If the governor and Legislature would get their acts together, we’d say Louisiana’s budget could be stable. But given the unlikelihood of the aforesaid, it’s difficult to quarrel with the bond rating agencies that “negative” is a better word for the state’s financial outlook.
We can certainly do better, though, and we hope the bond rating agencies get that.
The departure of Gov. Bobby Jindal because of term limits also means a new Legislature will be elected this fall; a number, though not a majority, of lawmakers also are term-limited.
We can only hope they are more financially responsible than Jindal and his followers in the House and Senate over the past eight years.
The new focus on the bond agencies is because the state’s credit ranking is a key factor in the costs of borrowing, and some particularly important projects are underway: On Aug. 10, the state wants to start the process toward an Aug. 18 sale of bonds that would raise $78.9 million for a section of Interstate 49.
Upgrading the highway between Lafayette and metropolitan New Orleans is a great long-term investment, but this segment alone requires substantial borrowing. Bond sales will cost more in a state with a negative outlook, and unfortunately, that’s what Jindal and Co. have given us.
Ironically, on objective assessments of the state’s economy and with some financial good judgment, the outgoing governor and Legislature should have given their successors a growing state general fund and actual surpluses of one-time money that could be applied to roads and other one-time purposes.
At least $542 million in the budget is in one-time money used to prop up the operating plan for the fiscal year that began July 1. While that’s less one-time money than last year because of legislative tax increases, it’s still no sign that a bond rating agency could consider fiscally responsible.
If we’re resorting to all these financial gimmicks and dubious funding sources during relatively good economic times, what reassurance can we give the bond agencies or anyone else that Louisiana’s outlook is anything better than negative?
Our state is living on borrowed time.
State Treasurer John N. Kennedy notes that the 2015 Legislature did make some changes that will improve the state’s outlook but that it will take a few years to straighten out the mess.
“We had all four wheels in the ditch,” he said. “Now we got one wheel out.”
That doesn’t mean we’re ready to roll.