The bill, which was pushed by Gov. Roy Barnes, innocuously changed the name of the State Tollway Authority to the State Road and Tollway Authority.
More significantly, it gave the previously obscure agency the ability to issue bonds backed by federal transportation grants. Until then, the authority could only sell bonds backed by the quarters, nickels and dimes drivers tossed into tollbooths.
The magnitude of the change -- if not the stakes for Georgia taxpayers -- began to become clear in June, when Barnes held a press conference unveiling an $8.4 billion plan to expedite 22 years of road projects in about a decade. Like governors before him, Barnes said he'd found a way to catch Georgia up with the rest of the South by putting 98 percent of rural residents within 20 miles of a four-lane, "developmental" highway. He said the program also would tackle Atlanta's air pollution by adding more HOV lanes, bus service in the suburbs and a light rail line from Midtown to Cobb County.
And he announced that he was naming a longtime buddy from his native Cobb County, Jim Croy, as the executive director of the revamped authority. SRTA, the governor declared, would take advantage of a new kind of federal grant to help finance the projects.
Croy had spent most of his career in Cobb County government, the last seven as director of the county's transportation department. In 1999, his old friend and brand new governor tapped him as transportation director for the Georgia Regional Transportation Authority.
But his new job is a doozy. He's spent the last nine months trying to figure out how to pay for all the roads Barnes wants to build.
Like most things Barnes, the expedited road-building plan was heralded across the state right after it was announced. The governor described it as a bridge between the haves in Atlanta and the have-nots in rural Georgia.
Few voices questioned the details. Environmentalists criticized it as a scheme to finance the $2.4 billion Northern Arc highway across Atlanta's suburbs. Georgia Conservancy Policy Director Michael Halicki got his juices going when he started asking questions about the financing; no one would specifically explain how the construction would be funded.
"What raised red flags for us was that the more we looked into the financing, the more we realized what they don't know about financing the transportation projects," Halicki says. "SRTA hasn't been very forthcoming as to what their plans are."
Despite the program's sketchy financing, only the Northern Arc has been singled out for serious opposition -- and even that opposition was scattered among the usual suspects of anti-road environmentalists. After all, it's not as if Joe Six Pack would bitch about using billions of dollars in federal funds to speed up road construction.
But Joe Six Pack might get a bit more concerned if he learned all those roads could cost him -- at the pump, in tolls, even possibly in the form of income taxes.
As with most other things in life, when it comes to roads, you get what you pay for, and you have to pay for what you get. Sort of.
Actually, more than $900 million in the state Department of Transportation budget comes each year from the federal government. But, for decades, the nagging issue over at the state DOT has involved the revenues that Georgians provide directly through the state's unusually low gas tax.
Georgia motorists pay 7.5 cents in taxes for every gallon of gas. A 3 percent sales tax, which is added at the pump to the final price, goes toward gas-tax collections as well.
This year, that's expected to bring in $662.3 million -- money that will be spent on just about everything road-related, from plugging potholes to paying the guys who pick up the trash on the side of the road. It's also used to pay for road construction and to pay off bonds.
One of the limitations of the gas tax is that it can't be used for anything having to do with mass transit, bicycle lanes or other transportation alternatives. The Georgia Constitution requires the money to be spent on roads.
Road builders, DOT bureaucrats, legislators, even governors have tried for decades to raise the gas tax. Even some environmentalists supported a 1992 proposal to increase the tax under the condition that some of the new funds go toward transit. Voters rejected the constitutional amendment that would have allowed that.
But road advocates haven't stopped beating the drum for more gas-tax money. One of the most recent was Charles Floyd, a University of Georgia business professor who has long championed developmental highways. In 1998, Floyd compared the previous 13 years of gas tax revenues to the miles of road the state is responsible for maintaining.
"Unless Georgia's political leaders address this problem of providing adequate and responsible transportation financing very quickly," he concluded, "the state's future economic development and quality of life will be in definite peril."
At the June press conference, Barnes announced that he'd found a way to fund a road-building frenzy without relying on the gas tax. SRTA, he explained, would use a new class of federally backed bonds called Grant Anticipation Revenue Vehicles to get 22 years of road construction done in seven years.
Since "Garvee" bonds were created by federal law three years ago, 14 states have used them to finance major road projects. Selling Garvee bonds would let SRTA generate the money that Georgia DOT needs to build the roads, Barnes said. Then, SRTA would pay off the bonds with grants the federal government sends to Georgia every year for transportation.
