DIGEST
The digest printed below was prepared by House Legislative Services. It constitutes no part of the
legislative instrument. The keyword, one-liner, abstract, and digest do not constitute part of the law
or proof or indicia of legislative intent. [R.S. 1:13(B) and 24:177(E)]
HB 122 Reengrossed 2018 Regular Session DeVillier
Abstract: Adds restrictions to the allocation of cash line of credit capacity for capital outlay
projects and requires the House Committee on Ways and Means and the Senate Committee
on Revenue and Fiscal Affairs to approve line of credit recommendations before the division
of administration submits the list to the State Bond Commission for funding.
Present law requires the governor to submit his capital outlay budget which implements the first year
of the five-year capital outlay program and the bond authorization bill for the sale of bonds to fund
projects included in the bond portion of the capital outlay bill to the legislature no later than the 8
th
day of each regular session.
Present law authorizes capital outlay budget requests submitted after Nov. 1
st
to be included in the
capital outlay act if the budget request meets all of the applicable requirements as provided in present
law, except for time of submission, and the project is an economic development project
recommended in writing by the secretary of the Dept. of Economic Development (DED), the project
is an emergency project recommended in writing by the commissioner of administration, the project
is for a nonstate entity which meets certain present law requirements, or the project is located in a
designated disaster area and it meets certain present law requirements.
Proposed law retains present law.
Present law defines the term "economic development" as follows:
(1)Improvements on public or government-owned property for attracting or retaining a new or
existing manufacturing or business operation that benefits La.
(2)Facilities or improvements on public or government-owned property that generate new,
permanent employment or which help retain existing employment.
(3)Facilities or infrastructure improvements on public or government-owned property necessary
for a manufacturing plant or business to operate.
Proposed law changes the term to "economic development project" and defines it as a recruitment
or retention project sponsored by DED or a political subdivision or other public entity which has
economic development as part of its stated mission or purpose, that meets one of the following:
(1)Improvements on public or government-owned property for attracting or retaining a new or existing manufacturing or business operation that benefits La. and generates new, permanent
employment or which helps retain existing employment.
(2)Facilities or infrastructure improvements on public or government-owned property necessary
for a manufacturing plant or business to operate.
Proposed law prohibits projects from nongovernmental entities from being eligible for capital outlay
funding.
Present law limits general obligation bond (GOB) funding of nonstate projects to no more than 25%
of the cash line of credit capacity for projects in any fiscal year.
Proposed law retains the amount of cash line of credit capacity for nonstate projects but requires the
commissioner of administration (commissioner) to divide 10% of the GOB allocation of cash line
of credit granted to nonstate projects on a pro rata basis of population and number of homesteads in
each parish in proportion to the population and number of homesteads throughout the state. The
remaining 15% of the GOB cash line of credit capacity granted to nonstate projects shall be
prioritized for highway, bridge, flood control and flood prevention projects, or economic
development projects as defined in proposed law. Further defines "economic development project"
for purposes of proposed law.
Proposed law requires that of the portion of GOB cash line of credit capacity each fiscal year granted
to state projects, the commissioner shall direct no less than $3M to each DOTD highway district to
fund projects deemed to be either deferred maintenance projects or drainage projects within the
geographic boundaries of each district. Proposed law authorizes the allocation to highway districts
to be used to fund costs for the lease or rental of movable equipment necessary for construction of
deferred maintenance or drainage projects. Further requires the commissioner to designate no less
than 50% of the remaining GOB line of credit capacity to be directed to highway and bridge projects.
Present law requires nonstate entities applying for capital outlay funding to provide a match of not
less than 25% of the total requested funding amount with the following exceptions:
(1)Projects deemed to be an emergency by the commissioner.
(2)Projects for which a nonstate entity has demonstrated its inability to provide a local match.
Proposed law requires the establishment of a needs-based formula for determining the
inability of a non-state entity to provide the required local match.
(3)Projects for rural water systems servicing less than 1,000 customers to extend or connect
waterlines to other water systems.
Proposed law repeals the present law exception for nonstate entity projects for which the nonstate
entity has demonstrated its inability to provide a local match. Present law requires the JLCCO to make recommendations to the commissioner concerning nonstate
entity projects to be granted lines of credit. Further requires the commissioner to submit the list of
projects to be recommended for lines of credit to the JLCCO a minimum of five days prior to
submission of the list to the State Bond Commission (SBC).
