Louisiana Officials Downgraded Priority for $300M in Capital Projects

BATON ROUGE (The Center Square) — Nearly $300 million in Louisiana’s capital outlay budget was downgraded in priority by the Interim Emergency Board in November, impacting nearly 100 projects.

The Louisiana Legislative Auditor last week issued a status update to legislative leaders on the current year capital outlay budget through Dec. 14, a report “intended to provide timely information related to an area of interest to the legislature or based on a legislative request.”

“Overall, capital outlay funding in Act 465, net of line-item vetoes, totaled $11.6 billion across all means of finance,” according to the report. “The largest source of funding was general obligation bonds, which accounted for $7.7 billion of capital outlay funding.

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“The largest recipient of funding was state government entities, which were appropriated $8.5 billion.”

Non-state and local government recipients were slated to receive $2.6 billion, while non-government entities were budgeted $476.6 million.

State law allows the Interim Emergency Board — comprised of the governor, lieutenant governor, treasurer, Senate president, House speaker, and representatives from the Senate Finance and House Appropriations committees — to make adjustments with approval from a majority of lawmakers in both chambers.

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The process allows for modifying the scope of a project or changing the priority of general obligation bond proceeds for specific projects. The IEB can also change the recipient agency for line items if the agency impacted consents.

“In November 2023, the IEB met and approved $293.7 million in priority changes, impacting 98 projects,” the report read. “A majority of both houses of the Legislature subsequently approved these changes by remote balloting.”

The edits moved $158.16 million in funding for state agencies from priority 1 to priority 5, $122.56 million in local priority 1 funding to priority 5, and $12.97 million in priority 1 funding for non-government agencies to priority 5.

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The 794-page report includes a breakdown of all projects and those impacted by the changes, which bring the budget in line with limits on cash lines of credit in Act 465.

“For projects receiving appropriations of general obligation bond proceeds (Priority 1, 2, and 5), the enactment of this appropriation in the capital outlay act is not the last step needed for the project to receive capital outlay funding,” auditors wrote. “General obligation bond appropriations are not funded until the receive lines of credit. Lines of credit must be approved by the State Bond Commission bore recipient entities can (ink) contracts and pay project expenses from their general obligation bond appropriations.”

Initially, lawmakers appropriated about $282.68 million more than limits on lines of credit included in Act 465.

“Lines of credit are not granted automatically, and Act 465 of 2023 limits the amount that the State Bond Commission can approve in cash lines of credit in fiscal year 2024 to $1,451,887,938. Since the Act 465 appropriated $1,734,570,408 in Priority 1 general obligation bond funds, this means that not all Priority 1 appropriations can be funded with cash lines of credit in fiscal year 2024.”

A breakdown on the lines of credit included in the report shows that after the November adjustments by the Interim Emergency Board, the total lines of credit for priority 1 stood at $1.43 billion as of Dec. 14, while the current general obligation bond appropriation for priority 1 was $1.44 billion.

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