Tucked away in the 2010-11 state budget bill is the authorization of another $175 million in non-voter approved debt. The budget is on pace to be signed into law by Gov. Perdue by Thursday of this week.
The $175 million in authorized debt consists of $120 million dedicated to repair and renovations of state buildings along with $55 million to be spent on equipment for the UNC and Community College Systems. According the the budget’s accompanying money report, the debt service for this new debt will already cost $14.2 million in this year’s budget alone.
To put this in perspective, remember that North Carolina’s per capita state debt has climbed to nearly two and a half times its level in 2000. Moreover, according to the State Treasurer, North Carolina has “exhausted its General Fund debt capacity” until next year.
To add insult to injury, the debt is to be in the form of Certificates of Participation (COPs), a financing instrument that allows state lawmakers to avoid a public vote on the debt. COPs have been a favorite of the NC General Assembly -and its bond rating is threatened if the state insists on using more COPs to finance debt. North Carolinians have been denied a vote over state debt since 2000. Indeed, the State Treasurer also warned that the state’s bond rating may be jeopardized if state lawmakers continued to rely on COPs for additional state debt. Oh, and COPs carry a higher interest rate than voter-approved General Obligation bonds.
In spite of all this, North Carolina’s reckless politicians are going to cram this added debt down taxpayers’ throats anyway.