BATON ROUGE, Louisiana — Louisiana's financial adviser on Thursday warned that the state is edging closer to its debt ceiling and will need to tightly manage construction spending to stay under the cap.
Renee Boicourt, with Lamont Financial Services Corp., gave an update to the State Bond Commission about the debt load and its implication on state-financed construction work.
Gov. Bobby Jindal's administration has committed to a billion dollars more in projects than the state currently has cash to spend, and Louisiana has a limited amount of space to borrow under its debt limit.
"This is going to have to be well-planned and tightly-controlled," Boicourt said.
Treasurer John Kennedy, chairman of the Bond Commission, said it appears the next governor and Legislature will be left with a lengthy list of construction commitments, but not enough borrowing capacity to pay for them.
"That'll be a nice little present for the new governor," Kennedy said.
Jindal is term-limited, and the election to choose Louisiana's next governor is in October.
Commissioner of Administration Kristy Nichols, Jindal's top financial adviser, questioned the borrowing assumptions in the data. She said Louisiana regularly manages its construction work to stay under the debt ceiling and will continue to follow the same approach.
"It's all about cash flow, and we're very closely mindful," said Mark Moses, director of the Jindal administration agency that oversees state-financed construction projects.
Louisiana borrows money through bond sales to investors to pay for road work, building repairs and economic development projects. The debt is paid off with interest over decades. A debt ceiling enacted in the early 1990s requires that annual repayment requirements fall under 6 percent of the state's revenue forecast.
The state's debt load has risen each of the last six years. A report presented to the Bond Commission on Thursday showed Louisiana carried a debt load of $1,503 for every man, woman and child in the state at the end of 2014. That's a 27 percent increase since 2008.
If Louisiana's revenues go up, the state will get more breathing room under the debt limit. But if they fall, the situation becomes more difficult.
Kennedy said the next governor will have to grapple with a series of commitments made by his predecessor while balancing new requests and a limited borrowing capacity.
"We made a bunch of promises we don't have the money for," the treasurer said.
The situation isn't new. Former Gov. Kathleen Blanco left a similar pile of over-commitments to Jindal, though she also left a billion-dollar surplus as well.
Lt. Gov. Jay Dardenne, a member of the Bond Commission, said the construction budgeting process has been broken for years and needs to be changed.
"We can't keep making this a grab-bag for everybody to throw a project into," said Dardenne, who is running for governor.
Rep. Joel Robideaux, R-Lafayette, is seeking to keep new projects from being placed in the construction budget for next year. Robideaux is chairman of the House Ways and Means Committee, which shapes the budget bill.