GEORGIA CONSTITUTION
ARTICLE VII SECTION 4
STATE DEBT

ART. VII §4 ¶1 | PURPOSES FOR WHICH DEBT MAY BE INCURRED. THE STATE MAY INCUR

(a) Public debt without limit to repel invasion, suppress insurrection, and defend the state in time of war.

(b) Public debt to supply a temporary deficit in the state treasury in any fiscal year created by a delay in collecting the taxes of that year. Such debt shall not exceed, in the aggregate, 5 percent of the total revenue receipts, less refunds, of the state treasury in the fiscal year immediately preceding the year in which such debt is incurred. The debt incurred shall be repaid on or before the last day of the fiscal year in which it is incurred out of taxes levied for that fiscal year. No such debt may be incurred in any fiscal year under the provisions of this subparagraph (b) if there is then outstanding unpaid debt from any previous fiscal year which was incurred to supply a temporary deficit in the state treasury.

(c) General obligation debt to acquire, construct, develop, extend, enlarge, or improve land, waters, property, highways, buildings, structures, equipment, or facilities of the state, its agencies, departments, institutions, and of those state authorities which were created and activated prior to November 8, 1960.

(d) General obligation debt to provide educational facilities for county and independent school systems and to provide public library facilities for county and independent school systems, counties, municipalities, and boards of trustees of public libraries or boards of trustees of public library systems, and, when the construction of such educational or library facilities has been completed, the title to such facilities shall be vested in the respective local boards of education, counties, municipalities, or public library boards of trustees for which such facilities were constructed.

(e) General obligation debt in order to make loans to counties, municipal corporations, political subdivisions, local authorities, and other local government entities for water or sewerage facilities or systems or for regional or multijurisdictional solid waste recycling or solid waste facilities or systems. It shall not be necessary for the state or a state authority to hold title to or otherwise be the owner of such facilities or systems. General obligation debt for these purposes may be authorized and incurred for administration and disbursement by a state authority created and activated before, on, or after November 8, 1960.

(f) Guaranteed revenue debt by guaranteeing the payment of revenue obligations issued by an instrumentality of the state if such revenue obligations are issued to finance:

(1) Toll bridges or toll roads.

(2) Land public transportation facilities or systems.

(3) Water facilities or systems.

(4) Sewage facilities or systems.

(5) Loans to, and loan programs for, citizens of the state for educational purposes.

(6) Regional or multijurisdictional solid waste recycling or solid waste facilities or systems.

ART. VII §4 ¶2 | STATE GENERAL OBLIGATION DEBT AND GUARANTEED REVENUE DEBT; LIMITATIONS

(a) As used in this Paragraph and Paragraph III of this section, “annual debt service requirements” means the total principal and interest coming due in any state fiscal year. With regard to any issue of debt incurred wholly or in part on a term basis, “annual debt service requirements” means an amount equal to the total principal and interest payments required to retire such issue in full divided by the number of years from its issue date to its maturity date.

(b) No debt may be incurred under subparagraphs (c), (d), and (e) of Paragraph I of this section or Paragraph V of this section at any time when the highest aggregate annual debt service requirements for the then current year or any subsequent year for outstanding general obligation debt and guaranteed revenue debt, including the proposed debt, and the highest aggregate annual payments for the then current year or any subsequent fiscal year of the state under all contracts then in force to which the provisions of the second paragraph of Article IX, Section VI, Paragraph I(a) of the Constitution of 1976 are applicable, exceed 10 percent of the total revenue receipts, less refunds of the state treasury in the fiscal year immediately preceding the year in which any such debt is to be incurred.

(c) No debt may be incurred under subparagraphs (c) and (d) of Paragraph I of this section at any time when the term of the debt is in excess of 25 years.

(d) No guaranteed revenue debt may be incurred to finance water or sewage treatment facilities or systems when the highest aggregate annual debt service requirements for the then current year or any subsequent fiscal year of the state for outstanding or proposed guaranteed revenue debt for water facilities or systems or sewage facilities or systems exceed 1 percent of the total revenue receipts less refunds, of the state treasury in the fiscal year immediately preceding the year in which any such debt is to be incurred.

(e) The aggregate amount of guaranteed revenue debt incurred to make loans for educational purposes that may be outstanding at any time shall not exceed $18 million, and the aggregate amount of guaranteed revenue debt incurred to purchase, or to lend or deposit against the security of, loans for educational purposes that may be outstanding at any time shall not exceed $72 million.

