The state Treasury Department has released its annual Debt Affordability study, and the report concludes that North Carolina once again can issue state debt without threatening its credit rating. From WRAL:
State Treasurer Janet Cowell says state lawmakers have plenty of room to borrow money through bonds – as much $4.5 billion over the next five years.
That number came out Monday in this year’s Debt Affordability Study, an annual advisory report issued by a commission including Cowell, State Budget Director Lee Roberts and other state financial leaders.In order to keep its AAA bond rating, the state can’t spend more than 4 percent of its overall revenue on debt service each year. Cowell says the state is currently well below that mark. While it’s been paying down its outstanding debt, the state has issued little new debt in the six years since the recession began.
The report examined the debt capacity for both the state’s general fund and the Highway Trust Fund and found “the state can afford to borrow about $700 million a year for each of the next five years. That comes out to about $3.5 billion in general fund debt capacity. It can borrow a total of about $1 billion against its Highway Trust Fund over that same period.” The ability to borrow against the Highway Trust Fund is especially relevant in light of recent discussions coming from Gov. McCrory’s office about issuing up to $1 billion in debt for transit projects.