Securing Highway Bonds Spurs Pitched Legal Battle In Georgia
The State Road and Tollway Authority (SRTA) plans to issue $822 million in Federal Highway Grant Anticipation Revenue Bonds later this year, but opponents intervened when a petition was filed Aug. 6 with the state court to validate the issue. They argue that the Georgia constitution expressly prohibits certain types of debt which, in this case, allow federal highway revenue received by the Georgia Dept. of Transportation to be used by the road and tollway authority to guarantee its bonds. "A state agency cannot guarantee the debt of an authority," says Mike Bowers, attorney for the opponents, and a former Georgia attorney general.
The state constitution was changed in 1972 to allow the state to directly incur public debt. The amendment also discontinued the practice of incurring indirect debt through agencies that would issue bonds and guarantee them with state lease payments. "They stopped exactly what they are doing now," says Bowers. He speculates that the method is being used to avoid a political fight over projects to be funded by bond sales.