It’s confusing to some, the difference between a multi-million dollar bond project and funding for education or mental health or other high-priority needs of the state.
Of the $17.9 billion state funds budget, about $1 billion is budgeted to repay previous bonds issued for infrastructure. Each year as bonds from previous years are paid off, a package of new bonds is normally included in the state budget.
Bond underwriters, who set the rating on bonds being sold, look closely at the debt of the issuer. Georgia has, in fact, a debt management plan which tracks into the future expected state revenues and expected bond issuance. Ratios, based on debt issued versus previous years revenues are one of the guides used by the state. Georgia has maintained a AAA bond rating for many years, resulting in the lowest interest rates being charged the state, saving millions and millions of dollars through the years.
Gov. Sonny Perdue reduced the size of the bond package for 2011, reflecting the diminishing size of the state budget. The governor proposed a $900 million bond package in January when he presented the FY2011 budget to the Legislature. This total was some $300 million under the package of one year ago. The Legislature reduced that bond amount by $30 million to $870 million.
Bonds are issued in three categories, five years, 10 years and 20 years. Five-year bonds are issued for short life items like vehicles, computers and equipment for new buildings. Ten-year bonds are used to finance longer life items such as school buses. Twenty-year bonds are used to construct long term investments such as schools, college buildings, prison construction and other infrastructure.
Bond service obviously is higher on short term bonds than on longer, 20-year bonds. For example, a five-year bond costs almost 10 percent per year for the five-year life of the bond. Twenty-year bonds cost about 8 percent of the total bond per year.
As passed by the Legislature, the FY2011 bond package contains short, medium and long term investments.
Several five-year bonds provide vehicles for DNR, Public Safety, GBI and Probation Division of Corrections, as well as equipment for various facilities. Ten-year bonds included $50 million to purchase 589 school buses as well as $1.4 million for prisoner transport buses. Long-term, 20-year bonds included about $140 million in school construction bonds.
Other educational needs such as vocational equipment and facility improvements totaled $14.6 million. Mental health facilities received $9.3 million.
Public Health facilities received maintenance and repair funds totaling $1 million statewide and $3.8 million for a new vital records system.
The Department of Corrections received $23.5 million in repairs, renovations/construction and safety improvements.
The Department of Juvenile Justice received $13.4 million for renovations and planning/design funds for new and expanded facilities.
The Department of Natural Resources will receive bond proceeds of $20 million for renovation and improvements at state parks and for communications equipment.
Technical colleges received $21.1 million for planning and construction funds and $15 million in maintenance and repair funds as well as $7.5 million for equipment. New Career Academies will be created with $9 million in bond funds.
The University System of Georgia bonds are about one-third of the amount of previous years. Some $60 million is included for maintenance and repairs. Various design, equipment and construction projects totaled $111 million.
Three library projects are funded totaling, $3.6 million.
Additionally, there are projects for facilities, repairs and equipment in other departments including Forestry, Human Services, Defense, GBI and Agriculture.
Next week: a look at specific projects in economic development, the ports and other projects of interest.
I may be reached at
234 State Capitol, Atlanta, GA 30334
(404) 656-5038 (phone)
(404) 657-7094 (fax)
E-mail at Jack.Hill@senate.ga.gov
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