’s focus will be on financing transportation and port projects with the limited bond capacity available, Commissioner of Administration Jay Dardenne told the House Appropriations Committee Tuesday.
“There is a debt limit imposed on the state,” he said, “so we can’t keep bonding without cash to pay for it.”
Dardenne said only $350 million in new bond capacity will be available over the next two fiscal years, and that means there will be a “dramatic reduction” in what the State Bond Commission can do to fund capital construction.
The governor and legislature approve a capital outlay budget each year that lists all projects and means of funding, which includes cash from the general fund, federal grants, and funds from universities and local governments, although most are financed with general obligation bonds.
Projects are ranked on lists from 1 to 5, with 1 being the highest priority. The state authorizes “cash lines of credit” to start certain projects that will later be financed with GOs.
As of June 30, 2015, the state had authorized $1.1 billion in lines of credit, according to the comprehensive annual financial report. Those lines of credit eventually will need long-term financing.
Although the governor’s priorities are submitted to the legislature, lawmakers have added projects to the list in the past.
“We’ve knocked a huge swath of projects out of this budget,” Dardenne said Tuesday. “It’s a remarkably different capital outlay bill than any legislature is used to seeing.”
The administration-sponsored bill cuts $1 billion in projects that were previously authorized on the priority 5 list but remain unfunded.
About $110 million in new GO financing has been earmarked for road and port construction projects, he said, adding that “transportation is a priority for this administration.”
Revisions to the capital program are meant as a “step toward meaningful reform” and to be candid about funding projects through bond indebtedness, Dardenne said.
The State Bond Commission gives final approval to state GO bond issues as authorized by the legislature, and members have discussed concerns about the fast pace of state cash being used to fund projects in advance of bonds being issued.
Louisiana plans to issue $359.3 million of GO refunding bonds on Wednesday that will restructure payments on previously issued bonds to provide relief this year and in 2017 as part of a plan to deal with the state’s budget deficit.