Aseemingly arcane spat over how to spend $325 million for rural roads actually says a lot about Louisiana’s budget picture, and political maneuvering by Gov. Bobby Jindal’s administration.

On the surface, the dispute looks like an issue that would appeal to few laymen — how to issue bonds that will pay for mostly obscure road improvements.

However, it also points up the depth of state money problems, and the possibility that rural roads have to take a back seat to Jindal’s push to repeal the state individual and corporate income taxes.

The governor proposed the rural roads plan, which breezed through the Louisiana Legislature last year. The fact that roads in almost every parish in the state stand to benefit made it an easy sell.

However, things have gotten complicated ever since.

The Jindal team said it wanted to issue the bonds in increments over three years — $100 million, $100 million and $125 million.

State Treasurer John Kennedy, who has clashed with Jindal on other issues, said it made more sense to sell the bonds in one package to take advantage of low interest rates.

Sherri LeBas, secretary for the state Department of Transportation and Development, agreed with that approach on Oct. 17. The State Bond Commission, which Kennedy chairs, gave preliminary approval to the all-at-once bond sale the next day.

However, all that changed on the night of Jan. 18.

LeBas, budget officials and others decided that the prudent thing now is to issue the bonds in yearly increments.


Kennedy said one possibility is that, because the state is bumping up against its debt ceiling, how the rural road bonds will be sold has to change.

Selling all $325 million of the bonds now could crimp the state’s ability to move ahead on some other construction projects.

Those represent another example of state government borrowing, and one that lawmakers love, and that governors love to hold over them, because it means projects the lawmakers can take home to their legislative districts.

Last year, the Legislature approved $4.3 billion for state construction, including more projects than the state could afford. Jindal whittled the list, which meant the end of several Baton Rouge area projects.

“This is a debt-limit problem,” Kennedy said. “They (governor’s team) can’t do the full amount for the rural roads and all the things in capital outlay they want to do.”

That could be especially relevant during the 2013 legislative session, which begins April 8.

Jindal wants to repeal Louisiana’s individual and corporate income taxes. However, how he replaces the roughly $3 billion in lost revenue — higher state sales taxes are one possibility — requires a Herculean two-thirds majority in the state House and Senate.

That means every vote will be precious. And outlay projects could be key in getting votes.

Another theory is the change in plans for rural roads stems from Louisiana’s ongoing budget problems, including round after round of midyear budget cuts since 2008.

The bigger the bond sale, the more state officials have to dig into the general fund each year to retire the debt.

“The more we borrow, the more it costs,” said Commissioner of Administration Kristy Nichols, in a prepared statement.

The problem is not a lack of revenue, Kennedy said.

“We have more money than we have had in the history of the state,” he said.

Will Sentell covers state transportation issues for The Advocate’s Capitol news bureau. His email address is