Fiscal Cliff Could Impact State Construction Projects

Jan 30, 2018

When Louisiana rolls into the next fiscal year on July 1, state revenue will shrink by more than $1 billion as temporary tax increases expire. That drop in revenue is what's referred to as the fiscal cliff.

Gov. John Bel Edwards recently presented his budget proposal for the coming fiscal year. He says that loss in revenue is putting a squeeze on investments the state can make in things like infrastructure.

“Quite frankly," he explained at a January meeting of the Joint Committee on the Budget, "I don't see us, if we don't fix the cliff, having any additional Capital Outlay for next year."

Capital Outlay is the funding approved for state construction projects like roads, buildings and water systems. The state sells bonds to fund these projects and agrees to pay that debt off over 20 years.

Commissioner of Administration Jay Dardenne says funding for interest payments on new bond sales isn’t included in the budget proposal — a total of $6 million.

"We don't feel like we can make a commitment to $6 million over the course of the next 20 years facing the cliff," he said.

Without new bond sales, funding these construction projects could prove difficult.

At a Joint Committee meeting on Capital Outlay Monday, Sen. Gerald Long (R-Winnfield) asked what kind of funding constraints legislators should expect.

"We all know that the Capital Outlay projects that are currently pending are limited because of the scope of, obviously, our inability to move bonds at this time," said the senator.

Mark Moses is in charge of Capital Outlay for the state. He says just to keep projects going that are already underway could cost more than $600 million. But so far, the state doesn't have that much to spend.

"There's a shortfall from what we already have that we need to reauthorize just to keep these projects going," explained Moses.

Sen. Long says the reality is that the state's money is limited.

"We're moving forward," he said, "but we don't have very far to go because we don't have very much to spend."