ATLANTA Georgia will issue $523 million of general obligation bonds tomorrow, and the deal comes as the triple-A rated state revealed a decline in revenue.

The deal will be sold competitively, with King & Spalding LLP as the bond counsel and Public Resources Advisory Group as the financial adviser.

This deal is broken into several pieces, noted Lee McElhannon, director of bond finance for the state Financing and Investment Commission.

There are $56.6 million of Series 2008A GO bonds and $465.9 million of Series 2008B GOs.

Series A bonds will be sold in two subseries. There are $53.6 million of 2008A-1 five-year bonds and $2.9 million of 2008A-2 10-year bonds. The maturities for the 2008A-1 bonds are from 2009 to 2013. The maturities for the 2008A-2 bonds are from 2009 to 2018.

The Series B bonds will be due July 1, 2009-2028, and subject to early redemption beginning July 1, 2018.

The state chose to break the deal up in this manner because of the intended use of the proceeds and for debt management purposes.

The deal comes as state officials revealed tumbling revenues. Collections for the month of May were 30.9% lower than the May 2007 revenue collection, in part due to increased efficiencies that resulted in an accelerated collection of personal income tax in April 2008, according to a disclosure notice.

The Financing and Investment Commission released a disclosure notice yesterday detailing the revenue collections.

In that notice, it was stated that fiscal 2008 collections through May 2008 were flat compared to the same period through May 2007, and Georgia officials expect that revenues may be flat for the fiscal year ending June 30, 2008.

The state's adopted budget for fiscal 2008 had projected a 2.8% increase in general fund revenues. If general fund revenues are flat in fiscal 2008, revenues should be approximately $525 million less than budget. The revenue shortfall reserve contains $1.54 billion. The state plans on drawing down the amount needed from the revenue shortfall reserve to balance the fiscal 2008 budget net of any lapsed or unspent appropriations.

Gov. Sonny Perdue will instruct agency heads to submit budget reductions from 3% to 4% for fiscal 2009.

McElhannon said there are about $1.9 billion of GOs that will be sold by the state through fiscal 2009 thanks to previous authorizations.

The next deal could come to market in October.

Most of the proceeds from this deal will be used for capital projects, with the Georgia Department of Transportation, Board of Education, and Board of Regents taking most of the funding.

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