Raleigh, N.C. — The proposed Connect NC bond would not rack up more debt than North Carolina could afford, according to an annual study issued Wednesday by the State Treasurer's Office.
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.
Bond opposition getting organized Political, academic leaders give bond push a kick-start "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.