Today’s N&O has a short piece expressing relief about North Carolina’s continued AAA bond rating for its debt. As I point out in this article at www.nccivitas.org , however, there are some serious warning signs that this top credit credit rating may be in serious jeopardy in the near future.
Here’s a sliver:
According to the 2011 Debt Affordability Study produced by the North Carolina Department of State Treasurer, North Carolina appears to be on a collision course with a debt downgrade of its own.
The culprit? A decade-long commitment by state lawmakers to intentionally deny North Carolina taxpayers any voice over the issuance of new state debt.
Furthermore, the Debt Affordability studies suggest that the exclusive use of “special indebtedness” over the last decade could very well lead to a debt downgrade for North Carolina. They conclude that “including all authorized but unissued debt, the percentage of non-GO debt is projected to increase well beyond the medians for ‘triple A’ states and exceed the median for ‘double A’ states as well.”
In other words, because of the exclusive reliance on special indebtedness over the last decade, North Carolina could be facing a debt downgrade in the near future.
I’ve written before about North Carolina legislators’ reckless use of non-voter approved debt. Now it appears it may lead to a costly downgrade.