BATON ROUGE, La. -- The state will again borrow the cash
needed to make its annual payment to the New Orleans Saints, thanks
to a loan arrangement approved Monday, though it's unclear how that
borrowing will be repaid or how the state will meet its future
obligations to the NFL team.
The state has struggled to pay the Saints for the past few years
and has yet to repay the cash it borrowed from an economic
development fund last year to make its payment. This time, the
state will borrow $10.5 million through a financing mechanism it
hasn't used for at least a decade.
Members of the State Bond Commission, which approved the plan
Monday, said there were few options available since the Legislature
adjourned last week without approving a new tax source for the
Saints payment or setting aside dollars in the state's budget to
make the latest payment, due July 5.
"We have an obligation that we have to live up to. Some of us
may not agree that it's the best contract, but it's a contract we
have to live up to. The full faith and credit of the state is
behind it," said Sen. Diana Bajoie, D-New Orleans.
The state -- through the Louisiana Stadium and Exposition
District which oversees the operation of the Superdome -- will
borrow the cash through the sale of a "revenue anticipation
note," which assumes that money generated down the line will cover
the repayment of the loan.
The head of the LSED and members of the Bond Commission aren't
sure where the dollars will come from to repay this loan, however.
The Bond Commission's staff, which normally suggests whether items
on the agenda should be approved or rejected, didn't make a
recommendation on the Saints payment loan, noting that the current
money streams available to the LSED aren't sufficient to repay the
But the New Orleans area legislators on the money panel said the
loan arrangement was preferable to defaulting on the state's
agreement with the Saints and allowing them to leave penalty-free.
Andy Kopplin, Gov. Kathleen Blanco's chief of staff who sits on the
Bond Commission, said the governor backed the plan as a short-term
remedy until a permanent solution could be developed.
Sen. Francis Heitmeier, D-New Orleans, said defaulting on the
deal would harm the state's economic development initiatives and
indicate Louisiana doesn't honor its contracts.
"What we did today wasn't pretty," said Treasurer John
Kennedy, head of the Bond Commission. "If you look strictly at the
numbers, you probably wouldn't do this, but there's a story beyond
The annual payments to the Saints are part of a 10-year, $186
million agreement negotiated by Gov. Mike Foster's administration
in 2001. A $15 million payment is due to the NFL team on July 5,
and the state was estimated to be about $9 million short because
the revenue sources designed to cover that payment -- particularly
the New Orleans area hotel/motel tax -- aren't bringing in as much
cash as was projected.
The dollars from the loan also will help the LSED pay for
insurance costs and other items that haven't been paid while the
Superdome commission struggles to make the Saints payments,
according to Tim Coulon, head of the LSED.
The debt from the payments to the Saints is compounding. The
LSED owes the state economic development fund from which it
borrowed last year and must repay this newest loan by Jan. 1, 2007.
And the annual payments due to the Saints are scheduled to grow to
$20 million next year and to $23.5 million a couple of years later.
The Legislature approved a plan that would put the NFL team in
line for some of the tax money generated when slot machines start
operating at the New Orleans Fair Grounds in 2007 and thereafter,
but officials say that won't bring in enough cash to cover the
Saints payments and the money borrowed for them.
"We need a significant amount of money over the long haul,"
said Doug Thornton, an executive for the company that manages the
Superdome, New Orleans Arena and other facilities in the state.
The governor said she still hopes to ultimately renegotiate the
deal, but Saints owner Tom Benson has cut off negotiations until
after the 2005 football season when the Saints have their first
opportunity to negate the current deal with an $81 million payment
to the state. The state can opt out of the deal after the 2007