Press release from the Governor's office
ATLANTA - Governor Sonny Perdue announced today that strong fiscal management of the state through the ongoing economic downturn has resulted in almost $90 million in additional savings, which will offset some budget cuts that would have been needed otherwise.
Last week, the state successfully refinanced approximately $658 million of its outstanding general obligation bonds at lower interest rates which will save the state over $35 million of debt service, including over $18.3 million in the state's current fiscal year.
Also last week, the State Auditor wrapped up its work on Fiscal Year 2009 agency audits and identified $54 million in lapsed funds that will be returned to the state's rainy day account.
"For every dollar that is saved, that is less that has to be cut from an already lean state budget," Governor Perdue said. "I want to commend our agency leaders for continuing to find efficiencies and savings, which result in funds being lapsed back to our reserve account. Also, the Georgia State Financing and Investment Commission has been proactive in refinancing outstanding debt when interest rates are favorable, achieving debt service savings totaling over $100 million."
At the end of each fiscal year, any funds left over in state agency accounts are lapsed back into the state's rainy day fund. The $54 million identified by the State Auditor brings the rainy day fund balance up to $103 million, after the FY 2010 mid-year education adjustment.
The bond refunding savings are the result of a Nov. 23 sale of Georgia General Obligation Refunding Bonds, 2009I, by competitive bid. Citigroup was the winning bidder; the interest rate on the bond issue was just over 2.85 percent.
The bonds being refunded were originally sold between 2000 and 2007 with interest rates of 4 percent to 6 percent. A decline in the tax-exempt interest rate market during the last few weeks provided the state with the opportunity to refinance the bonds.
"Once again, our strong bond ratings and sound fiscal management allowed the state to achieve significant cash flow savings," said Governor Perdue. "Georgia is one of only seven states with AAA bond ratings, which allows us to take advantage of refinancing opportunities that are not readily available to other states."
This latest refunding was the third time the state has been able to lock in lower rates on refunding bonds. In total, the refundings have saved the state $100.4 million over fiscal years 2009, 2010 and 2011.
This week's sale came just three weeks after the state successfully sold approximately $794 million of general obligation bonds to fund new schools, public safety projects, road projects and other crucial infrastructure. During that sale, the state was able to lock in a rate of 1.49 percent for its 5 year bonds, and 2.99 percent for its 20 year bonds — both rates were historic low rates.
Prior to the early November bond sale, the three major rating agencies — Moody's, Fitch, and Standard & Poor's — assigned their highest ratings of triple-A with a stable outlook to the state's general obligation bonds.