Gov. Bobby Jindal wants to take $100 million from the New Orleans Ernest N. Morial Convention Center to help fund higher education in next year’s state budget.
However, with roughly four months left in the current state fiscal year, the convention center has yet to transfer $20 million the governor put into this year’s state budget.
“It’s totally ridiculous. They’re trying to raid the convention center,” said state Rep. Jared Brossett, D-New Orleans.
The state expects to be $1.3 billion short of the money needed to keep state government services at their current levels in the budget year that begins July 1.
One of the biggest expenses in the governor’s $24.7 billion proposed spending plan is higher education.
To fund the state’s public colleges and universities, the governor wants to take money from legal settlements, sell property, refinance tobacco settlement bonds and take $100 million from the convention center.
For 2011, the convention center approved a $34.3 million budget that it expected to supplement with reserves and other revenue sources to fill a $9.8 million gap.
Commissioner of Administration Kristy Nichols, the governor’s chief budget adviser, said the center has in excess of $100 million in reserves. She said the center has no standing to object to money being taken for the state budget.
“The convention center is a state entity and the Legislature provided in law that they have to transfer the funds,” she said.
Nichols said, “By using dollars available to the state, we are determined to protect higher education from unnecessary cuts of up to 19 percent. After we discovered and fixed an error by the Treasurer’s office in calculating the debt limit, there is no problem with the availability of construction dollars. We are taking a responsible approach that reduces the size and cost of government while also protecting critical services.”
The convention center’s general manager, Robert Johnson, and board President Melvin J. Rodrigue did not return calls for comment over two days.
However, New Orleans Mayor Mitch Landrieu said he is prepared to “go to the mat” to ensure the city’s tax dollars are invested in New Orleans.
“Local hotel/motel tax dollars generated in New Orleans ought to remain in New Orleans. Every municipality in Louisiana ought to be concerned if the State can come in and take the receipts from a local hotel/motel tax and spend it somewhere else for a purpose for which it wasn’t intended,” Landrieu said in a prepared statement.
Nichols’ office said the $20 million from the convention center for the current year is forthcoming.
The Legislative Fiscal Office noted in a January edition of its fiscal newsletter that significant dollars had not been transferred into various funds that ensure colleges, hospitals and other public services continue operating. The office cited the convention center money as well as $56 million from a self-insurance fund, $25.9 million in bond repayments and $10 million in federal government reimbursements.
The Jindal administration said legal discussions are ongoing with regard to the self-insurance fund dollars. Of the bond repayments, $12 million has been received and the federal government reimbursements can be drawn down at any time, the administration said.
Nichols told legislators last week that the convention center would be repaid through the state’s capital outlay, or construction, budget.
Brossett said he does not understand how the governor can promise to repay the convention center with construction dollars when the capital outlay fund is all but tapped out.
Problems with the state’s debt limit and a dwindling capital outlay fund already are preventing the state from moving forward on a full slate of rural road projects. State officials are working with the Jindal administration to identify a solution to the problem.
Because of a slump in state revenue, the state is nearing a debt ceiling that limits how much money can be borrowed. The limitation presents a problem in replenishing a fund that is low on cash for construction projects. The money, which is used to finance ongoing projects, is expected to run out in nine to 12 months.
State Rep. Cameron Henry, who lost his House Appropriations Committee vice chairmanship after clashing with the Jindal administration, said the governor wants to borrow money, then borrow more money with interest to pay it back.
“It’s another accounting gimmick. This is the worst kind, where you’re taking someone’s operating budget,” he said.
Henry, R-New Orleans, said the governor is playing games with the state budget.
“Last year they needed $20 (million). Next year, they need $100 (million). The year after that, they might need $200 (million),” he said.
Nichols said money may be set aside in the state construction budget over time to repay the convention center.
“We may not do that all in one year,” she said. “We’re working with stakeholders and the city on finding the right capital investments to make in that area.”