BRADENTON, Fla. — Georgia's State Transportation Board Thursday adopted a financial management plan to pay down an estimated $1.2 billion deficit at the Georgia Department of Transportation in order to balance the fiscal 2008 budget.
The 13-member board approved a plan that included using $473 million in advance construction funds and receivable payments available from the Federal Highway Administration, $31.3 million in interest from grant anticipation revenue vehicle bonds, and $23 million in federal reimbursements on Garvee bond debt payments.
In addition, the board agreed to enter into an agreement with the State Road and Tollway Authority to use $600 million of Garvee bond proceeds sold in March to manage another major portion of the anticipated deficit. The agreement would enable GDOT to recognize the bond funds as "positive income," said department spokesman David Spear.
A third part of the budget plan requires GDOT to eliminate $250 million of planned right of way acquisition costs.
"We're getting our financial house in order," Spear said. The fiscal 2008 year ends June 30.
The deficit was reported to the board in a two-day meeting last week by state auditors, who were asked by Gov. Sonny Perdue and top lawmakers to review GDOT finances.
The budget review came after newly appointed GDOT commissioner Gena Abraham said she wanted an in-depth look into the agency's budgeting practices. Abraham was appointed by the board last December to head up the department.
Although Georgia law requires state agencies to have balanced budgets, GDOT's budgeting practices historically were influenced by politics, according to Spear.
"When someone wanted a project done, we would add it to our list," he explained. "We'd been operating on the principle that we were going to receive money from the FHA or from a bond sale and encumber funds before we actually had the funds in hand."
GDOT currently has 9,000 projects in its work program. Its six-year plan is short of funding by $8 billion while its 30-year plan is under funded by $70 billion.
"Commissioner Abraham has said we will run more like a business," Spear said. "We are going to encumber projects that are ready to be done and have funding for projects clearly identified and available before we wade into them."
GDOT is not authorized to sell debt. But the department will begin taking the politics out of the current system by developing a list of projects based on needs, priorities, and costs, Spear said.
"The commissioner says we'll take a look at every one of those projects and there will be a great many of those 9,000 that will fall by the wayside," he said. "That's when the rub will come."
The unwieldy list of projects has also made it difficult for the agency to move forward with its public-private partnership program. GDOT received four unsolicited P3 proposals, but Spear said they have been deemed unworkable because proposers required significant public funds.
"That caused us to look at the process," Spear said, adding that Abraham supports the P3 program.
GDOT has scheduled a forum on July 24 to meet with the firms that submitted P3 proposals to discuss their projects.