Planned Monday conference calls with the nation’s bond rating agencies were postponed amid questions surrounding the Jindal administration’s state budget surplus claims.
State Treasurer John Kennedy said he didn’t want to get into conversations with those who monitor the state’s financial condition until it’s determined if the $178.5 million surplus really exists.
“The rating agencies obviously are watching the news in Louisiana and I anticipate them asking about it,” Kennedy said. “I don’t want to represent to the rating agencies we have a surplus if we don’t. Our credibility is very important. … I don’t want to have to defend something that may be indefensible.”
Commissioner of Administration Kristy Nichols said it was a mutual decision to wait until after the Legislature’s top money committee certifies the amount “so we can all be on the same page.”
She said she is confident that the administration is on sound financial footing.
Nichols late last week announced a $178.5 million budget surplus as of the fiscal year ending June 30. The next day, Nichols confirmed that the administration had added a new element to the computation — money heretofore uncounted from prior budget years — to achieve what is called the “general fund balance.” Nichols’ office said $319 million carried over from prior state fiscal years had been added to last fiscal year’s revenues to produce the year-end $178.5 million surplus.
Kennedy said the state would have ended the fiscal year with a $141 million deficit if the method used in past years had been followed.
When asked about Kennedy’s claim, Nichols did not directly answer. “I think it’s true that all revenues that go up or down affects the general fund balance,” Nichols said.
She insisted that the money is cash on hand and should be counted whether it was generated in the last budget year or in previous years. “My question is why the treasurer knowingly left this money on the table?” she added.
Separate conference calls had been scheduled with Moody’s, Fitch, and Standard and Poor’s in advance of the state issuing bonds and doing some bond refinancing. The Treasurer’s Office, the state Division of Administration and the state’s financial adviser in New York City were to be involved in the discussions.
The ratings bond agencies give states determine interest rates received on borrowing. Generally, the better the rating, the lower the interest rate.
The meetings are tentatively rescheduled for Friday afternoon and early next week, according to Nichols’ office.
Kennedy said he plans to meet with Legislative Auditor Daryl Purpera, who is going over the Jindal administration’s backup documentation on how the calculation was made to determine its accuracy.
Neither Purpera nor the Legislative Fiscal Office had received specific information Friday on what went into the computation.
The Joint Legislative Committee on the Budget is supposed to take up the issue when it meets Friday. The administration’s Office of Planning and Budget is required to provide a budget status report that reflects the state general fund balance. The legislative auditor certifies that it’s a correct assessment.