By Benita Dodd

Atlanta – Georgia could create its own “economic stimulus package” and see a one-time savings of as much as a half-billion dollars to help plug the hole in the state budget by “rightsizing” the Georgia Environmental Facilities Authority (GEFA), according to an analysis released today.

The analysis by the Georgia Public Policy Foundation, a state-based, free-market think tank, found that the authority’s programs “far surpass the original intent of GEFA,” which was established “to provide low cost loans to small towns and communities who had little or no access to the financial markets for the infrastructure needs.”

“Unfortunately, the road to overreach is paved with good intentions,” said Kelly McCutchen, executive vice president of the Georgia Public Policy Foundation and author of the report, “GEFA: Paring Back Mission Creep Could Yield State Half a Billion Dollars.”

“What we have now is an agency sitting not only on a massive pile of money, but competing with a private-sector market willing and able to loan local towns and communities the funds they need. And when it’s doing that with taxpayer funds, it puts the private sector at a disadvantage in many cases – which is why we argue that there is economic stimulus in removing GEFA from the equation.”

If GEFA were compared to banks headquartered in Georgia, McCutchen said, the authority would be the third largest financial institution in the state ranked by total net assets or equity.

The Foundation found that as of June 1, 2008, GEFA had assets of almost $1.7 billion, liabilities of $95.9 million and a net worth of $1.6 billion. Although there are federal restrictions on some of the funds; the “Georgia Fund” portion of GEFA’s high-quality loan portfolio, totaling more than $541 million, could be monetized, conservatively producing $325 million to $500 million for the state.

Those funds could be used to supplement the state’s rainy day fund or to target such specific areas as construction of new reservoirs, McCutchen said.
“The bottom line is that ending the use of taxpayer funds to provide subsidized loans will boost the economy by engaging the private sector. Then, restoring GEFA to its original purpose – lender of last resort – will help reinforce the focus on limited government in Georgia.”

The Issue Analysis, "GEFA: Paring Back Mission Creep Could Yield State Half a Billion Dollars," can be accessed at www.gppf.org, the Foundation's Web site. To interview the author about this Issue Analysis, contact Kelly McCutchen at 404-256-4050 or kmccutchen@gppf.org.