ART. VII §4 ¶3 | STATE GENERAL OBLIGATION DEBT AND GUARANTEED REVENUE DEBT; CONDITIONS UPON ISSUANCE; SINKING FUNDS AND RESERVE FUNDS

(a)

(l) General obligation debt may not be incurred until legislation is enacted stating the purposes, in general or specific terms, for which such issue of debt is to be incurred, specifying the maximum principal amount of such issue and appropriating an amount at least sufficient to pay the highest annual debt service requirements for such issue. All such appropriations for debt service purposes shall not lapse for any reason and shall continue in effect until the debt for which such appropriation was authorized shall have been incurred, but the General Assembly may repeal any such appropriation at any time prior to the incurring of such debt. The General Assembly shall raise by taxation and appropriate each fiscal year, in addition to the sum necessary to make all payments required under contracts entitled to the protection of the second paragraph of Paragraph I(a), Section VI, Article IX of the Constitution of 1976, such amounts as are necessary to pay debt service requirements in such fiscal year on all general obligation debt.

(2)

(A) The General Assembly shall appropriate to a special trust fund to be designated “State of Georgia General Obligation Debt Sinking Fund” such amounts as are necessary to pay annual debt service requirements on all general obligation debt. The sinking fund shall be used solely for the retirement of general obligation debt payable from the fund. If for any reason the monies in the sinking fund are insufficient to make, when due, all payments required with respect to such general obligation debt, the first revenues thereafter received in the general fund of the state shall be set aside by the appropriate state fiscal officer to the extent necessary to cure the deficiency and shall be deposited by the fiscal officer into the sinking fund. The appropriate state fiscal officer may be required to set aside and apply such revenues at the suit of any holder of any general obligation debt incurred under this section.

(B) The obligation to make sinking fund deposits as provided in subparagraph (2)(A) shall be subordinate to the obligation imposed upon the fiscal officers of the state pursuant to the provisions of the second paragraph of Paragraph I(a) of Section VI of Article IX of the Constitution of 1976.

(b)

(l) Guaranteed revenue debt may not be incurred until legislation has been enacted authorizing the guarantee of the specific issue of revenue obligations then proposed, reciting that the General Assembly has determined such obligations will be self-liquidating over the life of the issue (which determination shall be conclusive), specifying the maximum principal amount of such issue and appropriating an amount at least equal to the highest annual debt service requirements for such issue.

(2)

(A) Each appropriation made for the purposes of subparagraph (b)(l) shall be paid upon the issuance of said obligations into a special trust fund to be designated “State of Georgia Guaranteed Revenue Debt Common Reserve Fund” to be held together with all other sums similarly appropriated as a common reserve for any payments which may be required by virtue of any guarantee entered into in connection with any issue of guaranteed revenue obligations. No appropriations for the benefit of guaranteed revenue debt shall lapse unless repealed prior to the payment of the appropriation into the common reserve fund.

(B) If any payments are required to be made from the common reserve fund to meet debt service requirements on guaranteed revenue obligations by virtue of an insufficiency of revenues, the amount necessary to cure the deficiency shall be paid from the common reserve fund by the appropriate state fiscal officer. Upon any such payment, the common reserve fund shall be reimbursed from the general funds of the state within ten days following the commencement of any fisca1 year of the state for any amounts so paid; provided, however, the obligation to make any such reimbursements shall be subordinate to the obligation imposed upon the fiscal officers of the state pursuant to the second paragraph of Paragraph I(a) of Section VI, Article IX of the Constitution of 1976 and shall also be subordinate to the obligation to make sinking fund deposits for the benefit of general obligation debt. The appropriate state fiscal officer may be required to apply such funds as provided in this subparagraph (b)(2)(B) at the suit of any holder of any such guaranteed revenue obligations.

(C) The amount to the credit of the common reserve fund shall at all times be at least equal to the aggregate highest annual debt service requirements on all outstanding guaranteed revenue obligations entitled to the benefit of the fund. If at the end of any fiscal year of the state the fund is in excess of the required amount, the appropriate state fiscal officer, as designated by law, shall transfer the excess amount to the general funds of the state free of said trust.

(c) The funds in the general obligation debt sinking fund and the guaranteed revenue debt common reserve fund shall be as fully invested as is practicable, consistent with the requirements to make current principal and interest payments. Any such investments shall be restricted to obligations constituting direct and general obligations of the United States government or obligations unconditionally guaranteed as to the payment of principal and interest by the United States government, maturing no longer than 12 months from date of purchase.

