DALLAS — The Louisiana State Bond Commission approved a staff report Thursday that set the par amount of net state tax-supported debt at $5.9 billion as of Dec. 31, 2010.
The annual report is required because the commission is prohibited from approving new debt issues that would push annual debt service on state borrowings beyond the constitutional limit of 6% of expected tax revenues.
Director Whit Kling Jr. said the total net state tax-supported debt, including interest costs, was $10.3 billion at the end of 2010.
Louisiana’s per-capita state debt rose to $1,307 at the end of 2010 from $1,277 in 2009, Kling said. That debt peaked at $1,369 in 2007.
Total debt service should remain well below the constitutional limit for the foreseeable future, Kling said, if borrowing remains at anticipated levels. The report assumes annual GO offerings of $300 million for capital outlay projects.
The report is based on the Revenue Estimating Conference’s June 2010 estimate of $8.2 billion of general fund tax collections in fiscal 2012. Kling said statutory limitations did not allow the use of the increased estimate of $8.26 billion in fiscal 2012 revenues adopted by the revenue panel on March 7.
The previous report put net state tax-supported debt at $5.74 billion on Dec. 31, 2009. Louisiana paid debt service of $330.5 million on state-supported debt during fiscal 2010.
The state’s GOs are rated Aa2 by Moody’s Investors Service, AA by Fitch Ratings, and AA-minus by Standard & Poor’s.
Only $408 million of Gulf Opportunity Zone bonds remain allocated but unsold from the state’s $7.82 billion share of the tax-exempt private-activity bonds, according to Kling said.
He said $6.2 billion of the total allocation of $7.82 billion was awarded to projects in Calcasieu, East Baton Rouge, St. John the Baptist, St. James, and Ascension parishes.
The commission gave recent applicants another 30 days to sell their remaining GO Zone bonds before the capacity reverts back to the panel for re-allocation.
In late 2010, the commission shortened the grace period to 90 days from 120 because the federal hurricane recovery bond program was set to expire at the end of the year. However, in December the GO Zone program was extended by Congress for another year.
The commission authorized the waiver of auctions for the $225.8 million of auction-rate tax-exempt bonds issued in 2006 by the Louisiana Stadium and Exposition District. The state purchased the bonds in April 2008 when the rate on the variable-rate demand bonds went to 12% from 4% due to downgrades of the insurance provider.
The unexpected failure in the auction-rate securities market in 2008 raised the debt service paid by the state agency that oversees the Louisiana Superdome in New Orleans to $65,000 a day.
Kling said the state owns 100% of the district’s outstanding 2006 bonds. The measure approved by the commission set the interest rate on the bonds at 1.25%.
Kling said the Internal Revenue Service has given Louisiana a two-year exemption to the federal ban on states acquiring their own tax-exempt debt. The exception will expire at the end of 2012.
