Executive Branch--Net State Tax Supported Debt Limitation
WHEREAS, the State of Louisiana has a longstanding policy of managing its net state tax supported debt in a fiscally responsible manner, and such policy is codified in the Louisiana Constitution and Louisiana Revised Statutes through strict limitations on the amount of net state tax supported debt the State can issue (the “debt limit”); and
WHEREAS, the debt limit is in place to provide the citizens of Louisiana with protection against excessive government spending, as well as to provide investors in Louisiana’s bonded debt and the bond rating agencies with assurances that the State is highly creditworthy and not over-burdened with debt; and
WHEREAS, the debt limit provisions of La. R.S. 39:1367, and other provisions of law, limit the issuance of new debt unless the total debt service on all outstanding net state tax supported debt and the proposed new debt does not exceed six percent (6%) of the official revenue forecast of the Revenue Estimating Conference; and
WHEREAS, Act 419 of the 2013 Regular Session of the State Legislature (“Act 419”) was enacted to require the forecasting of revenues from designated funds and to place restrictions on the amount of non-recurring revenues that may be used in the State’s annual operating budget; and
WHEREAS, in La. Atty. Gen. Op. No. 14-0031, the Louisiana Attorney General has opined that Act 419 modifies the calculation of the debt limit under La. R.S. 39:1367 by requiring the Revenue Estimating Conference to include certain statutory dedications and self-generated revenues in its official revenue forecast, and the change in such calculation results in the State unexpectedly having increased capacity to issue new debt, without any accompanying increase in new revenues; and
WHEREAS, the State has no intention of materially altering its debt issuance plans nor undertaking any new capital programs as a result of the increased legal capacity provided by Act 419, and the State desires to continue providing fiscally responsible limits on the issuance of new debt for the benefit of the citizens of Louisiana, investors in Louisiana’s debt, and the bond rating agencies; and
WHEREAS, it is now prudent for the State, acting through the legislative process, to further examine the State’s existing debt limit as well as the effects of Act 419 and to develop and enact into law amended debt limitations which may include a repeal of the unforeseen effects of Act 419, new debt limit calculations not present in current law, or a combination of the foregoing; and
WHEREAS, prior to the next opportunity for the Legislature to consider such matters in the 2015 Regular Session, it is prudent for the State to provide temporary interim assurances that it will continue to manage its debt burden in the historic and fiscally responsible manner; and
WHEREAS, requests for the issuance of new money State debt (whether general obligation bonds, gas and fuels tax revenue bonds, appropriation backed bonds, or other forms of debt backed by the State) either originate with or require the approval of executive branch departments and agencies including, without limitation, the Division of Administration, Office of Facility Planning and Control, and the Department of Transportation and Development.
NOW THEREFORE, I, BOBBY JINDAL, Governor of the State of Louisiana, by virtue of the authority vested by the Constitution and laws of the State of Louisiana, do hereby order and direct as follows:
SECTION 1: No executive branch agency or department (including without limitation, the Division of Administration, Office of Facility Planning and Control, and the Department of Transportation and Development) shall initiate or approve any request for the issuance of new money debt which would be considered net state tax supported debt unless the issuance of such proposed new debt would be allowed under the State’s debt limit without giving effect to the provisions of Act 419. This interim limit shall remain in full force and effect until June 30, 2015, by which time the Legislature will have had opportunity to examine the State’s existing debt limit as well as the effects of Act 419 and to develop and enact into law amended debt limitations that may include a repeal of the unforeseen effects of Act 419, new debt limit calculations not present in current law, or a combination of the foregoing.
SECTION 2: This Order is effective upon signature and shall continue in effect until amended, modified, terminated, or rescinded by the Governor, or terminated by operation of law; provided, however, that I declare that I will not amend, modify, terminate, or rescind this Order prior to June 30, 2015 in order to permit the issuance of additional debt that could only be issued as a result of the increased debt capacity created by the unforeseen effects of Act 419 of the 2013 Regular Session.
IN WITNESS WHEREOF, I have set my hand officially and caused to be affixed the Great Seal of Louisiana, at the Capitol, in the City of Baton Rouge, on this 11th day of July, 2014.
Secretary of State