Two major La. bridge projects face cash crunch

Published 11:44 pm Thursday, October 16, 2008

BATON ROUGE (AP) — Two longtime state bridge projects could face cash shortfalls because the nation’s financial problems have dried up the market for the municipal bonds that are supposed to pay ongoing construction costs.

The cash crunch could hit the widening of the Huey P. Long Bridge in Jefferson Parish and the construction of the John James Audubon Bridge, the new Mississippi River bridge linking New Roads to St. Francisville, said Whit Kling, director of the State Bond Commission.

Kling outlined a twofold problem Thursday to Bond Commission members: a troubled bond market and declining gas tax income.

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The national economic crisis has sidelined plans for the state to sell $485 million in bonds to investors in December to raise cash to pay for the ongoing bridge work. The debt would have been paid off over 35 years, but the state’s economic advisers said no one likely would buy the bonds.

‘‘The municipal credit market is frozen right now,’’ said Freda Johnson, with Government Finance Associates, a financial adviser to the Bond Commission. ‘‘There are virtually no banks providing letters of credit at this time.’’

The transportation department has enough money to cover the bridge work until a May bond sale, Kling said, so the state will delay any such sales in the hopes that market conditions will improve by then.

Even if the state can sell bonds by May, the bridge work faces another money problem. Kling said drivers are cutting back on driving amid high gasoline prices, so the state’s gas tax income is lower than expected — and 4 cents of the 20-cent state gasoline tax is used to pay for the borrowing for the bridge projects.

Rep. Jim Fannin, chairman of the House Appropriations Committee and a member of the Bond Commission, described the worst-case scenario: the state Department of Transportation and Development runs out of money for the bridge work, lapses on outstanding contracts and gets sued by contractors.

However, to stave off problems, lawmakers could tap into a hefty state surplus totaling hundreds of millions of dollars to fill in some of any funding gaps for the bridges. Lawmakers return to the Capitol for a regular session in April.