BRADENTON, Fla. — Georgia Gov. Sonny Perdue Thursday said the state could not refinance $424.4 million of transportation debt because the board that oversees road projects has voted to maintain accounting practices that violate state law.
The unauthorized accounting practices were uncovered last year by the state’s auditors and inspector general investigating deficits at the Georgia Department of Transportation.
Part of the problem, investigators said then, was that GDOT had implemented a practice of using cash flow to fund its entire construction program — as many states do — which enabled the agency to enter multi-year financial obligations.
However, there is no provision in Georgia law to use that methodology and auditors recommended that GDOT seek legal authority in order to continue the practice.
The auditors said the practice risked the state’s financial stability and its triple-A rating by violating Georgia’s constitution, which mandates a balanced budget.
The practice was abandoned but road work in the state dwindled.
The 13-member State Transportation Board that oversees GDOT last week voted to resume the accounting practice starting July 1 to jump-start more projects and to give the state’s attorney general time to issue an opinion about its legality.
“The board is refusing to heed the sound advice of the state auditor and the department’s own legal and financial staff,” Perdue said in a statement. “Previous attorney general opinions also make it very clear that the department must follow the same accounting procedures as the rest of state government.”
The Georgia State Road and Tollway Authority was preparing to refund its Series 2001 and 2003 guaranteed revenue bonds for cash-flow savings.
The refunding, depending on market conditions, was anticipated to save $22.3 million in debt-service payments over the life of existing maturities.
The deal was expected to price in
the first half of February and close in early March.
“Given the uncertainty that has now been unnecessarily created by the board, we cannot proceed with the refinancing at this time,” Perdue said.
He went on to say that the Transportation Board’s action exhibited “a
clear defiance of state law and a frightening lack of concern for our state’s financial systems.”
“While I am incredibly frustrated that we are forced to pass up a substantial savings opportunity, I am more concerned that this board continues to act irresponsibly and show such little regard for the state’s conservative fiscal management policies,” Perdue said.