Why State and Local Governments do Business as Authorities?

Since the great depression gave rise to the Tennessee Valley Authority or TVA in 1933, State and local governments throughout the U.S. have conducted business through authorities. Although instruments of government, authorities are quasi-public entities separate and distinct from the state and local government creating them. Authorities are created to serve specialized purposes and enjoy powers and exemptions not available to government agencies. Unlike, government bodies, authorities are controlled by appointees, rather than elected officials. Authorities also have far greater autonomy for incurring debt, financing projects, procuring goods and services, and other exemptions not available to local governments.

Like many other states, Georgia along with its counties and cities have been doing business through authorities since the 1950’s. There are now almost twice as many Authorities as there are counties, cities, and towns. Georgia contains 159 Counties and 535 cities and towns. In 2022, state and local governments in Georgia conducted business through 1,297 Authorities. These authorities controlled a broad range of public services, including ports, airports, water and sewer, redevelopment, hospitals, housing, recreation, waste management, elderly housing, and jails. Several of the better-known authorities include the Georgia Ports Authority, Georgia Highway Authority, Georgia Building Authority, World Congress Convention Center Authority, Atlanta Housing Authority, and the Georgia Regional Transportation Authority.

Unlike the government, authorities are empowered to generate revenue through bonds, or other forms of creative financing, without relying upon tax revenues. The debts of an authority may then be serviced through revenues generated by use of the goods, services, or rental incomes. More importantly, authorities are exempt from the competitive bidding statutes otherwise applicable to the procurement of goods and services by State or local governments creating them. However, such exemptions may be restricted voluntarily by the authority or involuntary by their creator whether State or local government. The freedom to finance and procure goods and services, unfettered by laws applicable to State and local governments, allow authorities to behave like private corporations.

Along with the expansive powers and exemptions given to authorities go greater liabilities. Most Court’s including those in Georgia, have found that authorities are not entitled to sovereign immunity as there is no sovereign or public purse to protect. But like private entities, authorities may be single purpose entities with limited assets and limited sources of income. So, when dealing with an authority do not be surprised if it conducts business more like a private corporation and less like a government agency.