Analysis: Louisiana Construction Budget Getting Scrutiny

BATON ROUGE (AP) — Lawmakers are doing something highly unusual in the Louisiana Capitol this legislative session. They're publicly discussing the individual projects included in — or dumped from — the state's construction budget.

         The House Ways and Means Committee has been holding lengthy hearings on projects that were slated to receive state construction financing. Committee members have asked about the purpose of the projects, timeline, sources of financing and value to the state.

         And they haven't just focused on state projects, like construction on college campuses, at parks and on economic development initiatives. They've also been digging into the smaller, local projects around the state that lawmakers tuck into the construction budget each year and that governors have used to trade for votes.

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         Louisiana's cash crunch is clearly bad when it reaches into that most politically protected of places, lawmakers' pet projects.

         "We need to make sure we're being prudent with our state dollars," said Ways and Means Chairman Neil Abramson, D-New Orleans. "Whether it's cash dollars going to the operating budget or bonds (for construction work), it's still state money."

         The state construction budget passed by lawmakers each year, known as the capital outlay bill, has become a sort of wish list. It's crammed with more proposals than Louisiana has money to spend.

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         That leaves the governor to decide which projects advance to the State Bond Commission to receive lines of credit and the money to get under way. The commission is packed with a governor's allies, so whichever list gets forwarded to the panel usually gets approved.

         As governors before him had done, former Gov. Bobby Jindal got the Bond Commission to approve millions more in projects than Louisiana could afford in the short-term, leaving them in a queue waiting for financing.

         Gov. John Bel Edwards inherited that lengthy list. But he also inherited something different from many of his predecessors: the worst budget problems Louisiana has seen in nearly 30 years. That limits the amount of borrowing the state can do to finance projects.

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         "The capital outlay program was about as broken as the budget for the state of Louisiana," Edwards said Thursday.

         Abramson said the state can only borrow $400 million over the next two years and $1.2 billion worth of projects have been given cash lines of credit — promises of money from the state.

         "We have committed to pay for things that we don't have the money for," he said.

         Louisiana finances items in the construction budget by selling bonds to investors for upfront cash, with the debt paid off over decades. The state faces cash flow problems for projects, because of the over-commitments and borrowing limits tied to the state debt ceiling.

         A debt cap enacted in the early 1990s requires that annual repayment requirements fall under 6 percent of the state revenue forecast. That limit is expected to force lessened spending on construction work for several years.

         Edwards wants to steer the limited money available mainly to roadwork and a backlog of deferred maintenance on state-owned and college buildings. He's planning to halt part of a building boom to expand Louisiana's community colleges and to drop many local projects favored by lawmakers for their districts.

         The governor proposed stripping $1 billion in projects from the construction budget. But he's also proposing new spending for the roadwork and building maintenance on top of the long list of projects that already have received cash lines of credit.

         Abramson thinks the reductions should go further.

         His committee is considering ways to remove some projects that have received lines of credit, to better match the construction budget to available money. The committee's proposal is expected within the next week or two.

         But even if the House tries to further cut the spending plan, such efforts seem likely to run into resistance in the Senate.

         Senate President John Alario, R-Westwego, a powerful legislative leader known for drawing millions in construction financing to his district, doesn't support Edwards' bid to lessen local projects — which suggests proposals to cut even deeper would face pushback.

         – by AP Reporter Melinda Deslatte



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