Louisiana authorizes borrowing for projects in its 2026 capital budget

The State Bond Commission may issue bonds backed by Louisiana’s promise to repay for projects covered by the 2026 Capital Outlay Act. The authority covers projects funded wholly or partly through state-backed bonds under the 2026 Capital Outlay Act. Each project must meet the separate capital budget’s conditions for borrowing and spending. The law repeals earlier state general obligation bond authorizations, except those for refinancing debt and Act 41 of the 2006 First Extraordinary Session. Bonds already issued remain valid. The law took effect June 8, 2026. It expires June 30, 2027, except for authorized bonds already sold, those with lines of credit issued, or those for which construction contracts have been signed.

Public boards and agencies responsible for covered projects must use designated fees or other revenue to repay the state and build repayment reserves. These rules cover projects whose capital budget terms require repayment to the state. Revenue may include student fees. Louisiana remains responsible for paying the bonds. Before borrowing, the responsible board or agency must have a repayment agreement approved by the State Bond Commission and the attorney general’s office. The commission need not accept an agreement unless projected revenue can cover principal, interest, and any extra payment owed on the bonds. Boards and agencies must charge enough to meet their repayment promises. Agreements also require a reserve fund holding at least one average year of bond payments, accumulated over a period of at least ten years. An existing reserve may qualify under the law’s rules. Annual repayment starts in the fiscal year bonds are issued and continues until principal and interest are paid. Deposits to the reimbursement reserve equal one-tenth of average annual bond payments that year and each of the next nine years. The resulting minimum balance must be maintained.

The State Bond Commission may sign certain contracts to support bond sales and management without following other state purchasing laws. The permission covers financial tools that help sell bonds or provide ready cash. It also covers specialized services for bonds with changing interest rates or options for investors to return them. The commission must consider the contract terms advantageous to the state. If the commission approves, the state’s bond repayment fund may pay these service costs.

The state treasurer must move small unused bond balances into the state’s bond repayment fund. The requirement covers unused balances of $10,000 or less in state general obligation bond accounts created before 2020. The money pays debt tied to the account, including debt used to refinance it. If that debt is fully paid, the money pays other outstanding state-backed bonds.