La. Panel Approves $200M Construction Plan for Colleges
BATON ROUGE, La. (AP) — A $200 million financing plan for construction projects at state community and technical college campuses has been approved by the State Bond Commission, despite concerns the borrowing will edge the state closer to its debt ceiling.
The move nearer the state’s annual cap on debt would limit the ability for the governor and lawmakers to move ahead with other state-funded construction projects. Debt is capped at six percent of state income each year.
The Bond Commission already had agreed to $185 million in borrowing for the Louisiana Community and Technical College System campuses. The bond commission’s vote, which came without objection, increased the size of the bond issuance to $200 million and reworked the borrowing and repayment schedule.
Public agencies sell bonds to investors to generate cash for a project and pay off that borrowing over time.
The money will replace, repair and expand campuses at a list of community and technical colleges around Louisiana. Supporters say upgraded facilities are badly needed to improve worker training and skills trade programs.
“It’s so important to the state to get these facilities built,” said Sen. John Alario, a Democratic member of the Bond Commission.
The state will pay off the borrowing in installments over 20 years, starting with a $2 million payment in the upcoming 2009-10 budget year, a $17.3 million payment the following year and payments of $16.2 million each year after that until the debt is paid, according to a financial analysis by Bond Commission staff.
The director of the Bond Commission and Gov. Bobby Jindal’s administration disagreed about whether the college construction borrowing could push Louisiana over its debt ceiling in a few years.
Whit Kling, commission director, said his calculations show the college borrowing would force the state over its debt limit in five years if the state tried to issue the transportation bonds and general obligation bonds planned for the next few years, unless the state’s income projections improve.
Kling said the state will have to scale back issuance of general obligation bonds for state-funded construction projects. That would slow — or stall — other projects already in the pipeline.
“If all the assumptions stay static and they all come true, then you won’t be able to do something else,” Kling said.
Commissioner of Administration Angele Davis disagreed with Kling’s assumptions, however. Davis, the governor’s top budget analyst, said the administration doesn’t intend to issue as much general obligation debt as Kling assumed in his report, so the state would stay under its debt ceiling.