Proposed law changes present law by requiring the commissioner to make recommendations to the
House Committee on Ways and Means and the Senate Committee on Revenue and Fiscal Affairs
(hereinafter "committees") concerning state and nonstate entity projects to be recommended for lines
of credit. Further requires the commissioner to submit the list of recommendations to the
committees no less than 30 days prior to the meeting date of the SBC in which the lines of credit are
to be considered for funding.
Proposed law requires the committees to make final recommendations by either approving the list
of recommendations or making changes to the list. Only projects which received approval from the
committees can be submitted to the SBC for consideration of funding.
Present law limits the annual amount of general obligation bond cash line of credit capacity which
may be authorized by the State Bond Commission to $200 million per year, adjusted for construction
inflation from 1994. The amount may be raised by a favorable vote of 2/3rds of the elected members
of each house of the legislature.
Proposed law changes present law by establishing the following specific amounts which may be
authorized each year:
(1)For Fiscal Year 2020, $300 million.
(2)For Fiscal Year 2021, $275 million.
(3)For Fiscal year 2022, $250 million.
(4)For Fiscal Year 2023, and each year thereafter, $225 million.
Proposed law retains authority for a change in the limit by a favorable vote of two-thirds of the
elected members of each house of the legislature and adds authority for that approval to be
accomplished by mail ballot.
Present law establishes various requirements for content to be included in the capital outlay act.
Proposed law retains present law and adds a requirement that the capital outlay act include a
statement concerning the total outstanding net state tax supported debt, including the specific amount
of principle and interest, as defined in present law. Further, the capital outlay act shall contain an
estimate of debt service costs associated with the amount of new general obligation bond cash line
of credit capacity for that fiscal year, as provided in proposed law.
Present law provides a procedure for the development of a list of recommended projects to be presented to the State Bond Commission for consideration for a general obligation bond cash line
of credit.
Proposed law retains present law and requires that for each project presented to the State Bond
Commission for this purpose there be included an estimate of debt service costs associated with the
sale of debt for the total project cost.
Applicable to the funding of all nonstate entity projects included in the capital outlay budget for
fiscal years commencing on and after July 1, 2018.
Effective July 1, 2018.
(Amends R.S. 39:112(C)(2)(b), (E)(1), (2)(intro. para.), (b) and (c), and (F), and 122(A); Adds R.S.
39:112(H))
Summary of Amendments Adopted by House
The Committee Amendments Proposed by House Committee on Ways and Means to the original
bill:
1. Expand the definition of "economic development project" for purposes of the capital
outlay program in general to include projects by a political subdivision or other public
entity which has economic development as part of its stated mission or purpose.
2. Define "economic development project" for purposes of the nonstate allocation of cash
lines of credit to mean any project undertaken by a nonstate entity which is determined
by the governing authority of the parish in which the project is located to benefit the
parish and which generates new, permanent employment.
3. Change the committee to which the commissioner submits line of credit
recommendations to and the committee required to make final line of credit
recommendations from the JLCCO to the Ways and Means and the Revenue and Fiscal
Affairs committees.
The House Floor Amendments to the engrossed bill:
1. Prohibit projects by nongovernmental entities from being eligible for capital outlay
funding.
2. Add flood control and flood prevention projects to the types of projects to be given
priority for funding out of the general obligation bond cash lines of credit granted for
nonstate entity projects.
3. Authorize the allocation to highway districts from the state portion of cash lines of credit
to be used for the lease or rental of movable equipment necessary for construction of deferred maintenance or drainage projects.
4. Change the annual limit on general obligation bond cash line of credit capacity.
5. Add authority for the legislature to approve an increase in the annual limit on general
obligation bond cash line of credit capacity by mail ballot.
6. Require that the capital outlay act include a statement concerning the total outstanding
net state tax supported debt as well as an estimate of debt service costs associated with
the amount of new general obligation bond cash line of credit capacity for that fiscal year,
as provided in proposed law.
7. Require that for each project recommended to the State Bond Commission for
consideration for a general obligation bond cash line of credit, there shall be an estimate
of debt service costs associated with the sale of debt for the total project cost.