It seemed a brand new day for road construction in Georgia. The governor had given SRTA a credit card with an $8 billion spending limit and orders to take the DOT on a building binge.
On Nov. 15, 2001, New York underwriters Goldman, Sachs & Co. and Salomon Smith Barney Inc. released the first bonds for Barnes' expedited road plan. It was a $300 million issue.
But they weren't Garvee bonds. They were temporary notes to kick-start the road program. The notes are supposed to be repaid with another, much larger bond sale possibly as early as this summer. But, as it turns out, that larger bond sale won't be Garvees either.
SRTA sold more bonds in December, $357 million worth. And again they weren't Garvees. The December bonds will be paid off with gas taxes, Georgia gas taxes.
Publicly, at least, it seemed as if Barnes' plan was right on track. Newspapers across the state ran stories saying the new highways were on the way.
But the small world of transportation policy wonks was buzzing: After such a big ballyhoo was made over Garvee bonds, why was SRTA relying on gas taxes?
The first bond sale wasn't really a surprise. It's not uncommon to issue temporary notes to get a large project going while financing strategies are figured out. But the second bond sale will cost Georgia motorists $31 million in gas taxes each year -- and that's for only a small portion of the $8.4 billion program.
If Barnes does get to spend the full $8.4 billion he's looking for -- which appears likely -- the state will be obligated to come up with the money to pay off the portion that was financed with bonds. Some of that money will certainly come from federal grants, but Georgians will have to pay for the rest, whether it's through gas taxes, tolls or some other revenue source.
The group with the ultimate authority over financing the governor's road-building plan is the five-member State Road and Tollway Authority Board.
Until last year, the handful of employees who worked at SRTA merely counted the change drivers threw into the tolls on Ga. 400 and a five-mile bridge from the coast to St. Simons Island. SRTA was the easiest of state agencies to overlook.
Thanks to the legislation Barnes pushed through last year, the board now gets to decide everything: whether to sell bonds, how many bonds to sell, what kinds of bonds to sell -- everything.
Barnes chairs the board. The vice chairman is state Transportation Commissioner Tom Coleman Jr. Croy handles the agency's day-to-day operations from the fifth floor of the state health building, less than a block from the Capitol and just behind the DOT building.
Croy fully concedes that neither he, nor anyone else for that matter, has figured out how to pay for everything Barnes wants built. Croy admits he's looking at every possible source from U.S. Federal Transit Authority grants to more tolls.
"We're working through those issues as we speak, today," he told CL in late March. "Certainly, we'll have all that settled before the first bonds are sold."
Actually, SRTA already had sold more than $650 million in bonds, and the plan to pay for the roads, if it exists, still hasn't been released.
Despite the outward confidence, what happened after the first two bond issues were sold hints at just how desperate state officials are getting. In January, it turns out, Croy and state Transportation Commissioner Coleman quietly signed an agreement that'll use tolls gathered from Ga. 400 to pay for construction of other roads, possibly the Northern Arc. (The original agreement that allowed the collection of tolls on Ga. 400 said the tollbooths would be removed once the road was paid for in 2011.)
That deal, which was exposed in an article last week in the Atlanta Journal-Constitution, showed Croy might look to Georgians to pay for the construction through tolls, not Garvee bonds.
And Croy was less than forthcoming about that arrangement. In an interview two days before the AJC broke the story, Creative Loafing asked him how the road projects would be financed. Croy mentioned tolls, bonds and possible grants from the Federal Transit Authority -- the same thing he's told reporters for six months. But he never mentioned that he'd already taken action on the toll front by signing an agreement with Coleman.
Another option on the table is even more of a reach. The idea would be to charge solo drivers a fee so they could ride in HOV lanes. This would have the opposite effect HOV lanes are supposed to have, which is to encourage carpooling. But it also would generate desperately needed funds that could be used to pay off bonds for the Northern Arc and other projects.
The sad truth is that tolls from Ga. 400 and fees to ride in HOV lanes won't come close to solving Croy's problem. They're chump change in the grand scheme of things. Georgia is on the brink of accumulating $8 billion in debt.
Go to the governor's website, click on the header for his road plan and you'll find a whole section explaining Garvee bonds. Even the legislation that expanded the authority's power over the state's biggest construction program specifically gave SRTA the authority to issue Garvees.
But Georgia hasn't even applied for the permission it needs to issue Garvee bonds yet, and, according to Croy, the state won't.
