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Louisiana running out of money; possibility of taking out short-term loan

Louisiana State Capitol (Source: WAFB) Louisiana State Capitol (Source: WAFB)
BATON ROUGE, LA (WAFB) -

Even with the work of a regular session and two special sessions, there’s still a long road ahead to fully repair Louisiana’s budget problems as the new fiscal year starts. 

Lawmakers raised around $371 million for the state’s budget, according to the Revenue Estimating Conference (REC) which met Thursday morning. However, that’s still not enough to keep Louisiana out of the red. 

"I haven't been quite this concerned since I've been in the treasurer's office for sure," said Ron Henson with the state's Department of the Treasury. 

Henson has been with the department for nearly 40 years, so that statement is saying something. 

One problem presented was the status of the state's interfund borrowing, which is taking money from an emergency fund. 

"We're able to borrow from ourselves in essence," said Commissioner of Administration Jay Dardenne. "And the numbers that we heard today were that the balance available for that interfund borrowing is about $151 million compared to $1.5 billion last year at this time." 

The next fiscal year officially starts on July 1, but revenue the state brings in until August 14 must first be used to cover any shortfalls from last fiscal year. 

One solution that Henson presented was a short-term loan known as a Revenue Anticipation Note, basically borrowing against money the state thinks it will bring in. 

He said it's common for local governments to take out such loans, but it's not common at the state level. 

"We could enter into an agreement with a financial institution and we'd only draw down as much as we'd have to have, and that would save interest expense," Henson said. 

Economists forecast a slight uptick in state revenue for the next fiscal year, but then two years of lower revenues following that. 

They are hoping that the price of oil will increase soon. If not, loans will become a bigger possibility. 

"You just hate to be in a position where you have to borrow money to pay your bills," Dardenne said. "Unfortunately the fiscal practices of the past administration, sweeping funds, delaying payments to vendors, using every possible source of one-time money they could, has got us in this position." 

Dardenne said he expects the REC will meet again in September, when they have a better idea of what the price of oil will be. 

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