In a change of strategy, Gov. Bobby Jindal’s administration late Wednesday endorsed the sale of all $325 million in rural road bonds at the same time.
The plan, which emanated from a bill pushed by Jindal earlier this year, called for the state to sell $100 million in the first two years and $125 million in the third year.
But Sherri LeBas, secretary for the state Department of Transportation and Development, said late Wednesday that the new plan stems from the advice of the state’s bond counsel and financial adviser. “They came back and said even if you let the projects over a three-year period it is better, more financially sound, to go ahead and bond all of the money out up front,” LeBas said.
The change represents a victory of sorts for State Treasurer John Kennedy, who is chairman of the commission.
Kennedy said in August that the state needed to sell all the bonds to take advantage of low interest rates and save money. “Rates have to go up at some point,” Kennedy said on Aug. 16.
Told of LeBas’ comments, Kennedy said Wednesday night: “I’m glad that DOTD has finally come to that perspective.”
He added, “If rates don’t move for three years, then we will have made the wrong decision. But I think this time three years from now interest rates will be much higher.”
The bond issue, which is a form of borrowing, won overwhelming approval from the Louisiana Legislature earlier this year.
It applies to rural roads that are ineligible for federal aid, some of which have not been upgraded in 30 years.
Roads in every parish in the state, except Orleans, were initially set to benefit.
LeBas said that, while most parishes will see improvements, “it is not etched in stone” that every one, except Orleans, will see gains.
The initial work includes 80 projects, including three in West Baton Rouge and one in Livingston Parish.
The state is set to start accepting bids for first-year projects in January.
The spending relies on the State Highway Improvement Fund.
It generates about $50 million per year from commercial vehicle registration and license fees.
Between $425 million and $490 million in projects over about 1,100 of rural roads are set for repairs through bond issue proceeds and the fund.
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