Financing public safety needs with bond proceeds could endanger East Baton Rouge Parish’s bond ratings, Mayor-President Melvin “Kip” Holden told a committee on Monday.
The parish’s Crime Fighting/Prevention Committee approved a list of projects — including a new parish prison and a misdemeanor jail — expected to cost between $300 million and $350 million.
The panel was established after the Metropolitan Council refused to set an election for a $748 million bond package proposed by Holden. The rejected plan included $298 million of public safety projects.
Holden said he was concerned that new debt for public safety could lower the parish’s credit rating when it came time to issue debt for infrastructure efforts.
“We have to make sure that we don’t dig ourselves into a deeper financial hole,” he said.
East Baton Rouge Parish’s $1.16 billion of outstanding debt is rated Aa3 by Moody’s Investors Service, AA by Standard & Poor’s, and AA-plus by Fitch Ratings.
The sheriff or the district attorney can ask voters to approve property tax increases for operational costs, but only the parish-wide capital improvements district can issue bonds supported by a sales tax increase, according to Richard Leibowitz of Breazeale, Sachse & Wilson LLP, the parish’s bond counsel.
Bond proceeds cannot be used for operational expenses, he told the committee, which is expected to seek an election on a tax hike in April 2012.