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Per capita debt in Louisiana hits a new high
Question of the Day
BATON ROUGE, La. (AP) - Louisiana’s debt load has risen each of the last six years, with the state hitting a record this year for how much debt it owes for each state resident, according to a report released Thursday.
The latest assessment of state debt, presented to the Bond Commission, showed Louisiana currently carries a debt load of $1,545 for every man, woman and child in the state. That’s an increase of $149 per person from 2013 and a 30 percent increase since 2008.
The per capita debt has risen nearly every year since Gov. Bobby Jindal has been in office, according to the data. It’s reached a rate that tops the state record of $1,369 set in 2007 during former Gov. Kathleen Blanco’s term.
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.
“This borrowing allows us to make financially responsible investments, including completing important economic development projects, fortifying infrastructure, improving roads and maintaining higher education campuses,” Jindal administration spokeswoman Meghan Parrish said in a statement.
Renee Boicourt, with Lamont Financial Services Corp., a financial adviser to the state, said Louisiana ranks as the nation’s 17th most indebted state per capita. She said that ranking likely will edge up because the state has borrowed more money in recent months.
But unlike in past years when the report was presented, there were no worries Thursday that the state was nearing its debt ceiling.
Efforts to put more limits on how state government spends its money, under a new law passed last year, had the unintended effect of also boosting the amount of money the state can borrow each year.
The law requires the state’s income forecasting panel, the Revenue Estimating Conference, to estimate how much money is available for spending in a long list of set-aside funds that it didn’t previously forecast.
Louisiana’s debt ceiling, enacted in the early 1990s, requires that the state’s annual debt-repayment requirements fall under 6 percent of the conference forecast. Since more money was swept into the forecast, that’s 6 percent of a much larger pool of money. That means the state now has much more room to borrow under the ceiling.
Treasurer John Kennedy said that doesn’t mean the state has the capacity to borrow more, because he said the state doesn’t necessarily have more money to set aside for debt payments each year.
Boicourt recommended that the Bond Commission establish guidelines about how it will manage the newly-available borrowing capacity, to give some assurances to the agencies that set state credit ratings that Louisiana won’t go on a borrowing spree.
“Absent some sort of policy statement, I think there will be some concern on the part of rating agencies and investors that the longstanding discipline that the state has used under the constitutional limit will erode,” she said.
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