Gov. Bobby Jindal's top budget adviser said Thursday the administration is looking at ways to restructure Louisiana's debt to keep dollars flowing for state construction projects, even as the state hovers near its debt ceiling.
BATON ROUGE, La. (AP) - Gov. Bobby Jindal's top budget adviser said Thursday the administration is looking at ways to restructure Louisiana's debt to keep dollars flowing for state construction projects, even as the state hovers near its debt ceiling.
Commissioner of Administration Kristy Nichols said the administration will ask the Bond Commission next week for approval to bring on a financial adviser to help chart the plans.
Among the options being considered, she said, is a debt refinancing that could help the state take advantage of lower interest rates, which could free up more money for construction projects.
"We're looking at every financial opportunity to ensure that our needs are met and that we move forward with the projects intended," Nichols said.
The state's pool of money to pay for ongoing construction projects is running dry, and Louisiana is teetering so close to its debt ceiling that there's little room to borrow more to replenish the fund.
The state borrows money to pay for construction projects through bond sales to investors, with the debt paid off with interest over decades. But Louisiana has a constitutional limit on debt, and the state is $22 million away from hitting its $605 million debt ceiling, the amount allowed for annual debt-repayment requirements.
According to estimates from financial analysts, the state will run out of money for construction projects within four to five months and could borrow enough to pay for another four months of construction spending before hitting the state's debt limit.
Nichols said the governor will not support any proposal to breach the debt ceiling or increase the cap.
Treasurer John Kennedy said Jindal administration officials talked in a conference call this week of restructuring the state's existing debt by extending the repayment term or possibly issuing debt over 25 to 30 years, instead of the standard 20-year term.
Both would boost interest costs, and Kennedy said he opposes the ideas.
"That's penny-wise and pound-foolish. It'll cost the taxpayers more money. That's kicking the can down the road," he said.
But Nichols said Thursday that those ideas of lengthening the repayment period for borrowing have been rejected.
"That's not an option we're looking at," she said.
The decisions could have implications on Louisiana's credit ratings, Kennedy said.
"The rating agencies have already called us. They know there's a problem and they want to know how we're going to solve it," he said.
The treasurer said he'd like to sit down with administration officials to talk over ideas about ways for debt restructuring and for managing the state's construction projects. He said he'd suggest scrapping - or at least delaying - some projects that haven't begun and that aren't urgent needs.
"There's no question we have projects in the works or that will be in the works that are low-priority. I don't consider renovating the headquarters at the Junior League to be a priority," he said. "I don't consider bike paths and splash pools to be a priority."
However, Nichols said the administration won't support stalling projects already given lines of credit and doesn't anticipate any delays with planned construction.