Treasurer Kennedy Says State Should Continue on the Right Track and Live Within Its Means

BATON ROUGE, LA State Treasurer John Kennedy announced today that he currently opposes any proposal in the upcoming legislative session that would raise the amount of state tax supported debt Louisiana can issue.

We have been making dramatic progress reducing our state debt, said Treasurer Kennedy. But, there is an item in the call for the special session to increase the amount of money that state government is allowed to borrow under our constitution we call this the debt limit. We don’t need to do anything that will turn back the clock and add new debt for our kids and grandkids to pay.

During the early 90s, Louisiana had the highest per-capita debt in the south and the fourth highest in the United States. The state was also paying a large amount of interest on its debt taking money away from education, human services and economic development because of its low credit rating.

Louisiana’s debt has improved significantly over the past nine years primarily due to a 1993 constitutional amendment adopted by the people of Louisiana that caps the amount of debt the state can issue each year. According to the amendment, from 2003 and on, the state is prohibited from spending more than 6 percent of its income on debt service. Voters gave the state 10 years to wean itself off its debt and reach that 6 percent limit.

If you had maxed out all of your credit cards, any credible debt counselor would advise you to pay off what you owe, not raise the credit limits on your cards even more, said Treasurer Kennedy. We should not increase the limit on the state’s credit card. This will only open the door to more spending, higher fees and more debt.

The three nationally recognized credit rating agencies Fitch, Moodys Investors Service and Standard & Poor shave assigned Louisiana with credit ratings of A, A2, and A, respectively. The state’s improved ratings are a result of its continued efforts to reduce debt by matching spending to revenue. Moodys recently downgraded New Jerseys credit rating because of heavy state borrowing. Moodys also issued a negative outlook to Wisconsin because of new state debt.

Part of my job is to maintain the state’s credit rating, because the better credit rating the state has, the less interest taxpayers have to pay on state debt, said Treasurer Kennedy. We don’t need to return to the days when we were borrowing every penny we could get our hands on in order to spend it.

Contact:
Sarah Mulhearn
(225) 342-0012