BATON ROUGE, La. (AP) - Louisiana’s debt load has declined for the first time in a decade, a notable benchmark in a state trying to get a handle on its finances after years of budget gaps and record borrowing. But the amount Louisiana owes for every man, woman, and child still outstrips the national average.
An updated debt report presented to the State Bond Commission shows Louisiana’s per capita, tax-supported debt dipped to $1,497 in 2018, down $61 per person from $1,558 a year earlier, as the state works to shrink its outstanding obligations for construction projects.
It was the first drop in the debt load since 2008, after years of continued rises. Louisiana owes an amount per state resident that is lower than in 2014, when it hovered slightly above $1,500.
“This is really all good news for us and represents a discipline that has been instilled in our capital outlay program,” said Commissioner of Administration Jay Dardenne, the governor’s chief budget adviser, referencing Louisiana’s construction budget.
Louisiana borrows money through bond sales to investors to finance construction projects, like road work, building repairs, and economic development initiatives. The debt is paid off with interest over decades.
Boosted borrowing levels, combined with pension and other state debts, grew the per capita debt level every year during Republican former Gov. Bobby Jindal’s tenure. The Jindal administration and lawmakers at the time overcommitted Louisiana to construction work, leaving the state on the hook for years of projects that far outpaced available money.
Democratic Gov. John Bel Edwards’ administration and the majority-Republican Legislature have worked to curb the borrowing levels, with the Bond Commission report showing the state’s tax-supported debt load fell $650 million last year compared to 2017.
Still, the numbers remain large — and out of step with other states.
Louisiana owes around $7 billion for the borrowing done for construction and other projects, the debt report shows. The state is expected to pay that off with $3.5 billion in interest over decades.
Meanwhile, Louisiana’s per capita debt load remains about $150 above the national average, according to the report, and the state’s credit rating remains the lowest among states.
Dardenne suggested the comparison to other states could be skewed, because not all states include debt obligations for local projects in their calculations.
“This may be a little bit misleading,” he said.
Treasurer John Schroder has repeatedly voiced concerns about Louisiana’s debt load, suggesting the state finances too many local projects. He urged lawmakers to consider his proposal to create a revolving loan fund to help municipalities finance infrastructure projects.
Schroder said that could “relieve some of the pressure” on the state construction budget. Louisiana faces billions in backlogs on needed roadwork, repairs to state buildings, and upkeep on public college campuses.
Louisiana remains below its debt ceiling, a cap enacted in the early 1990s that restricts how much the state can borrow each year for construction work.
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