Debt study: State can afford Connect NC bonds

Posted January 27, 2016

— 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.

Flapping flag Bond opposition getting organized Connect NC bond logo 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.


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  • New Holland Mar 17, 2016
    user avatar

    Well, now that this Bond has passed in the recent election, i've heard more times than not, this this bond will not raise taxes. So this appears like free money from the skies.
    Somehow, someway people are going to have to pay for it, this is just a way to use smoke and mirrors to really tell where the money is going to come from to pay for this. The pie is still the same size, unless the state raises taxes(or FEES) so something would have to get cut to pay for it out of that same pie.

  • Bill Gibson Feb 1, 2016
    user avatar

    You only start crying when you look at the Connect NC Projects List and compare what "others" are getting and you are not. It is a redistribution of wealth. My institution is benefiting far less than the other institutions. My county is getting much less than some smaller counties. We're renovating an old faciltiy, but you're getting a brand new structure. *Yeah, it will pass.

  • Thomas White Jan 28, 2016
    user avatar

    Instead of needing bonds to fund projects why not budget projects in to start with? Of course there will be some projects that exceed what the State can pay for at one time, but many of the parks projects should be budgeted items and not bond items.

    Since taxes and fees go up every year saying that more bonds doesn't require an increase in taxes in not really the truth.