The city of New Orleans struck out Wednesday on convincing legislators to forgive a loan dating back to the early days of the Hurricane Katrina recovery.
Municipalities borrowed money from the state in 2006 to pay the debt service on cheap borrowing that Congress created to spur the hurricane recovery.
The New Orleans School Board and the Orleans Parish Law Enforcement District repaid the money they owed. Thirteen political subdivisions, including the city of New Orleans, still owe $415 million in principal and interest.
House Bill 83 would forgive the loans.
The House Committee on Ways and Means balanced differing designs on the dollars.
Jackie Clarkson, president of the New Orleans City Council, told legislators that her city could use the money demanded by the state for loan repayment.
“We’re to the wire on our budget. There’s nowhere for us to go except to cut vital services to pay these loans,” she said.
The Jindal administration, meanwhile, warned that forgiving the loans would unbalance the nearly $25 billion state budget for the fiscal year that starts this summer.
The governor included $45 million from loan payments to help fund state government in the upcoming fiscal year.
“Any forgiveness or delay in the payments will cause a shortfall,” said Barry Dussé, state budget director for the Jindal administration.
After listening to the arguments for and against forgiving the loans, the committee shelved the legislation.
The bill’s sponsor, state Rep. Jared Brossett, had asked the committee to send HB83 to the House floor.
Brossett, D-New Orleans, said municipalities need to hold onto their money to pay for transportation, law enforcement, fire protection and flood control.
Andy Kopplin, chief administrative officer for the city of New Orleans, told legislators that the loans were made with the understanding the state would not demand repayment.
At the time the loans were made, Kopplin was overseeing the storm recovery for then-Gov. Kathleen Blanco.
He said the state could not simply give the money to municipalities because of prohibitions against donations.
“We bring this bill to you as a matter of principle. The commitments made at the time were for the forgiveness of these loans,” Kopplin said.
He said the city could commit millions of dollars a year to repaying the loans or spend that money on beefing up the Police Department.
On the eve of Kopplin’s appearance before legislators, a New Orleans judge was carjacked in the Carrolton area.
State Rep. Jeff Thompson, R-Bossier City, warned that it might not be wise to go against the governor since he controls the flow of some dollars to New Orleans.
Thompson also pointed out that Gov. Bobby Jindal could use his veto power to scrap the bill if it made it to his desk.
Kopplin reiterated that commitments should be honored.
Tim Barfield, executive counsel for the state Department of Revenue, said the bill has a good intent.
The Jindal administration’s oppositions stems from the impact on the state operating budget, he said.
“From our standpoint and from the administration’s standpoint it’s just about the money. It’s about the cost,” Barfield told the committee.
The committee agreed without objection to involuntarily deferring the legislation.
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