Louisiana could make the first debt payment without a loan
BATON ROUGE, La. (AP) – Rather than borrowing, Louisiana could make its first $ 400 million cash payment to the federal government for improvements to the New Brunswick region’s flood protection system Orleans after Hurricane Katrina, if lawmakers agree to the spending.
The state’s revenue forecast has been boosted by better-than-expected tax collections in the current fiscal year that ends June 30. This gives lawmakers an additional $ 357 million to spend and could be geared toward debt-lifting the system instead of taking out a loan that would require years of repayments with interest.
The House-approved version of the budget already proposed spending $ 45 million in cash on the first payment of the $ 400 million debt. Governor John Bel Edwards would like to use $ 355 million of the newly recognized cash flow to cover the full payment of the flood protection system debt owed this year.
Administration Commissioner Jay Dardenne, chief budget adviser to the Democratic governor, delivered the speech to the Senate finance committee on Friday.
Senate Speaker Page Cortez said lawmakers were weighing the idea as the Senate worked on its version of spending plans for the extra money available this year and a budget for next year.
“It’s certainly safe to try and pay cash for this,” said Cortez, a Republican from Lafayette. “It is a debt that we owe.”
The Senate is expected to unveil its budget proposal on Monday, less than three weeks before the legislative session.
Former Governor Bobby Jindal made an agreement years ago that requires the state to pay between $ 1 billion and $ 3 billion for improvements to the dike system built in the parishes of Orleans, Jefferson, St. Bernard, Plaquemines and Saint-Charles after Katrina devastated the region in 2005 The amount of debt depends on how quickly Louisiana repays the federal government.
The agreement finalized in 2009 called on the federal government to pay the full cost of rebuilding the US Army Corps of Engineers’ flood control system that failed during Katrina, as well as additional structures authorized in 1965 that were not completed. when Katrina struck.
But Louisiana had to shoulder a 35% share of the cost of building new projects such as valves, pumping stations and surge barriers. The invoice begins to fall due.
Congress authorized forgiveness of the considerable interest that has accrued if Louisiana makes an upfront payment of $ 400 million by September 30 and repays the full $ 1.1 billion construction cost by September 30. 2023. If the state cannot meet these conditions, the 30-year repayment with interest is expected to cost $ 3 billion.
Edwards initially proposed borrowing money over several years through the sale of bonds to investors for upfront cash in order to repay the federal government by 2023. But that would require debt repayments on decades _ and put a damper on Louisiana’s ability to borrow money for other construction work.
Lawmakers are worried about the cash flow crisis that could lead to other projects they want to fund. Direct cash payment this year might alleviate those concerns, but it would also remove all new cash for debt. Some lawmakers may have other ideas for spending this money.
Several ideas were floated during this session for paying down the federal debt with little or no borrowing, but they are mainly aimed at getting the five parishes to provide some of the money. This arouses the reluctance of parish leaders and legislators who represent the regions.
Paul Rainwater was Jindal’s chief of staff and the former head of the Louisiana Hurricane Recovery Agency and is now a lobbyist representing New Orleans. He said the flood protection agreement still provided that the state would pay the share of the costs due and local governments would cover the costs of maintaining and operating the dikes and pumping systems.
“It was never envisaged that the locals would put the game on,” Rainwater said. “They’ve got their skin in the game” because of the dollars they spend on maintaining flood protection systems.
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