Invest now, reap later
Published August 11, 2015
Editorial by Greensboro News-Record, August 9, 2015.
Gov. Pat McCrory has stepped onto almost any available soapbox in recent weeks promoting his plan to let voters decide whether to incur bond debt to fix and upgrade North Carolina’s highways and public buildings.
The governor wants voters to decide whether to borrow $2.85 billion to pay for transportation improvements such as roads and bridges and for infrastructure projects that would fix, maintain and build facilities owned by the state and by public universities. He needs the General Assembly to approve his plan or something like it. And soon.
Make no mistake, North Carolina needs these improvements. The governor’s plan is good, for multiple reasons:
- North Carolina’s transportation infrastructure – highways, roads, bridges – sorely need repair and upgrading. Now.
- The state’s population is growing, and it must invest to keep pace with the increasing load on its transportation assets and public facilities.
- Investment in roads is more than a convenience. It also is an economic development tool, directly through the employment created in completing the work and by providing infrastructure needed to sustain commerce.
- Interest rates are at historic lows. By acting now, the General Assembly and North Carolina voters could borrow cheaply and reap the benefits of infrastructure spending sooner.
- The benefits would be spread across the state. The governor’s plan calls for highway projects in 57 counties and infrastructure projects in 101.
Unfortunately, only one chamber of the General Assembly has come close to buying McCrory’s needed bond pill. The House last week approved a measure that is similar to McCrory’s proposal, although different in some substantive ways.
McCrory began pitching his idea almost a year ago, and he said in April that he would formally ask the legislature to put a plan on the November ballot.
Called Connect NC, the governor’s plan would commit the state to borrowing $1.48 billion for infrastructure projects and $1.37 billion for highways. The governor asserts that his plan would deliver 50-year infrastructure improvements paid for over the 20-year life of the bonds.
As with many of the governor’s initiatives, Republican lawmakers played Lucy to his Charlie Brown. They didn’t scoff, exactly. Sniff and yawn are more apt.
McCrory got the warmest, or the least cool, reception in the state House. House Speaker Tim Moore said in May that highway and infrastructure referendums would fare better in 2016, because of higher voter turnout in a presidential election. McCrory countered that a delay would risk higher borrowing costs.
Then a bit of good news for the governor. The House on Thursday approved bond measures similar to McCrory’s — $2.46 billion for infrastructure such as universities and schools and $400 million for highways. The House measure would budget an additional $1.3 billion for transportation projects, without borrowing. The House measure would delay the bond referendum until next year’s special presidential primary election. That election hasn’t been scheduled but appears headed for March 15.
The Senate remains opposed Republicans in that chamber dislike debt financing. Senators have said that ending the annual transfer of gas tax receipts from highway construction to the state’s general fund should provide sufficient funding.
They’re wrong. If nothing else, the low cost of debt financing today justifies serious consideration of taking on bond debt to pay for needed improvements now. North Carolina’s top-drawer credit rating would reduce the cost of financing still further, another benefit.
Spending to improve highways and infrastructure is a public good, a fact that McCrory and a majority of state representatives grasp. The more ideologically driven Senate should embrace these needed investments. Now.
August 11, 2015 at 9:40 am
bruce stanley says:
Because NC has a good credit rating is not a good reason to take on a massive amount of new debt. That's the kind of thinking that results in a poor credit rating. It's much better to fund through operations without borrowing. That's how good stewarts of the credit rating do it.
