Political Notes – Did Georgia dodge a bullet on its bond rating?


Gov. Nathan Deal was due to return to Georgia Tuesday afternoon after taking a brief trip to New York City to meet with the bond rating agencies and other key players in the investment community.

Deal’s media spokesman, Brian Robinson, characterized the trip as something of an “introductory meeting” for the governor, who’s been in office for barely 100 days and will soon be signing a state budget that depends on the sale of nearly $700 million in state bonds to Wall Street investors.

The visit takes on added significance in light of the fact that one of the “big three” rating agencies, Standard & Poor’s, on Monday downgraded its outlook for federal government debt instruments from “stable” to “negative.” A similar downgrading of Georgia’s gilt-edged AAA bond rating would cost the state millions of dollars in higher interest rates when it floats its bond issues.

From the standpoint of bond ratings, one of the best things that may have happened to Georgia in recent days was the failure of the legislative leadership to pass the tax revision package they were trying to roll out towards the end of the session.

That tax proposal, which was hammered out behind closed doors by House leaders but never brought to the floor for a vote, would have reduced the state’s annual tax revenues by anywhere from $130 million to $200 million.

There were more than a few capitol insiders who worried that such a hit to state revenues would result in a decision by the rating agencies to lower Georgia’s AAA bond rating.

“We were digging ourselves a deeper hole, that’s for sure,” said a veteran lobbyist familiar with the state’s financial issues. “I have to think the Wall Street folks got a message through to the governor.”

If the Legislature actually passed a tax revision bill that reduced state revenues by such a large amount,“they’d drop our bond rating, sure as anything,” predicted Sen. George Hooks (D-Americus), the former chairman of the Senate Appropriations Committee.

“Wall Street doesn’t care where you get your revenue – sales tax, income tax, whatever,” Hooks said. “They just want stability.”

A.D. Frazier, the businessman who chaired the Tax Reform Council that spent more than six months studying Georgia’s tax structure last year, offered this observation via email:

“I read the Moody’s, S&P, and Fitch rating reports when they reaffirmed our State’s Triple A rating last year. (We are one of only nine States with this rating – California, by contrast, is junk.) All of them plainly said: if the State does not STRUCTURALLY replace the stimulus money (two billion in our case) and if it doesn’t begin now to reestablish reserves, our rating is in jeopardy. There is probably a 20-50 basis point higher cost of AA vs. AAA which, of course, we would start paying immediately on ALL of our outstanding bonds were we to be downgraded.”

Robinson said Deal did not have quite that level of concern about possible changes in the bond rating during the consideration of the tax revision bill.

“When the tax plan was set aside by the speaker, he said, ‘We need to make sure we get the numbers right – it might be best to see where we are at the end of 2011,’” Robinson recalled.

The governor still thinks the state “can reduce our tax burden without endangering the state’s AAA bond rating,” Robinson added.

Anti-abortionists attack Ralston

House Speaker David Ralston has definitely gotten on the bad side of Georgia Right to Life after his actions to block votes on anti-abortion bills during the past two legislative sessions.

A news release distributed Tuesday by Georgia Right to Life said that this year’s session “marked a new low in the State House’s relationship with Georgia Right to Life and its prolife base.”

“For the second year in a row, there was no prolife legislation enacted,” the news release said. “In contrast, the Senate leadership has led by example and passed strong prolife bills each of the last four years.”

Added Georgia Right to Life:

House Speaker David Ralston, who claims to be prolife, blocked efforts by House members on two meaningful bills, ensuring they were never taken up in committee. He also ignored two excellent Senate bills which had passed with every Republican senator voting “yes”.

In response, the Speaker offered his own “prolife” bills. The Speaker’s bills were deeply flawed and damaging to the state’s ability to protect the preborn. Dan Becker, President of GRTL, explained, “If passed, these fake prolife bills would have nullified twelve years of prolife gains. Both bills were surgically designed to allow for abortions through all nine months. In addition, the Speaker’s bill introduced “rape and incest” exceptions’ in the Georgia code for the first time in twelve years.

Late in the session, Ralston backed what looked like a prolife bill. The Rules Committee even amended the bill with seemingly prolife language.

A friendly attorney’s careful research, pointed out that it was a cynical ploy. The measure’s language was excerpted directly from Nancy Pelosi’s federal “Obamacare” bill. It would have had little to no prolife impact.

That answered GRTL Legislative Director Mike Griffin’s question: “Why were Planned Parenthood and other groups doing nothing to oppose it?” As Griffin said on the final day, “This bill was a placebo; it was meant to make us feel good–it was a fake.” True prolife members of the House and Senate were frustrated by this year’s inaction. Leaders among them who attempted to work with the Speaker found closed doors and empty promises. “This is not what we expected from the Republican Party,” said Becker, “we are deeply disturbed by this continuing left-of-center shift towards a pro-abortion agenda. Georgians are prolife.”

Chamber creates transportation group

The Georgia Chamber of Commerce, gearing up for next year’s round of referendums on a transportation sales tax, has established a Georgia Transportation Alliance (GTA) that will try to generate support for those regional tax votes.

“This affiliate will allow us to bring key stakeholders together to focus on how we build and maintain a multi-modal network that moves both people and freight safely and efficiently,” Chamber President Chris Clark said.

“One of the first challenges for the new affiliate will be to work with leaders in each of Georgia’s 12 economic development regions to pass the one-cent TSPLOST on the ballot next year,” Clark said.

The announcement of the new group sent out by the chamber indicated that it will remain in operation after the tax votes have been held to carry out other planning initiatives, such as upgrading the state’s ports and rail facilities.

Ross v. Loudermilk?

In an editorial summing up David Doss’s nine years of service on the State Board of Transportation, the Rome News-Tribune says that Doss may end up running for the state Senate next year against Sen. Barry Loudermilk (R-Cassville).

From the News-Tribune editorial:

We don’t expect this to be Doss’ last hurrah in the public arena, and he said as much during his interview with the Rome News-Tribune. His immediate plans now revolve around the private sector. He is president of the Harvey-Given Co., a Rome real estate management firm, and he said he would be interested in getting involved in consulting on transportation issues.

When asked about his political aspirations, Doss said he is not after one of the Rome City or Floyd County commission seats. “Like many people, I have a bad taste about what’s happening nationally and in the state,” he said. “It probably won’t be as a candidate, but I expect to remain politically involved in the upcoming election cycle.”

But we suspect there may be at least one more political campaign in his future. This newspaper surely is not the only entity that noted that while Doss worked with both Republicans and Democrats during last week’s Transportation Enhancement grant distribution, one area lawmaker was noticeable by his absence: state Sen. Barry Loudermilk, R-Cassville. Doss isn’t saying anything at the moment, but let us be the first to say it here — “Doss for Senate in 2012.”

© 2011 by The Georgia Report


Tags: AAA rating , Abortion , Barry Loudermilk , David Doss , David Ralston , Georgia Right to Life , Nathan Deal , rating agencies , state bonds