Even the next, big round of bonds won't be Garvees, Croy says. Instead, they'll be what he and other transportation planners call "Garvee-type" bonds.
That slight distinction could make all the difference in the world. Under real Garvee bonds, the Federal Highway Administration reimburses states for the full cost of road projects as long the projects were approved beforehand; and Garvee bonds may only be spent on approved projects.
The problem for Georgia is that the feds haven't approved a fair chunk of Barnes' projects, including some developmental highways and the Northern Arc.
With a "Garvee-type" bond, the reimbursement money could be spread around to help pay for unapproved roads. The disadvantage is that the feds wouldn't reimburse the state for projects that weren't approved.
By opting for Garvee-type bonds, the state said "no thanks" to completely paying for a smaller number of road projects. Instead, SRTA intends to spread the money it gets to partially pay for more projects.
Under that arrangement, because many of the projects wouldn't qualify for reimbursements, the bond program is likely to get less federal funding (although the balance of the federal funds would go toward other transportation projects in Georgia).
"There's a certain scrambling nature to this that raises flags," says the Georgia Conservancy's Halicki. "If they figure out a way to fund this strictly with state money, then they'd take money away not just from metro Atlanta, but from the state as a whole."
If you want to see how bad things can get when a state overextends on its transportation projects, just head up I-85 o Virginia.
Faced with the same problems Georgia has -- suburbs clogged with intense traffic congestion, hour-long commutes, daunting lists of road projects stuck on the drawing board -- then-Gov. James Gilmore and the Virginia Legislature came up with a six-year, $10.3 billion plan to expedite construction of highways and roads.
In November 2000, Virginia became the eighth state to sell Garvee bonds, $375 million worth, to finance new highways. But gas tax revenues, federal transportation grants and general tax revenues all declined with the slowing economy. The plan backfired.
The state's entire transportation department could run out of money -- basically go bankrupt -- in less than a year, according to a report the Virginia state Senate released Feb. 25.
To stave off financial ruin, Virginia Department of Transportation officials asked contractors in mid-February to suspend work on more than 500 projects, worth $2.1 billion, until April 1. They also dropped a third of the projects they wanted to build.
Now, Virginia lawmakers are battling over whether to raise the gas tax and transportation projects statewide are in jeopardy. "Georgia could be in the same place in a couple years," says Michael Replogle, transportation director for the nonprofit group, Environmental Defense. "Even if Georgia's bonding program went off without a hitch, which hardly is assured, the state's transportation future is bumpy at best."
Barnes' transportation plan amounts to putting one enormous egg in one basket. By committing so much of the state's transportation money to paying off bonds, Barnes is in effect locking in the state's transportation future for the next 25 years.
"In this particular issue -- accelerating [an existing] program -- there's not any new projects and it's not costing any extra money, but we are building them today, so the money won't be there in the future," Croy says. "There'll be less money available in the future. It's an investment i n infrastructure."
The problem is that many Georgians don't agree that the proposed infrastructure is such a good investment -- much less that the state should build it without knowing how to pay for it. Think of it this way: The state's own studies say the Northern Arc won't make a dent in Atlanta's traffic woes, but SRTA is in the process of borrowing $2.4 billion for the Arc -- and still hasn't come up with a way to pay that money back.
Environmental Defense's Replogle sees unworthy roads as the biggest fault of the Georgia program: "If the projects that get the money now later prove to fuel more sprawl and don't really address traffic problems, then the citizens of Georgia are going to be in a real pickle and have far fewer options for solutions in the future."
An alternative -- one that hardly seems to enthuse road-hungry politicians and the developers who fund their campaigns -- would be for Barnes to stick to the core projects that would be approved by the feds. Financing through the more taxpayer-friendly Garvee bonds would cover those projects entirely. And the state wouldn't have to go through wild gyrations trying to squeeze more taxes and fees from residents.
Croy says not to worry: The "majority" of the road projects will be eligible for federal funds. But how many won't be eligible? $2 billion worth? $3.5 billion?
Croy doesn't know. Nor does he know how much debt the state will have to take on to complete Barnes' project or how much state money will be used versus federal dollars.
Right now, there's a mad dash to find the horse to pull the cart.
The fallacy of the low crime "per capita" is exactly that it considers the tens…
More diversionary bs by Cobb County officials.... that email did NOT insult residents, it spoke…
It's not an "honest debate" over gun rights but simply submission. Most Americans do not…
Damn Imperial Storm Troopers can't hit anything (type of joke made by the type of…
A person has all the rights to do whatever they would want to in their…