Jindal And Kennedy Reach A Deal On $200M Borrowing
BATON ROUGE (AP) — Treasurer John Kennedy and Gov. Bobby Jindal's administration have struck a deal that will allow the state to borrow $200 million for construction work before any projects experienced delays, both sides confirmed Thursday.
Kennedy and Jindal's Division of Administration reached a compromise on the financial documents needed for the borrowing. The treasurer insisted the paperwork needed to explain an ongoing dispute over whether Louisiana ended last year with a budget surplus or deficit.
"The division made concessions and accepted our language. I thank them for their cooperation," Kennedy said in a statement.
Commissioner of Administration Kristy Nichols, the governor's top budget adviser, issued her own assessment: "We can finally move forward with the critical projects that were being threatened by Treasurer Kennedy's delay."
The Jindal administration says it identified additional state cash reserves that it calls a $179 million surplus from the fiscal year that ended June 30. Kennedy says when revenues are compared against expenses from that year, the state had a $141 million deficit. He says the calculation used by the Jindal administration strays from Louisiana's accounting practices.
According to Nichols' office, the final, agreed-upon language says: "As of the date of this official statement, it has not been determined whether the state has a surplus or a deficit for Fiscal Year 2013-2014."
The dispute was the latest in a string of disagreements between the two Republicans.
It began when Kennedy said he wouldn't sign the financial paperwork needed for the borrowing — and for a refinancing of existing state debt — because the language suggested by the Jindal administration would have him running afoul of federal anti-fraud laws. He said he wouldn't sign until the documents accurately explained the surplus disagreement.
Nichols replied that Kennedy was unnecessarily holding up the paperwork and his actions threatened to stall state-financed construction projects. She sent a letter to lawmakers urging them to pressure the treasurer to sign the documents, saying her office submitted suitable compromise language.
Kennedy accused Nichols of exaggerating the urgency of the situation.
State-financed construction projects are paid with dollars borrowed through bond sales to investors, paid off over years with interest. Louisiana has about $400 million in its capital outlay escrow account, which pays for ongoing construction work.
The new borrowing this month will replenish the escrow account. Meanwhile, a separate refinancing of current state debt also is planned to take advantage of lower interest rates and save the state money.
Nichols' office said the state likely will lose out on savings because of the delays in the refinancing. Meanwhile, Kennedy noted that credit rating agency Moody's Investors Service describes the state's budget from last year having a "$140 million year-end operating deficit."
"Moody's agrees with me," he said.
– by AP Reporter Melinda Deslatte