ART. VII §4 ¶4 | CERTAIN CONTRACTS PROHIBITED

The state, and all state institutions, departments and agencies of the state are prohibited from entering into any contract, except contracts pertaining to guaranteed revenue debt, with any public agency, public corporation, authority, or similar entity if such contract is intended to constitute security for bonds or other obligations issued by any such public agency, public corporation, or authority and, in the event any contract between the state, or any state institution, department or agency of the state and any public agency, public corporation, authority or similar entity, or any revenues from any such contract, is pledged or assigned as security for the repayment of bonds or other obligations, then and in either such event, the appropriation or expenditure of any funds of the state for the payment of obligations under any such contract shall likewise be prohibited.

ART. VII §4 ¶5 | REFUNDING OF DEBT

The state may incur general obligation debt or guaranteed revenue debt to fund or refund any such debt or to fund or refund any obligations issued upon the security of contracts to which the provisions of the second paragraph of Paragraph I(a), Section VI, Article IX of the Constitution of 1976 are applicable. The issuance of any such debt for the purposes of said funding or refunding shall be subject to the 10 percent limitation in Paragraph II(b) of this section to the same extent as debt incurred under Paragraph I of this section; provided, however, in making such computation the annual debt service requirements and annual contract payments remaining on the debt or obligations being funded or refunded shall not be taken into account. The issuance of such debt may be accomplished by resolution of the Georgia State Financing and Investment Commission without any action on the part of the General Assembly and any appropriation made or required to be made with respect to the debt or obligation being funded or refunded shall immediately attach and inure to the benefit of the obligations to be issued in connection with such funding or refunding. Debt incurred in connection with any such funding or refunding shall be the same as that originally authorized by the General Assembly, except that general obligation debt may be incurred to fund or refund obligations issued upon the security of contracts to which the provisions of the second paragraph of Paragraph I(a), Section VI, Article IX of the Constitution of 1976 are applicable and the continuing appropriations required to be made under this Constitution shall immediately attach and inure to the benefit of the obligation to be issued in connection with such funding or refunding with the same force and effect as though said obligations so funded or refunded had originally been issued as a general obligation debt authorized hereunder. The term of a funding or refunding issue pursuant to this Paragraph shall not extend beyond the term of the original debt or obligation and the total interest on the funding or refunding issue shall not exceed the total interest to be paid on such original debt or obligation. The principal amount of any debt issued in connection with such funding or refunding may exceed the principal amount being funded or refunded to the extent necessary to provide for the payment of any premium thereby incurred.

ART. VII §4 ¶6 | FAITH AND CREDIT OF STATE PLEDGED DEBT MAY BE VALIDATED

The full faith, credit, and taxing power of the state are hereby pledged to the payment of all public debt incurred under this article and all such debt and the interest on the debt shall be exempt from taxation. Such debt may be validated by judicial proceedings in the manner provided by law. Such validation shall be incontestable and conclusive.

ART. VII §4 ¶7 | GEORGIA STATE FINANCING AND INVESTMENT COMMISSION; DUTIES

(a) There shall be a Georgia State Financing and Investment Commission. The commission shall consist of the Governor, the President of the Senate, the Speaker of the House of Representatives, the State Auditor, the Attorney General, the director, Fiscal Division, Department of Administrative Services, or such other officer as may be designated by law, and the Commissioner of Agriculture. The commission shall be responsible for the issuance of all public debt and for the proper application, as provided by law, of the proceeds of such debt to the purposes for which it is incurred; provided, however, the proceeds from guaranteed revenue obligations shall be paid to the issuer thereof and such proceeds and the application thereof shall be the responsibility of such issuer. Debt to be incurred at the same time for more than one purpose may be combined in one issue without stating the purpose separately but the proceeds thereof must be allocated, disbursed and used solely in accordance with the original purpose and without exceeding the principal amount authorized for each purpose set forth in the authorization of the General Assembly and to the extent not so used shall be used to purchase and retire public debt. The commission shall be responsible for the investment of all proceeds to be administered by it and, as provided by law, the income earned on any such investments may be used to pay operating expenses of the commission or placed in a common debt retirement fund and used to purchase and retire any public debt, or any bonds or obligations issued by any public agency, public corporation or authority which are secured by a contract to which the provisions of the second paragraph of Paragraph I(a) of Section VI, Article IX of the Constitution of 1976 are applicable. The commission shall have such additional responsibilities, powers, and duties as are provided by law.

(b) Notwithstanding subparagraph (a) of this Paragraph, proceeds from general obligation debt issued for making loans to local government entities for water or sewerage facilities or systems or for regional or multijurisdictional solid waste recycling or solid waste facilities or systems as provided in Paragraph I(e) of this section shall be paid or transferred to and administered and invested by the unit of state government or state authority made responsible by law for such activities, and the proceeds and investment earnings thereof shall be applied and disbursed by such unit or authority.

