DALLAS -Louisiana Gov. Bobby Jindal has included a measure to provide relief for the high interest rates being paid on bonds issued by the Louisiana Stadium and Exposition District in his call for a second special session of the Legislature.
Jindal on Monday called for the session, which will begin March 9 and end no later than March 29, to deal with the state's $1.1 billion surplus from fiscal 2007. He amended the call Tuesday at the request of House Speaker Jim Tucker, R-Algiers, to include a bill that would allow the state treasurer to purchase the auction-rate bonds on which the district is currently paying 12% interest.
Current state law does not allow the state treasurer to purchase tax-exempt bonds from any issuer. The proposal being presented, Louisiana Revised Statue 49:327B(g), would allow the treasurer to purchase tax-exempt bonds, but only from the stadium district.
The stadium district issued $294.3 million of auction-rate debt in March 2006 to restructure its existing debt, provide $40 million in new money to repair hurricane damages at the facility, and give the district $25 million for operational expenses. When a recent auction failed, the interest rate on the debt reverted to 12%, boosting the district's monthly debt service from some $400,000 to more than $2 million.
"This measure is one of the alternatives presented as possible solutions to the district's auction-rate bond problem," said Whit Kling, director of the State Bond Commission. "The law will have to be amended to allow the state to bid on those bonds."
Kling said if the measure is enacted, the state could offer to purchase the bonds on a short-term basis at a lower interest rate than could be obtained in the open market.
"This measure would allow that to happen," he said. "This was one of a number of alternatives that was presented to the governor's office. Some of the other alternative solutions may come up, but it is up to the administration to do that."
The stadium district oversees the Louisiana Superdome, home of the New Orleans Saints of the National Football League, and the adjacent New Orleans Arena, home of the New Orleans Hornets of the National Basketball Association.
The governor originally called the session only to allocate the fiscal 2007 surplus, with 12 items on the agenda. The debt service relief request for the stadium district is agenda item 13.
Jindal is asking legislators to eliminate a number of business taxes that he said hinder economic development in the state. Eliminating the state tax on business debt - the only such tax in the country - and the state tax on business utility bills, along with accelerating the removal of a tax on business machinery, will cost the state more than $360 million over the next five years.
On the surplus side, Jindal wants to deposit $73 million into the state budget stabilization fund in accordance with constitutional mandates.
More than half the remaining surplus, or $515 million, will go to highway, bridge, and port projects in all 64 parishes. Jindal said $209 million will be allocated to new roads and expansions of the interstate highways within the state. Port projects include $25 million for the first phase of an expansion at the Port of New Orleans that would increase the capacity of a container terminal by 25%, and projects at ports in Lake Charles and Terrebonne Parish.
Another $300 million would be devoted to matching federal grants for hurricane protection and coastal restoration projects in southeast and southwest Louisiana.
Jindal wants to put $70 million of the surplus into the state employee and teacher retirement systems to help offset some of their $11.6 billion of unfunded actuarial accrued liability. The governor said for each $1 put into the systems, the state saves $4.36 of interest costs.
Other allocations suggested by Jindal include $80 million to meet critical infrastructure maintenance needs at state colleges and universities, and $50 million for new facilities and renovations at Louisiana State University's Pennington Biomedical Research Center in Baton Rouge.