Governor Sonny Perdue announced today that this week’s general obligation bond sale netted the lowest interest rates in the history of the state, resulting in $35 million in budget savings in Fiscal Year 2010 and annual debt service reductions of $10 million in future years.
“This bond sale funds needed projects and creates jobs throughout Georgia,” Governor Perdue said. “Our strong bond ratings and sound fiscal management have allowed us to achieve significant budget savings that will continue to benefit Georgia for years to come.”
This week, the State of Georgia successfully sold $793,855,000 in general obligation bonds to fund new schools, public safety projects, road projects and other crucial infrastructure. The state was able to lock in a rate of 1.49 percent – the lowest rate in state history – for 5-year bonds and 2.99 percent for the 20-year bonds – also a record low rate.
The historic low rate on the 20-year bonds was the result of the state’s decision to issue Build America Bonds, an option provided to governmental issuers in the American Recovery and Reinvestment Act. Under this option, the state will receive a 35 percent interest rate subsidy from US Treasury. Build America Bonds, combined with traditional tax-exempt bonds, proved to be the most cost effective strategy for the transaction.
Emphasis mine. Soooooo, Governor, just curious: where do you think the money comes from that the U.S. Treasury is using to subsidize this stratagem?