ART. VII §4 ¶8 | STATE AID FORBIDDEN

Except as provided in this Constitution, the credit of the state shall not be pledged or loaned to any individual, company, corporation, or association. The state shall not become a joint owner or stockholder in or with any individual, company, association, or corporation.

ART. VII §4 ¶9 | CONSTRUCTION

Paragraphs I through VIII of this section are for the purpose of providing an effective method of financing the state’s needs and their provisions and any law now or hereafter enacted by the General Assembly in furtherance of their provisions shall be liberally construed to effect such purpose. Insofar as any such provisions or any such law may be inconsistent with any other provisions of this Constitution or of any other law, the provisions of such Paragraphs and laws enacted in furtherance of such Paragraphs shall be controlling; provided, however, the provisions of such Paragraphs shall not be so broadly construed as to cause the same to be unconstitutional and in connection with any such construction such Paragraphs shall be deemed to contain such implied limitations as shall be required to accomplish the foregoing.

ART. VII §4 ¶10 | ASSUMPTION OF DEBTS FORBIDDEN; EXCEPTIONS

The state shall not assume the debt, or any part thereof, of any county, municipality, or other political subdivision of the state, unless such debt be contracted to enable the state to repel invasion, suppress civil disorders or insurrection, or defend itself in time of war.

ART. VII §4 ¶11 | SECTION NOT TO UNLAWFULLY IMPAIR CONTRACTS OR REVIVE OBLIGATIONS PREVIOUSLY VOIDED

The provisions of this section shall not be construed so as to:

(a) Unlawfully impair the obligation of any contract in effect on June 30, 1983.

(b) Revive or permit the revival of the obligation of any bond or security declared to be void by the Constitution of 1976 or any previous Constitution of this state.

ART. VII §4 ¶12 | MULTIYEAR CONTRACTS FOR ENERGY EFFICIENCY OR CONSERVATION IMPROVEMENT

The General Assembly may by general law authorize state governmental entities to incur debt for the purpose of entering into multiyear contracts for governmental energy efficiency or conservation improvement projects in which payments are guaranteed over the term of the contract by vendors based on the realization of specified savings or revenue gains attributable solely to the improvements; provided, however, that any such contract shall not exceed ten years unless otherwise provided by general law.

ART. VII §4 ¶13 | MULTIYEAR RENTAL AGREEMENTS

The General Assembly may by general law authorize the State Properties Commission, the Board of Regents of the University System of Georgia, and the Georgia Department of Labor to enter into rental agreements for the possession and use of real property without obligating present funds for the full amount of obligation the state may bear under the full term of any such rental agreement. Any such agreement shall provide for the termination of the agreement in the event of insufficient funds.

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GEORGIA CONSTITUTIONARTICLE VII SECTION 4STATE DEBT

ART. VII §4 ¶1 | PURPOSES FOR WHICH DEBT MAY BE INCURRED. THE STATE MAY INCUR

ART. VII §4 ¶2 | STATE GENERAL OBLIGATION DEBT AND GUARANTEED REVENUE DEBT; LIMITATIONS

ART. VII §4 ¶3 | STATE GENERAL OBLIGATION DEBT AND GUARANTEED REVENUE DEBT; CONDITIONS UPON ISSUANCE; SINKING FUNDS AND RESERVE FUNDS

ART. VII §4 ¶4 | CERTAIN CONTRACTS PROHIBITED

ART. VII §4 ¶5 | REFUNDING OF DEBT

ART. VII §4 ¶6 | FAITH AND CREDIT OF STATE PLEDGED DEBT MAY BE VALIDATED

ART. VII §4 ¶7 | GEORGIA STATE FINANCING AND INVESTMENT COMMISSION; DUTIES

ART. VII §4 ¶8 | STATE AID FORBIDDEN

ART. VII §4 ¶9 | CONSTRUCTION

ART. VII §4 ¶10 | ASSUMPTION OF DEBTS FORBIDDEN; EXCEPTIONS

ART. VII §4 ¶11 | SECTION NOT TO UNLAWFULLY IMPAIR CONTRACTS OR REVIVE OBLIGATIONS PREVIOUSLY VOIDED

ART. VII §4 ¶12 | MULTIYEAR CONTRACTS FOR ENERGY EFFICIENCY OR CONSERVATION IMPROVEMENT

ART. VII §4 ¶13 | MULTIYEAR RENTAL AGREEMENTS

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