Louisiana will become the second state to securitize payments it receives to compensate for the Deepwater Horizon disaster, using the income to pay for planned-but-unfunded transportation projects.
Gov. John Bel Edwards signed Act 443 on Monday, placing House Bill 578 into law and authorizing the use of the oil spill disaster funds to back $700 million of bonds. Proceeds will finance the construction of 10 specific road and bridge projects across the state.
HB 578, sponsored by Rep. Tanner Magee, R-Houma, received wide support from the Republican-led Legislature, passing unanimously in the Senate and by a vote of 92 to 10 in the House.
Edwards, a Democrat, said the measure represents an innovative way to fund important projects.
“Signing this bill into law is another major accomplishment for the state’s infrastructure, and I applaud the legislature for targeting long-awaited projects that we know will help improve travel for motorists and provide economic benefits to the state,” Edwards said.
Lawmakers opted to redirect the state’s payments from the oil rig explosion lawsuit settlement to fund transportation projects rather than increasing other sources of funding to address some of the state’s $14 billion in backlogged transportation capital needs.
HB 542, which would have increased the state’s vehicle fuel tax for the first time since the mid-1980s, died in committee. The bill also would have placed new registration fees on electric and hybrid vehicles.
Louisiana receives funds annually for economic and coastal damages caused by the 2010 Deepwater Horizon explosion that left 11 workers dead and dumped 134 million gallons of oil into the Gulf of Mexico.
Act 443 allows payments between July 1, 2020 and July 1, 2034 to be sent to a special account in the Transportation Trust Fund to finance specific projects, the largest of which is $150 million second phase of elevating eight miles of LA 1, a busy route in the southern part of the state that leads to Port Fourchon.
The State Bond Commission will be responsible for approving and issuing the bonds to be used by the Louisiana Department of Transportation and Development.
The governor’s office didn’t immediately respond to a request for comment about whether the $700 million in bonds would be issued all at once, or in smaller tranches.
Edwards on Monday also signed the omnibus bond act into law, authorizing the issuance of $1.5 billion of state general obligation bonds in fiscal 2020. In a separate act, he approved the capital outlay budget specifying the infrastructure and coastal projects to be financed.
The Deepwater Horizon and omnibus bond bill and were among Edwards’ last actions before concentrating on his campaign for a second term.
To date, GOP contenders U.S. Rep. Ralph Abraham and Baton Rouge businessman Eddie Rispone have said they will run against Edwards, although other candidates could still sign up to run before the Aug. 8 filing deadline. The primary election is Oct. 12 and the general election is Nov. 16.
In 2016, Alabama became the first state to securitize payments it received from the Deepwater Horizon disaster. The state sold $110 million of tax exempt bonds and $542 million of taxable bonds to monetize the settlement payments, using the proceeds to repay money it borrowed from its rainy day reserve fund and to pay for road projects and Medicaid expenses.