Governor reduces bond package; Metro Atlanta avoids slowdown
By David Pendered
The depth of the recession in Georgia is evident in the dwindling amount of money the state plans to borrow to improve its infrastructure.
The bond sum proposed in 2007 was $914 million. The current bond proposal is almost 22 percent lower, at just over $713 million, in the budget recommendation for 2014 presented by Gov. Nathan Deal. Metro Atlanta’s slice of the pie increased by 16 percent in snapshots of the years 2007 and 2014.
The comparison of two budget years hardly represents a comprehensive analysis of state investment. It does provide a glimpse of the state’s investment dashboard and outlook during the lingering downturn that officially started in late 2007.
The amount of bonds included in the state budget is a function of the governor’s determination of the amount of debt payments the state can afford.
In 2007, then Gov. Sonny Perdue expressed confidence that Georgia had turned the corner the economic downturn that began at the start of the decade. Perdue determined the state could afford payments of $91.1 million, according to his budget document for the fiscal year that started July 1, 2007.
- “The economic recovery that showed up in state revenue growth last year accelerated throughout the 2005 fiscal year and continues to grow at a healthy pace in fiscal year (FY) 2006. This strong growth allowed us to increase our ‘rainy day reserve’ to over $250 million at the end of FY 2005, a $200 million increase over the prior year.
- “My revised revenue estimates for FY 2006 and my revenue estimate for FY 2007 embody my philosophy of government restraint. I have based my budget on the same philosophy used by many families in homes all around this state.”
That said, the economic report in Perdue’s budget contained two prescient sentences in the same section:
- “The economic outlook is one of accelerating growth albeit with several notes of caution.”
- “Early indications suggest that housing markets may have peaked.”
Deal’s budget message, in the document he released Jan. 17, addresses the uncertain economy head-on. The state’s rainy day fund now is greater than $378 million and Georgia has maintained its top bond rating with all three bond rating house, Deal wrote.
Deal began his message with this sober language:
- “Our state continues to make steady progress as we emerge from the economic difficulties of the past several fiscal years. … Though we have faced unprecedented economic challenges in recent years, we have met these challenges through sound, conservative fiscal management, by living within our means and maintaining a balanced budget….
- “While Georgia’s economy continues to grow, uncertainty remains at both a national and glopbal level. Therefore, my Amended FY 2013 and FY 2014 budget proposals maintain a cautious approach to the current and next fiscal year….”
Deal proposes that Georgia can afford additional debt payments of $72.9 million a year to pay for about $713 million in borrowing for capitol improvements. The Legislature can propose its own amendments to the governor’s recommended bond package.
Metro Atlanta is slated to benefit from both budgets. New classrooms were major components of bond packages for each fiscal year. The amount proposed in the region actually would increase over the seven-year period, as Deal has recommended maintenance projects for several state-owned facilities in the region, including a prison in Buford and the public broadcast station in Atlanta.
In 2007, the plan was to sells bonds totaling $93.4 million for projects in metro Atlanta.
The program included $37.5 million for a facility at Georgia State University and $38 million for the nanotechnology building at Georgia Tech. The Georgia World Congress Center was provided $5.4 million for various renovation projects, according to the budget.
In 2014, the plan is to sell bonds totaling 108.7 million for projects in metro Atlanta.
Major projects include: $58.8 million for a structure at Georgia State to accommodate a law school and humanities; $12.5 million for equipment and development infrastructure for the Georgia Research Alliance (to be spent in Atlanta, Athens, and Augusta); and $15.1 million for projects affiliated with the Georgia World Congress Center – $11.8 million for the College Football Hall of Fame, and $3.3 million for upgrades to Building B at the GWCC.