The FY 2019 Budget contained $1.18 billion in projects to be paid for in bonds. On June 20, the State of Georgia sold $1.32 billion in bonds on the open market. Due to its AAA rating, Georgia borrowed those funds at the very low end of the market. Under the leadership of Governor Deal, the Senate and the House, the state achieved the AAA rating for the 21st consecutive year. Here is what tax- exempt bonds cost in the marketplace:
5 Year Bonds — 1.88 percent
10 Year Bonds — 2.26 percent
20 Year Bonds — 3.08 percent
What are taxable bonds?
Taxable bonds are tied to the IRS code concerning other uses of facilities that include business interests or charging for use. Examples might be state funded projects like the FFA/FCCLA Center which is used by students but also by the agricultural community. Another would be the Cyber Campus in Augusta, where a building was recently dedicated. Space there is shared by government agencies, businesses and the Technical College System.
5 Year Taxable Bonds — 2.65 percent
10 Year Taxable Bonds — 3.02 percent
20 Year Taxable Bonds — 3.62 percent
Georgia earned a top AAA rating from the three bond underwriting agencies for this bond sale, the 21st consecutive year Georgia has had this top rating. Of course the most beneficial reward for this designation is the very lowest rates for the bonds the state sells.
Here is what the agencies said about the state’s high ranking: Fitch stated that Georgia earns the high rating due to “conservative management, proven willingness and ability to maintain fiscal balance, and a broad-based and expanding economy with growth outpacing national trends.”
Moody’s statements were similar stating credit strengths as “a resilient economy outperforming the nation, strong management and governance practices and continuously positive financial results since the recession.”
S&P Global Ratings praised, “Strong financial monitoring and oversight with a history of budget adjustments, mainly through expenditure reductions, to restore fiscal balance.”
Georgia’s debt management plan
Georgia has a debt plan and sticks to it. Covering five years, the plan limits debt service to 7 percent of revenues, even more restrictive than the 10 percent in the state constitution. Currently, the actual debt service is running about 6 percent.
Bonded projects cover the state
Here are some of the purposes of the bonds recently sold by the state:
$396.15 million for K-12 schools for capital construction, vocational equipment, agricultural equipment and school facility safety grants
$362.03 million for the University System of Georgia that includes $60 million for maintenance and repair projects and renovations. This figure includes shorter five year bonds for equipment for classrooms in new construction projects. Local projects include:
$49.9 million for the new Center for Engineering and Research at Georgia Southern, Statesboro campus
$2.7 million for equipment for the Health Professions Academic Center, Savannah campus of Georgia Southern University
$123.08 million for the Technical College System of Georgia including:
$1.675 million for equipment for the Plant Operations and Workforce Training Center at Ogeechee Technical College, Statesboro.
$112.47 million for the Department of Transportation including $100 million for bridge repair/replacement statewide
$35 million for the next stage of the deepening of the harbor at the Savannah Port
$28.89 million for the Department of Natural Resources for park improvements and renovations, Americans with Disabilities Act related improvements statewide and dam break routings for state- owned dams statewide
$12.75 million for equipment for the new Coastal Crime Lab in Pooler and other statewide repairs
$10.64 million for the Department of Behavioral Health and Developmental Disabilities to complete facility repairs, facility major improvements and renovations and renovations to construct a Treatment Mall at Georgia Regional Hospital in Savannah.
Other projects collaborated with local governments to build or renovate five libraries around the state and provide other funding for libraries totaling $13.6 million. Other agencies receiving repairs and/or renovation funding were, DJJ, Department of Corrections, Department of Public Safety, GBI, Driver Services, Georgia War Veterans Home, Georgia World Congress Center, Stone Mountain Authority and Lake Lanier Islands Authority.