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Georgia's New Money Beats Florida

BRADENTON, Fla. — For a second year, Georgia is poised to eclipse Florida in authorizing new-money bonds in their state budgets.

Though neither gilt-edged state issues all its legislatively authorized debt in a single year, their Republican governors used different approaches to funding infrastructure needs in their budget recommendations for the current year as well as fiscal 2013.

Both governors, who took office in January 2011, responded to the recession and slower-than-anticipated revenue growth, and recommended less reliance on bonding.

The reduction has been more dramatic in Florida.

Georgia Gov. Nathan Deal proposed $563 million of bonds for the current budget, though the Legislature approved $632 million.

In prior years, the state’s legislative bond authorizations ranged from $800 million to $1 billion.

Deal, an attorney and former U.S. member of Congress, recommended $700 million of new bonds to fund a variety of capital projects across the state in the fiscal 2013 budget plan he unveiled Jan. 17.

“We are maintaining a conservative outlook and approach to budgeting,” he said.

In the coming fiscal year, Deal proposes to use the largest amount of bonds, $468.98 million, for primary and higher education, as well as technical school capital needs.

Another ongoing major bond program in Georgia includes continued financing of the harbor-deepening project in the Port of Savannah.

The work is in preparation for larger ships that will pass through the Panama Canal when its expansion project is completed in about two years.

“My budget for next year includes $46.7 million in bonds to continue deepening the harbor, building on the more than $136 million already approved for harbor deepening over the last three years,” Deal said.

Another important Georgia initiative is financing alternative drinking water supply programs, while the state waits for the U.S. Army Corps of Engineers to determine how much can be withdrawn from Lake Lanier, a major source of drinking water for Atlanta and surrounding local governments that has been the subject of litigation for years between Georgia, Alabama and Florida.

“My budget for next year proposes $45.7 million for water supply projects, the second installment in a four-year plan calling for $300 million of new investment in water supply,” Deal said.

He proposed another $18.37 million of bonding capacity for the Georgia World Congress Center, which owns the convention center and the Georgia Dome where the National Football League’s Atlanta Falcons play. Some $15 million would go to purchase land that could be used for a new Falcons stadium, a project that is still in negotiation.

Last year, the Georgia State Financing and Investment Commission said the state sold a total of $803.61 million of new-money bonds.

In comparison, Florida sold $380 million of new-money bonds last year, most of which was authorized in previous years, according to Ben Watkins, director of the state’s Division of Bond Finance.

An additional $2.2 billion of refundings were also sold by the state last year generating gross debt-service savings of $300 million, Watkins said.

Over the next few years, the amount of new deals from Florida could diminish dramatically as previously authorized but unissued capacity is sold, and debt-averse political leaders rely less on bonding for capital needs.

Just after taking office, Gov. Rick Scott recommended $331.3 million of new debt for transportation, education and state infrastructure bank projects in his first budget.

Ultimately, Scott approved $587.1 million of bonds in the current spending plan.

For fiscal 2013, he has proposed that the state authorize $217.2 million of new bond issuance, only for transportation projects.

Scott, a former private hospital executive, said his main policy funding recommendation calls for adding $1 billion in cash to the state’s public education budget.

Though he recommended education cuts in the current budget, Scott said education became a top funding goal after traveling the state and hearing complaints from parents and teachers.

As a trade-off, Scott is proposing a $2 billion cut in Medicaid insurance for the poor.

“No program has grown as fast and as much as Medicaid, and we must find a way to control the cost,” he said.

In a continuation from his first budget this year, Scott wants lawmakers to make deeper cuts in the taxes that businesses pay. His eventual plan is to eliminate business taxes — a move that he says will encourage job growth.

Scott has said that he supports capital projects that will create jobs, particularly the harbor deepening at the Port of Miami, as well as innovative financing for transportation.

As head of the State Board of Administration, which approves bonds sold by state agencies, Scott has frequently said that he does not support the use of debt.

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