A new study released by the state treasurer’s office has reignited the debate over how North Carolina manages its expenses.
The Debt Affordability Study released Tuesday found that North Carolina can afford to borrow $11 billion over the next 10 years through government bonds, which are taxpayer-supported loans usually borrowed from the federal government.
The study has launched a new argument over the state’s $24 billion spending proposal for the 2020 fiscal year, which has been in limbo for seven months.
Gov. Roy Cooper said the study supports his budget proposal to use $3.9 billion in bonds for school construction as well as water and sewer-system upgrades. Republicans who authored the state’s final spending bill disagree.
"A bipartisan supermajority passed a budget to spend $4.4 billion in cash to build new schools over the next 10 years," Sen. Harry Brown said in a statement. "A debt-financed bond would waste $1 billion in unnecessary interest payments, starving other parts of the budget that could use that money."
Cooper vetoed the budget proposal a few days ahead of the start of the fiscal year, which started July 1. The governor opposed the bill because it also excluded a $2 billion Medicaid expansion under the Affordable Care Act, and budgeted lower teacher raises and higher corporate tax cuts than the governor wanted, among other things.
In his spending proposal, Cooper wanted to use $2 billion for public school renovations. About $500 million each was allocated for improvements at the state’s community colleges and University of North Carolina System buildings, and $800 million was set aside for local water and sewer projects. The proposal also secured $100 million for cultural institutions at the North Carolina History Museum and the North Carolina Zoo.
After his veto, Cooper proffered a compromised proposal that reduced the bond to $3.5 billion. Republican lawmakers did not respond.
"A bond is the fiscally responsible option for making these investments, offering stability for school districts, colleges and universities and local governments planning their budgets," Cooper said in a statement. "It also allows the people of North Carolina the chance to voice their opinion on making these public investments."
In 2016, North Carolina voters approved a $2 billion bond referendum for college campuses, public parks and water and sewer projects.
Cooper signed a $3 billion infrastructure bond into law in 2018 to cover transportation projects.
North Carolina is one of few states with an AAA credit rating from all three national rating agencies, but Brown said the state should not take on more debt.
"Why in the world would we max out the credit card when we can just use cash to build new schools instead?" he asked. "It doesn't make a lick of sense."