This article is the third installment in a series of recommendations currently being released on a weekly basis. Future weeks will detail how much the state can save by tapping a "welfare for politicians" fund, freezing corporate welfare handouts for a year and temporarily abstaining from buying land.
Savings of $129 million now, delay $1.2 billion in future construction obligations and millions more in debt service payment.
As documented previously, North Carolina’s state government is projecting a budget shortfall as high as $1.6 billion for the current year. In such tight economic times, it would be prudent to delay the majority of planned capital projects included in this year’s budget. Moreover, state leaders should freeze the issuing of any more debt until the budget gap is closed.
As part of the Office of State Budget and Management’s Budget Management Plan, $114 million in funds that were slated to finance new capital projects will be held back, essentially freezing said projects. Capital projects receiving federal matching funds will proceed as scheduled.
The Civitas Institute agrees with this aspect of the Budget Management Plan. Also included in this freeze should be the planned $15 million appropriation for a new park in Fayetteville, bringing total savings from this recommendation to $129 million.
A budget crisis is an inappropriate time to embark on new construction and renovations of taxpayer-financed buildings, parks and horse barns. Moreover, the majority of appropriations in the capital budget are “planning funds” for new building construction; primarily, buildings on UNC campuses. Such planning funds are merely the tip of the iceberg for the total project costs for said buildings. In short, the cost to this year’s budget for such projects may total $129 million, but more than $1.2 billion in future funds will be required to complete all of the new buildings. (A complete list of capital projects recommended to be put on hold is below, along with their current budgeted appropriations and future obligations required to complete them).
Freezing the first phase of these capital projects will also serve to alleviate the escalating cost required of next year’s budget to continue the projects. Budget makers will already be very hard pressed to balance next year’s budget without this added burden.
Furthermore, the state should not issue any new debt this fiscal year. In spite of the inevitable economic slowdown being well known, budget makers nevertheless authorized an unprecedented $857 million in new, non-voter approved debt in the FY 2008-09 budget. Sources at the state treasurer’s office are uncertain how much, if any, new debt will be issued this year due to the turmoil in the bond market. The fiscally responsible move will be to not issue any new debt this year in order to avoid piling on to an already escalating debt service obligation.
|Project||FY 2008-09 Budget Appropriation||Future Obligations Required to Complete Project|
|State Capital Visitors Center/Plaza Underground Parking Facility Planning||$2,600,000||$37,822,719|
|NC Freedom Movement||$450,000||$2,450,000|
|Siler City Armory Rehabilitation||$929,600||$0|
|Camp Butner Land Buffers – Phase 2||$126,200||$586,203|
|IT Buildings for State Bureau of Investigation||$1,792,006||$0|
|Wanchese Seafood Industrial Park||$605,700||$0|
|Veterinary Lab System Study||$620,000||$0|
|Motor fuels/Metrology Laboratory Study||$300,000||$0|
|Hunt Horse Complex Horse Barn||$900,000||$0|
|NC Zoo – Africa Pavilion Replacement Planning||$600,000||$24,000,000|
|Water Resources Development Projects*||$6,000,000||$0|
| Nursing Building Planning –
Appalachian State University
| Aviation Complex Site Development –
Elizabeth State University
| Teaching Education Building Planning –
Fayetteville State University
| Joint Primary Data Center Planning –
Millennium Campus at Gateway
University Research Park
| Discovery Center Site Development –
NC School of Science and Math
| Engineering Complex Planning –
NC State University
| Carmichael Hall and Lecture Hall
Replacement Planning –
| Biomedical Research Imaging Center –
UNC Chapel Hill
| Carolina North Phase 1 and School of
Law Replacement –
UNC – Chapel Hill
| Morehead Planetarium Comp. Renovation and Expansion –
UNC – Chapel Hill
| Science Building Planning –
| Information Commons Building Planning –
| Allied Health and Human Science Building Planning –
| Education and Professions Building Planning –
Western Carolina University
| Science and Office Building Planning –
Winston-Salem State University
|UNC Upper Coastal Plain Higher Education and Health Center Planning||$1,000,000||$14,000,000|
|* Estimated amount. Total amount budgeted for FY 2008-09 is $20 million, however roughly $14 million most likely will be dedicated to projects receiving federal matching funds and thus exempt from the holdback.|