Bobby Jindal is on his victory tour of the state, touting his accomplishments.
Perhaps he should bring Edwin W. Edwards along, as the two now share a historic distinction.
It is on the outgoing year of their leadership that they leave the state of Louisiana borrowing on short-term loans to pay the bills.
Not since 1987, when Edwards was finishing his third term in a more severe oil price decline than this year’s, has state government seen this kind of embarrassment.
“We’re getting low on cash,” state Treasurer John N. Kennedy told the Joint Legislative Committee on the Budget. The lawmakers approved his plan to pursue a bond sale to raise $254.9 million for paying everyday bills on construction projects.
The plan is to borrow the money for six to nine months. Then the state would return to its typical financing methods, a long-term note for future projects, to be paid out over a longer period of time.
The state puts money into an account for capital outlay, the big construction projects for roads and bridges, parks and buildings. Now, we’re burning through that money at about $45 million a month.
Jindal and lawmakers have routinely balanced budgets by using one-time money from special funds. There are just not that many pots in the Treasury to temporarily borrow cash from internally because they’ve been tapped for the operating budget or their original purposes.
The bad financial practices of government have been noticed by the lenders for expenses such as construction projects. Kennedy urged a short-term loan, because a request for long-term financing would raise questions on Wall Street about the reliability of the state’s current budgets.
The state’s bridge loan avoids having to explaining to Wall Street loan officers that the state’s budget is in disarray and significant parts of the state’s economy are hurting because of low oil prices. The bridge loan will give breathing room to Gov.-elect John Bel Edwards — but not much because he and the Legislature will have to make the tough decisions to put the state back into better financial shape early next year.
Before, that is, Kennedy and officials of the new administration go back to Wall Street houses for the long-term bond borrowing. Unless things change a great deal, the impact of Jindal’s administration of the state’s finances will still require some explaining.
Just as in 1987, a new administration will take office amid not just the structural deficits that have been hallmarks of their predecessor’s reign. There may well be a serious cash flow crisis. In 1988, newly elected Gov. Buddy Roemer had to resort to a major sales tax increase to provide money to right the ship financially because making payroll for the state was an issue.
Bobby Jindal and Edwin Edwards would be in some ways the biggest political odd couple since James Carville and Mary Matalin, but in terms of the state’s finances, they both leave their successors “accomplishments” the state could have done without.