Debt study: State can afford Connect NC Bonds

Published January 28, 2016

by Mark Binker, WRAL, January 27, 2016.

Along with other officials responsible for financial oversight, Treasurer Janet Cowell issues a "debt affordability study" every year. The study gives guidance to lawmakers and other policy makers about how much the state can borrow and still be within a 4 percent ratio of debt service to general fund tax revenue. That 4 percent target is what policy makers say will allow the state to borrow but still maintain the highest ratings from various bond rating agencies. The higher the state's bond rating, the better the state's reputation for financial health and the cheaper it is for North Carolina to borrow.

"The model results show that the State's General Fund has debt capacity of nearly $210 million in each of the next 10 years," the report says. "The ratio of debt service to revenues peaks at 3.76 percent, in fiscal 2019 as the debt service arising from the Connect NC Bonds is incorporated into the model, still well below the 4.00 percent target."

The report doesn't weigh in on what the bond money will be spent upon, but it appears to back contentions that the state would not need to raise taxes in response to the increased debt.

Read More NC SPIN >>

January 28, 2016 at 9:41 am
Richard L Bunce says:

If the State can take on additional annual expenses in the form of debt payments without raising income tax rates then clearly the income tax rates were too high to begin with.

February 3, 2016 at 4:18 pm
Bill Gibson, II says:

Yeah, my thought on that was "the only way government gets money is via taxes" and if this isn't going to require additional taxes, then we could also take a $2 billions tax cut instead of adding debt.

February 3, 2016 at 4:33 pm
Bill Gibson, II says:

I'm for this because there are enough positives, but if I represented Cumberland County instead of Burke County, I would be asking why they get almost $90 millions and we only get about $25 millions. And, why Fayetteville State University only benefits $10 millions (the lowest of all the higher ed institutions - some other projects are funded over $100 millions) and Fayetteville Tech Community College gets slightly more $10 millions. Maybe FSU should have tagged their project with the current catch words "science" or "STEM" so that more money would have come their way.

If you take the PDF file of where the money will be spent and convert it so that you can pull it into Excel, then you can begin to sort the numbers and assign the actual percentages. That is when you might ask why money is flowing from one area to another. Still, its all to benefit North Carolinians.