When the state Bond Commission met Thursday, they voted to take out the governmental equivalent of a “payday loan”.
“Revenue Anticipation Notes, or RANs as they’re known, are designed to provide funds to address timing mismatch between when revenues come in and when expenditures go out,” Renee Boicourt, the state financial adviser, explained. “Traditionally, the borrowable funds have been the source of that. Borrowable funds have been drawn down. They aren’t going to be enough this year.”
Instead, Louisiana will be using lines of credit from U.S. Bank and J.P. Morgan.
“We are requesting capacity of $400-million,” Boicourt stated, half from each of the banks. “We do expect that it will be necessary to draw around $300-million by the end of October – potentially sooner.”
Senate Finance chairman Eric LaFleur was clearly disgruntled about the necessity.
“I just want to remind everyone that this was the ‘magical $300-million’ we spent at the tail end of the last administration. And that is why we are here today.”
To balance the budget without raising taxes, the Jindal administration “found” money sitting in dedicated funds and allocatied it for regular expenses, rather than keeping it to bridge the annual summer gap between income and outgo.
These loans will cost the state at least $1.5 million in interest and fees, and have to be paid back in full by August 15, 2017.
“This is the cheapest we could negotiate with them?” Treasurer John Kennedy asked.
“Yes,” Boicourt replied
“Do we get a toaster?” Kennedy wondered.
No toaster.
Since these revenue anticipation notes are predicated on the budget as approved by the Legislature, they don’t include funding for expenses related to the August floods. The Treasurer then asked, “What happens if it’s not paid back within the year?”
“It’s going to be paid back within the year,” Commissioner of Administration Jay Dardenne assured commissio0n members.