LFB: Administration to Delay $108 million Debt Payment

The Legislative Fiscal Bureau (LFB) has released a memo describing the administration’s planned restructuring of a general purpose revenue (GPR) $108 million commercial paper principal payment in May 2015. According to the memo, the governor and Department of Administration (DOA) are planning to delay a $108 million debt payment in the current Fiscal Year (FY) 2015, which ends on June 30th.

In January, LFB provided an updated estimate of revenue numbers for FY 2015. Based on their projections, LFB estimated a $283 million shortfall in FY 2015. Delaying the $108 million payment will help mitigate this shortfall. In a November letter, the DOA Secretary Mike Huesbsch indicated that any shortfall would be handled by the administration.

The administration can delay the $108 million principal payment without legislative approval and similar tactics have been utilized by past administrations. In their memo, LFB shows that since 2001, $1.5 billion in GPR debt has been restructured. The governor’s proposed 2015-2017 budget includes the restructuring action in the opening general fund balance. LRB states that the restructuring of the $108 million principal payment will increase GPR debt service by $544, 900 in FY 2016 and $18.7 million in FY 2017. This includes interest on the deferred payment in FY 2016 and payment of the interest and a portion of the deferred principal in FY 2017.

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