There's never been a better time to invest in North Carolina
Published April 9, 2021
By Tom Campbell
North Carolina is poised to make great gains as we recover from the pandemic. We are becoming a major hub for life sciences companies. Real estate sales and construction (especially in urban areas) are booming, unemployment rates are declining, and most economic sectors are recovering. Unless there is another major surge in the coronavirus, we can expect our economy to continue growing for at least the next year or so. Confirming North Carolina’s attractiveness are the thousands of people moving into our state each month.
But we can’t achieve our 21st century potential with a largely 19th century infrastructure. We have a poor track record for keeping up with demands, much less for maintaining the infrastructure we already have. Pay-as-you-go financing for public needs may sound attractive but it clearly isn’t working. We have failed to borrow for tomorrow….or even for today.
Just look at our record. In 2000 voters approved a $3.1 billion bond referendum for our university system and community colleges. The last General Obligation bond package we passed was the 2016 Connect NC $2 billion bond program that again largely directed the funds to universities and community colleges. The House passed a bill calling for a $3.1 billion transportation and school bond last November, but the Senate never approved the package. We have used a financing scheme for transportation, borrowing $700 million last October against future federal funding. But more is needed.
The American Society of Civil Engineers recently released their 2021 Report Card for each state’s public infrastructure. Among their findings for North Carolina were the need for $16.8 billion for drinking water over 20 years and $5.3 billion in wastewater needs. 14 percent of our roads were rated in poor condition, causing each motorist to spend an estimated $500 per year due to driving on roads needing repair. There’s a $660 million gap in estimated school capital expenditures, almost 10 percent of our bridges are structurally deficient, we have 1,307 high hazard dams and $459 million in deferred park maintenance. The list also includes needs for solid waste facilities (landfills), public use airports, our ports, and rail lines that saw 68.8 million passenger trips in 2018.
North Carolina can afford to provide for our infrastructure needs. At the beginning of this year our state coffers had more than $5 billion in unallocated funds; the amount grows each month. Three weeks ago, State Treasurer Dale Folwell released the 2021 Debt Affordability Study. It reported that North Carolina could safely borrow $3.22 billion in bonds this year (or $1.46 billion a year for the next five years) without endangering our state’s coveted Triple A credit rating. Using General Obligation bonds will ensure we pay the lowest interest rates and should not require tax increases.
The problem is a lack of leadership. For too long leaders have listened to the negative Nellies who only know one song: put more money into savings and cut more taxes. Further delays in infrastructure investments will only escalate the costs, increase risks to the public and make our state less competitive with other states. We have been blessed with past leaders willing to wisely build schools, roads and other public facilities. We need current leaders to do the same.
With interest rates at historic lows, we should pass the $3.2 billion bond package or perhaps even more. These projects will put more people to work, further improve our economy while also better providing for the needs of a growing state. There’s never been a better time to invest in North Carolina.
In my next column I will suggest where we should invest the bond proceeds.