(The Center Square) – Congressman Garret Graves is urging state lawmakers to spend at least $1 billion of Louisiana’s federal stimulus money on transportation projects, such as major new bridges in Baton Rouge and Lake Charles.
Gov. John Bel Edwards suggested he could support that idea if federal regulators say it’s OK, though his top priority is replenishing the state fund that pays for unemployment benefits. Doing so might also cost close to $1 billion if lawmakers want to maintain the current level of employer taxes and worker benefits.
Louisiana is set to receive more than $5 billion through the federal American Rescue Plan. More than $3 billion will go to state government, while local governments will get almost $2 billion.
“The extraordinary and likely once-in-a-lifetime availability of flexible federal dollars could be an opportunity for transformational investment in Louisiana,” Graves wrote in a letter to Edwards, state Senate President Page Cortez and state House Speaker Clay Schexnayder.
In the letter and in an interview, Graves pointed to a new Mississippi River crossing in the Baton Rouge area and a new Interstate 10 bridge in Lake Charles as long delayed needs.
“I think that’s a really good long-term investment that doesn’t get the state in a bad cycle of using this one-time money to cover recurring costs,” Graves said in the interview. “I think those are extraordinary projects that are extraordinarily delayed.”
A billion dollars likely wouldn’t be enough to pay for both projects – the Baton Rouge bridge is expected to cost in the neighborhood of $1 billion – but an infusion of that size could kick-start both projects and could be combined with other revenue sources such as tolls, Graves said.
“It puts the project within reach,” Graves said. “You start getting within a more doable realm.”
Asked about Graves’ request, Edwards pointed out the U.S. Treasury has not issued the rules about how the stimulus money can be used or how much money will be distributed in the first year.
“Making those allocations just isn’t possible yet,” Edwards said.
The federal law explicitly allows spending on water, sewer and broadband infrastructure. Expanding broadband access to areas without high-speed internet has become a bipartisan priority among lawmakers, and ailing water systems are a significant problem for many small towns statewide.
Edwards said he has been discussing possible uses for the money with legislators. His first priority for the stimulus money, which he shares with many lawmakers, is to shore up the state’s unemployment insurance trust fund. Employers pay taxes to support the fund. When the balance falls, employers pay more and the benefits to unemployed workers are reduced.
And when the balance hits zero, as it did recently, state officials borrow money from the federal government to pay legally required weekly benefits and employers are assessed a “solvency tax” to repay the debt. Lawmakers suspended the laws last year that would have triggered the tax increases, hoping a permanent solution, such as federal funding, would emerge.
Ava Dejoie, who leads the Louisiana Workforce Commission, said this week the commission had borrowed $156 million so far. Officials will be able to stop borrowing, at least temporarily, once the first-quarter tax payments start arriving in a few weeks.
Dejoie said the state’s debt to the federal government may reach $240 million. Under current law, to maintain the current tax and benefit levels, the fund balance would need to hit $750 million, she said.
Edwards has not said publicly how much money he will ask legislators to put into the fund. Commissioner of Administration Jay Dardenne said the ask will be in the “hundreds of millions.”