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The Louisiana tax free bond, unspent money and IRS saga

  // Friday, 30 May 2014 11:50 //

TheLensby Tyler Bridges of The Lens

Governments are better known for spending money — indeed, over-spending — than for failing to allocate available revenues.

So how come Louisiana over the past 20 years has accumulated tens of millions in unspent revenue from tax-free bonds issued to pay for state infrastructure projects?

 

As reported in The Lens two weeks ago, it’s a sum large enough to pose potential problems with the Internal Revenue Service and cost the state a hefty penalty. The IRS requires that money raised from the sale of tax-exempt bonds be spent within a certain period of time, not just placed in an interest-bearing account, as Louisiana has done.

To mitigate the problem, the Legislature has come up with a bill that would take $70 million of the unspent bond money and allocate it in the coming year to fund dozens of new or ongoing projects. The $70 million is just a portion of the accumulated total, which is perhaps $100 million higher, according to state Rep. Joel Robideaux, R-Lafayette, the sponsor of the legislation.

Robideaux’s House Bill 2, which contains a list of the projects eligible to be funded by tax-free bonds next year, would shift the spending. The Senate approved the bill Thursday on a 33-0 vote. It now heads to the House.

To get a feel for how the money accumulated and why it hasn’t been spent, The Lens took a look at six projects chosen at random:

Northeast Louisiana Delta African American Heritage Museum: $123,000 in unspent funds

The state appropriated $2.7 million in 2001 to design and construct the museum in Monroe. The $123,000 was left over and until now has not been approved to be spent on another project, said Meghan Parrish, a spokeswoman for the state Division of Administration, which oversees state construction projects. (The state is allowed to take unspent money from one project and spend it on another one.)

The museum opened in 2011, said Lorraine Slacks, its executive director, after design and construction delays. It had about 7,500 visitors in 2013, she said.

 New Orleans Museum of Art: $139,000 in unspent funds

 The state appropriated $1 million in 2002 for improvements, acquisitions, planning and construction at the museum, including the City Park entrance. The $139,000 was left over and until now has not been approved to be spent on another project, Parrish said.

Danziger Bridge: $580,000 in unspent funds

The state appropriated the $580,000 in 2004 to build ramps for traffic entering and exiting the bridge at Jourdan Road. The project was approved as a way to improve the traffic flow for commuters who live to the west of the Industrial Canal and work at the Port of New Orleans, according to the original request for the money. But none of the money has been spent, Parrish said.

State and city officials could not explain why the project has not advanced.

Read the rest of this updated article on The Lens

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