$200M Borrowing Plan Tied Up In Surplus Dispute

BATON ROUGE (AP) — A dispute over whether Louisiana ended last year with a budget surplus or deficit threatens to delay borrowing needed to keep state construction work on track.

         Treasurer John Kennedy said Friday that he won't sign financial documents needed for the $200 million in borrowing until he believes they accurately depict the budget picture. Otherwise, he said he could run afoul of federal anti-fraud laws.

         Kennedy wants the documents to spell out there is disagreement over the surplus figure.

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         "You can't use puffery. You can't use hype. You can't use BS. When I sign this document, I swear to the world that it's accurate," he said. "I am not going to mislead investors."

         Gov. Bobby Jindal's chief budget adviser, Commissioner of Administration Kristy Nichols, said her office submitted language clearly explaining the additional cash reserves the Jindal administration identified as a nearly $179 million surplus.

         "It's not controversial language. It's pretty straightforward," she said.

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         Kennedy said the calculation method used by the Jindal administration strays from Louisiana's regular accounting practices, which he said would show a nearly $141 million deficit last year when revenues are compared against expenses.

         Though Kennedy and the Jindal administration are regularly at odds on financial matters, skepticism about the surplus figure from the budget year that ended June 30 is more widespread.

         The Legislature's financial advisers have been reticent to immediately agree to the surplus amount submitted by the administration, and the Legislative Auditor's Office is combing through the numbers.

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         That review won't be final until December, and state officials hope to borrow money in November and also refinance existing state debt to take advantage of lower interest rates. State-financed construction projects are paid with dollars borrowed through bond sales to investors, paid off over years with interest.

         Nichols said Kennedy is unnecessarily stalling the borrowing — and risking interruptions in construction work and savings from the debt refinancing.

         "It feels like the treasurer's manufacturing an issue, which I don't know why he would do that. All that happens is the projects get delayed, the savings get delayed and the state gets hurt," Nichols said. "Unless he can show a legitimate issue with respect to the language, I don't have a sense what his problem is."

         The bond sale will replenish the state's capital-outlay escrow account, which pays for ongoing construction work. The account had more than $400 million in it earlier this month, but Nichols said the dollars are expected to run out in January.

         For now, the borrowing and debt refinancing remain on track. If the language of the financial documents can be worked out by Wednesday, Nichols said things will stay on schedule for a November bond sale.

         – by AP Reporter Melinda Deslatte

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