Debt study finds little room for state to borrow
Posted February 2, 2010 10:58 a.m. EST
Updated February 2, 2010 12:22 p.m. EST
RALEIGH, N.C. — A new report says North Carolina has essentially exhausted its ability to borrow money for state buildings and roads if it wants to protect its top credit rating.
The annual Debt Affordability Study, released Tuesday by State Treasurer Janet Cowell, says the state can borrow only an additional $9 million backed by tax revenues for each of the next five years and remain within self-imposed guidelines.
Officials base the recommendation on the assumption that annual debt service should be no more than 4 percent of state revenues.
"The use of federal stimulus funds was key in balancing the state’s budget, however, permanent solutions will need to be put into place as quickly as possible to secure long-term stability and replenish reserves in order to maintain the bond rating,” Cowell said in a statement.
The report also found there's no extra debt capacity for transportation projects until at least 2013.
Lawmakers review the commendations in deciding whether to authorize new borrowing.
Cowell also called on lawmakers to centralize debt authority to limit the ability of various agencies to "enter into alternative financial arrangements that may include debt and debt-like obligations."
A lawyer for the Treasurer's Office recently expressed concern over the public-private financing plan for a portion of Interstate 485 around Charlotte.