When is borrowing $2 billion smart? Now
Published February 18, 2016
Editorial by Charlotte Observer, February 17, 2016.
It’s rare – OK, it’s never – that Republican leaders like Pat McCrory, Phil Berger and Tim Moore agree on big policy questions with Democratic leaders like Dan Blue, Janet Cowell and June Atkinson.
But it’s happening now, through the miracle of math and everybody wanting something for what feels like nothing.
Voters in North Carolina’s primary will decide whether the state should borrow $2 billion. They should jump at the chance.
About half the money would go to UNC system campuses for new buildings and renovations. The state’s 58 community colleges would receive $350 million for projects and renovations. The remaining $670 million would be spent on water and sewer projects, agricultural research initiatives, state parks, the National Guard and public safety.
UNC Charlotte would receive $90 million for a new science building. Central Piedmont Community College would benefit from nearly $10 million. Other community colleges in the region would get a total of $30 million, and the state would spend $5 million improving state parks in the Charlotte region.
This bond package makes sense for many reasons, but two stand out:
? The state must make these kinds of investments periodically to stay competitive educationally and economically.
? Because the state has and will continue to pay off debt, it can borrow this money and still see its total debt drop from where it is today.
Take the UNC Charlotte science building as an example of a wise investment. The school’s current labs are overcrowded and outdated; the current science building was built in 1985. Since then, enrollment has ballooned and the number of science majors has exploded. About 15,000 students there take at least once science lab each year.
Now, the math: The state’s tax-supported debt has dropped from $6.5 billion in 2012 to $5.5 billion at the start of this fiscal year. Even with these bonds, the state’s debt will hover around $5 billion for several years, about 10 percent less than it is today. Total debt service payments will rise, but will stay below the recommended limit of 4 percent of state revenue.
In fact, the state could have afforded a bigger bond, and probably should have put one on the ballot. Interest rates are near historic lows, so it is a propitious time to get into the bond market. Fifteen years have passed since N.C. voters approved bonds; now with 2 million more residents, it’s time to do so again.
The individuals and organizations supporting the bond range from some of the most liberal to the most conservative, united in their belief that these are smart investments that the state can afford without raising taxes.
Despite that, the bonds aren’t a lock to pass. Given the state of the presidential race, more conservatives than liberals are likely to turn out for the primary, and they may be more inclined to oppose bonds.
Voters shouldn’t let this investment be killed by low voter turnout. Get out and support affordable, targeted investments in the state’s future.
February 18, 2016 at 10:02 am
Norm Kelly says:
Isn't $2BILLION equivalent to about 10% of the total annual state budget? How does one pay off a loan of 10% of the total without raising taxes, without paying a penalty? Answer, though it seems to be missed by pols, YOU CAN'T!
It's been noted in other information, probably NOT from a pro-bond group(s), that NONE of the money in this bond are actually designated for ANY purpose.
It may be nice to say that a new science and technology building will be built by some college/university. But do we really know that this WILL happen? Or do we know that this is necessary OUTSIDE of the normal budget process? Who will oversee how this money is spent to insure it is WISELY spent? As opposed to MOST money wasted by governments (at all levels)!
It may be nice to say that water & sewer projects are part of the bond. But do we really know any of this will happen? What projects, exactly, are in the plan? Does ANYONE know what the money will pay for? Does anyone know that these water&sewer projects are necessary for the state to be involved in as opposed to the local community taking care of this? I already pay taxes & water-sewer fees in my town&county to cover the cost of services, and expansion-maintenance. Is it really necessary for me to also pay for expansion-maintenance of water-sewer systems in some location that I have no access to?! Why should I pay double? Why aren't the citizens of the community where the work is 'necessary' paying for the work in THEIR community just like I pay for this in MY community?
Or is this the state level equivalent to the current White House occupier's scheme of 'shovel ready jobs' that never materialized. You remember, when a host of lib/socialist/central planner types were recorded laughing that those jobs weren't as shovel ready as anyone thought!?
Should citizens be voting to borrow money for projects that are not yet known? Should citizens be voting to borrow money that may NOT be necessary? Should citizens be voting to borrow money on projects that CAN NOT be specifically defined? Should citizens be voting to borrow money for projects that WILL cause taxes to go up because there is no way to borrow 10% of the budget without paying for it SOMEHOW?
The bond issue was originally sold as necessary for roads & bridges. We've been told for more than a decade that roads & bridges requiring repairs/maintenance is such a huge burden on the state over the next 40-50 years that it could well bankrupt us if we don't start doing something about it NOW. Yet, the roads&bridges bond that was sold to citizens IS NOT happening. Instead money is to be spent on an already bloated higher education system. Does this make sense?
NO!
If not now, then NEVER! I will be voting against this bond. I am asking everyone I know to vote against this boon-doggle. This is a monstrous waste of limited tax-payer resources. We will ALL be fleeced to pull off this (junk) bond!
