constructiongLa. funds foroing broke

As if Louisiana needed another budget problem, lawmakers have been told the money to pay for ongoing state construction projects is running dry. Plus, the state is hovering so close to its debt ceiling that there’s little room to borrow to replenish the fund.

Without a new infusion of cash, Louisiana is projected to run out of money to pay for college building repairs, economic development projects and state-funded road work in about four months by estimates recently presented to state senators.

And without a solution, the political ramifications could be widespread.

Lawmakers wouldn’t have the pet projects they like to bring home in the “capital outlay” process — and Gov. Bobby Jindal wouldn’t have as much “pork” to cajole votes, right as he’s trying to pass a tax code rewrite in the upcoming legislative session.

“The fund is broke. The fund does not have sufficient cash resources, and without a change in the legislative statute, there’s no way to issue additional bonds,” said Whit Kling, director of the State Bond Commission, which oversees construction borrowing and state debt calculations.

The state can borrow money to pay for construction projects through bond sales to investors, with the debt paid off with interest over future years.

But Louisiana has a constitutional limit on debt, and the state is $22 million from hitting its $605 million debt ceiling, according to data outlined by Sherry Phillips-Hymel, the Senate’s chief budget analyst.

That leaves the state little capacity to issue new bonds to refill the construction fund. Kling said the state could borrow enough money to cover about four additional months of construction work before hitting the debt cap.

A limit enacted in the early 1990s requires that the state’s annual debt-repayment requirements fall under 6 percent of the state’s yearly income from taxes, licenses and fees.

Lawmakers routinely pack the construction budget bill with more projects than the state can afford each year. That leaves the governor’s office to pick winners and losers and decide which projects are advanced, because it submits the list to the Bond Commission for cash lines of credit.

Meanwhile, as they overstock the budget bill, they’ve also not kept up with the funding needed to cover the costs for those projects that actually get lines of credit.

For years, state officials authorized more construction spending than what they’ve actually funded through either upfront cash payments or borrowing. Kling said over the past decade, Louisiana governors and lawmakers have given lines of credit to $1.6 billion more in projects than the state has sold bonds to pay for.

“We just credit card, credit card, credit card,” Kling said.

Now that the construction fund is nearly out of cash, the majority Republican Legislature and the Jindal administration have some options that won’t be appealing and that don’t dovetail with GOP calls for tightened and reduced spending.

Among the possibilities available, according to Phillips-Hymel, lawmakers could seek to exclude certain types of debt from the calculation of the cap, change the debt limit or vote to breach the ceiling.

Each proposal would require a hefty two-thirds vote.

The state has never exceeded the limit, and Kling said lawmakers have never voted to spend above the cap.

As the regular legislative session nears, add this budget trouble to the ever-growing list facing lawmakers.

Melinda Deslatte covers the Louisiana Capitol for The Associated Press. Her email address is

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