Lawmakers looking for defeasance plan

by Jeremy Alford, LaPolitics


Several lawmakers have told LaPolitics that they’re hearing rumblings of a possible bond refinancing by the Jindal Administration to take advantage of low rates. The savings, among other pots of money and maneuvers, would then be used to put into play a debt defeasance plan.

It’s yet another idea being tossed around to address the state’s $1.6 billion budget shortfall for next fiscal year.

Whatever the means might be to pre-pay debt, sources say around $173 million is the administration’s target. That’s how much money they want to cobble together for the debt defeasance plan.

Asked to confirm, Commissioner of Administration Kristy Nichols said, “The only way to approach this year’s budget is to put everything on the table.”

She added that her office is still developing the final budget proposal and will present it to the Legislature on Feb. 27.

The administration used a similar tactic to help balance the budget last session, when $210 million from several different pools of cash was used to pre-pay debt, which in turn freed up the same amount of unrestricted general fund money to use on operating expenses.

Critics like Treasurer John Kennedy have long decried debt defeasance as an “accounting gimmick,” especially if the money is not used to completely retire debts.