Ga. road budget so squeezed, DOT can't afford to borrow

By Ariel Hart

The Atlanta Journal-Constitution

Georgia’s transportation budget is so squeezed that the state Department of Transportation has asked the governor and the Legislature to cancel -- for now -- $300 million the state plans to borrow for road projects, because the DOT will be hard-pressed to make the debt payments.

In addition, within a couple of years, Georgia will have to pass up “tens if not hundreds of millions” in federal funds for road projects, because it will be unable to supply the standard 20 percent local financial match, said state Transportation Board member David Doss. The board’s legislative committee on Wednesday backed a resolution Doss introduced to notify the Legislature of the likelihood of losing the federal funds, and the full board will take it up Thursday.

DOT Treasurer Kate Pfirman said that it is impossible to know now exactly how much federal money the state would lose, because it would be more than a year away, likely in the fiscal year that begins in July 2011.

Over the past decade, the DOT has already borrowed so much to fund the Governor’s Fast Forward road program that its debt payments are reaching hundreds of millions of dollars. On top of that, revenues from the state gas tax, which fund roadwork, have slumped along with the economy, though they may be starting to recover.

The $300 million in borrowing was part of Gov. Sonny Perdue’s proposal this year for new transportation funding. He said he hoped future Legislatures and governors would continue the borrowing for a total of $3 billion over 10 years. Perdue originally suggested that the interest would be taken from the state’s general fund, not the already slim transportation budget. But steadily worsening state budget cuts and political strife with the DOT board led to a change. If the state borrows that money, it would now expect the DOT to make the debt payments of $26 million per year for 20 years.

If the state can't afford it, the DOT can't afford it either, at least for the moment, said board Chairman Bill Kuhlke, who wrote the letter asking to defer the borrowing. He said he had not yet received a response.

A spokesman for Perdue, Bert Brantley, said Wednesday that "the governor wanted to jump-start road construction, and the $300 million was a big part of that." He said Perdue's desire to get projects moving "is still the same as it was."

DOT officials said the governor is still declining to refinance some transportation debt that with new lower interest rates might save about $15 million next year, and about $25 million overall. Perdue canceled the refinance earlier this year after the DOT board took a vote to change its accounting. Following outraged reaction from Perdue and legislative leaders, the board has since rescinded that vote.

Transportation funding measures under consideration at the General Assembly now probably wouldn’t help in time, said board member Steve Gooch.

Member Rudy Bowen hinted that the state should raise the gas tax, pointing out that Georgia’s gas tax was much lower than those of surrounding states.