McCrory touts column on bond rating by campaign donor

Posted February 20

Gov. Pat McCrory

— North Carolina had just gotten all As – AAA ratings to be precise – on its financial report card earlier this month, and Gov. Pat McCrory was ready to take credit.

An opinion piece in Forbes seemingly beat him to the punch.

"Last week, North Carolina Governor Pat McCrory delivered the banner news that his state upheld its AAA bond rating – the highest rating possible – from all three major bond-rating agencies," Rex Sinquefield enthused about the Republican governor. "North Carolina’s stellar standing owes much to Governor McCrory’s leadership."

Forbes identified Sinquefield as a "contributor" to the website. He is also a contributor to McCrory's re-election campaign. And while maintaining a AAA bond rating for the state is certainly a good thing, it's nothing new to North Carolina.

Fitch, Standard & Poor's and Moody's are the nation's three major bond-rating agencies. Their assessment of whether a government is a good credit risk can save or cost states millions of dollars. Having a AAA rating from all three is a big deal for the state because it means that, if voters decide to borrow $2 billion during the March 15 bond referendum, the interest rates associated with those bonds will be lower than for most other states in the nation.

Fitch has rated the state a AAA risk since 1993, the year the agency first assigned a rating. Standard & Poor's has maintained the state's AAA rating for more than five decades.

Moody's is an exception. They downgraded the state's debt to Aa1, the rating just below AAA, in 2002 and did not raise it back until 2007. Both the downgrade and upgrade came during the administration of Democratic Gov. Mike Easley.

"North Carolina has suffered a series of adverse economic and fiscal events in the form of costly legal judgments related to tax policy, costs for the emergency response and rebuilding in the wake of hurricanes and floods, and revenue loss resulting from the national economic recession and the bursting of the stock market bubble," read the 2002 Moody's report.

In 2007, the rating agency called North Carolina's economic outlook "stable. Moody's believes that strong executive management, the stable economy, and the strong revenue growth in recent years will enable the state to steadily improve its fund balances and continue to replenish its reserve."

Since then, all three agencies have continued to rate the state as AAA.

Taking credit

Flaunting the state's higher-than-typical credit ratings is nothing new for elected officials here. State Treasurer Janet Cowell issued her own release this year, and former Gov. Bev Perdue, also a Democrat, regularly touted it as evidence of "strong and effective budget management."

So, it is not out of character that McCrory's campaign commended the Sinquefield piece to reporters and supporters.

This "op-ed in Forbes today looks at Governor McCrory's recent announcement that North Carolina has upheld its AAA bond rating and the progress being made under Governor McCrory's leadership to lower taxes, create jobs and make North Carolina more fiscally responsible," McCrory campaign spokesman Ricky Diaz emailed just after 2 p.m. Tuesday.

About an hour later, McCrory's office followed suit, pointing out to reporters that "Governor Pat McCrory and North Carolina's latest AAA bond rating were recently featured in Forbes magazine."

Asked if the governor could really take credit for something that's been a regular feature of fiscal life for decades, both Diaz and a spokesman for the Governor's Office said yes.

"The governor absolutely deserves credit for good stewardship of taxpayer money," said Josh Ellis, communications director for the Governor's Office. "Under Gov. McCrory’s leadership, the state has modernized the tax code, fixed our broken unemployment insurance system and championed a job creation strategy that’s putting more people back to work."

Ellis called the Sinquefield piece "just an other example" of his office "highlighting the national recognition North Carolina is receiving for strong fiscal management and job growth."

However, Sinquefield is not just a magazine columnist.

He built a fortune by pioneering stock index funds, and now Politico describes him as, "among a small and little-known but powerful group of big-money donors who have shied away from national politics to advance pet policy issues in their home states." In his case, Sinquefield has been a major player in Missouri politics.

In North Carolina, he and his wife have contributed a combined $10,200 to McCrory for the 2016 primary, the maximum allowed by law.

His columns that have run on Forbes' website often praise Republican governors – in November he praised Florida "Governor Rick Scott’s pro-growth plans" – and lambaste Democratic leaders – as with a column critical of Virginia titled "Wake Up, Governor McAuliffe--People Want Growth."

Asked whether the McCrory re-election campaign solicited the column or otherwise urged Sinquefield to write it, Diaz said, "It's a ridiculous question. Of course we didn't."

Like McCrory's office, Diaz said on behalf of the campaign that McCrory's "record and fiscally responsible policies have contributed to the state maintaining its AAA bond rating, including tax cuts, job growth, paying off irresponsible debts and turning the budget shortfalls he inherited into surpluses."

"Only nine states have AAA ratings from all three major credit rating agencies," he added. "If you look at it another way, what would you have said if the governor lost North Carolina's AAA bond ratings?"

Diaz said, rightly, that "the campaign routinely shares news, viewpoints and coverage about the governor's accomplishments from a variety of sources with the public and media." In this particular case, he described Sinquefield as a "long-time columnist with Forbes who has written about free markets and tax reform policies in many different states."

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  • Stacie Hagwood Feb 22, 2016
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    It's Obama's fault.