The state Bond Commission decided Thursday to seek advice on how to proceed with a $325 million bond issue for rural roads.
At issue is how fast to sell the bonds, which are a form of borrowing.
Gov. Bobby Jindal and his state Department of Transportation and Development have said they want to sell $100 million in the first two years and $125 million in the third year.
But state Treasurer John Kennedy, who is chairman of the commission, says the state needs to sell the bonds while interest rates are low.
“I am very nervous about saying we are going to issue some bonds this year, and then some next year and some the third year,” Kennedy said after the meeting.
“By the time we get to the third year, interest rates are going to be high,” he said. “If they are not, we will be back in another recession. Rates have to go up at some point.”
The commission said it will find an underwriter and bond counsel, then rely on the advice of the underwriter on exactly how the bonds will be sold.
One option would be to sell most or all of the bonds now, then draw down on the yearly amounts as needed.
DOTD Secretary Sherri LeBas said the aim is to strike a balance between taking advantage of low interest rates and other factors.
“We have made a commitment to industry that we are going to start to let these projects in December,” LeBas, who appeared before the commission, said afterward.
“We can only do that if the bonds are sold by that time,” she said. “If they are not, it will delay the letting of the projects.”
The bond plan, which was pushed by Jindal, was overwhelmingly approved by the 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 for Orleans are set to benefit, with priorities taken from a list compiled by DOTD.
The initial work includes 80 projects, including three in West Baton Rouge Parish and one in Livingston Parish.
The spending relies on the State Highway Improvement Fund. It generates about $50 million per year from commercial vehicle registration and license fees.
Money raised through bonds and the fund will pave the way for $425 million in rural road improvements in the next three years, officials said.
About 1,000 of Louisiana’s 6,000 miles of rural roads are in line for improvements.
LeBas said projects set for work in the second year will be released next month.