Louisiana will pay nearly a quarter of a billion dollars in additional bond interest over the next two decades, move closer to its debt limit and lose borrowing capacity for future capital outlay projects because of its borrowing activities over the past six years, a new audit shows.
The already cash-strapped state is having to pay back extra $71 million in interest on money that it borrowed to make debt payments to ease pressure on the general fund during Gov. Bobby Jindal’s administration, as well as $160 million in interest the state could have saved if it had used non-recurring revenue to fund some capital outlay projects.
“Ordinarily, bond proceeds are used to invest in capital outlay projects that have long-term benefits for the public such as roads and bridges,” the auditor’s report states. “In contrast, using bond premiums to reduce general fund deficits burdens the state with paying back the premiums with interest without the added benefit of long-lasting capital improvements.”
The auditors also concluded that between fiscal years 2011 and 2016, the state signed off on new capital outlay projects faster than it could sell bonds to pay for them, which has resulted in a $3.7 billion backlog and reduced the capacity for new projects until fiscal year 2024.
According to the audit, the state repeatedly relied on borrowed and one-time money to plug recurring expenses in the state budget. The audit points to the State Bond Commission’s borrowing oversight and largely lays blame on that panel.
State Treasurer John Kennedy, who heads the Bond Commission, on Monday put the blame on former Gov. Bobby Jindal.
Kennedy said he generally agrees with the analysis, but noted that the commission doesn’t vote on how bond premiums are used. “Utilization of bond premiums ... is determined by the Legislature with significant influence from the governor,” he writes, adding that the Division of Administration is also responsible for the flow of project approvals.