RALEIGH – Last week we drew your attention to a report issued by the Debt Affordability Advisory Committee, spearheaded by Republican State Treasurer Dale Folwell. The report, for the first time, included the State’s unfunded pension and State Health Plan liabilities in its assessment of the State’s fiscal health. What we missed was that members of Gov. Roy Cooper’s administration which sit on the committee made a motion to dramatically increase our State’s debt ceiling – by three times.
Luckily, the committee voted the motion down.
From the Laurinburg Exchange:
“The state panel that determines how much money North Carolina can prudently borrow over the next 10 years rejected an appeal Wednesday by Gov. Roy Cooper’s budget director to triple the state’s debt ceiling from $2.03 billion to more than $6 billion.
The 6-3 vote of the Debt Affordability Advisory Committee approved a study that for the first time calculated unfunded liabilities in the State Health Plan and state pension system into debt capacity. Voting no were state Budget Director Charles Perusse, Revenue Director Ronald Penny, and Auditor Beth Wood.[…]”
From a budget perspective, North Carolina has been quite healthy over the past several years. Spending, while not reigned in as much as it should be, was not overextended, reserve funds have been replenished, and revenue surpluses have been the norm.
So why does Cooper want to raise the debt ceiling? To spend more borrowed money on Big Government programs, of course.
“[Cooper’s Budget Director] Charles Perusse said the law doesn’t require the debt affordability study to include unfunded pension or health plan liabilities. He said under the previous formula, debt capacity for the next 10 years would be closer to $10 billion. He advocated a borrowing ceiling of $6 billion or higher.
It is important to acknowledge the unfunded liabilities in the debt study, Perusse said. But the report gives them too much weight, and chokes off the ability to reduce more than $30 billion in unmet needs.[…]”
What Folwell did was to move these liabilities on to the balance sheet to better reflect the actual financial obligations of the State. Perusse and Cooper, though, want to put theirs, and everyone else’s, head in the sand regarding the mounting fiscal stress of the unfunded liabilities, so they can justify racking up even more debt to pursue a big spending agenda.
There are certainly school and infrastructure needs piling up across the Old North State. Sen. Harry Brown (R-Onslow) has introduced relatively conservative legislation to help schools with construction projects, as opposed to the bond proposal touted by Speaker Tim Moore (R-Cleveland) and championed by Cooper.
Paying for those needs with money the State receives through regular tax revenues is too painful for the Big Spenders, though, who shun the reduction of spending in nearly any government program. Instead, they’d rather triple the debt ceiling, and pay for all of it with a credit card. And ignoring the unfunded liabilities was key to getting approved for the bigger credit card, if you will.
Although, as Folwell points out, the report merely issues recommendations that don’t have to be followed if lawmakers want to forge ahead with more debt.
“Folwell said he stands behind the debt affordability study, but the General Assembly and governor have no obligation to follow its recommendations. They can borrow higher amounts than recommended, but should be prepared to own any consequences.”
However, those lawmakers and governors that wish to sign taxpayers up for billions more in debt to fund programs that make them look good politically now, know that they’ll likely be long gone by the time the final bills come due. Such is the benefit of spending other people’s money. Let’s just be grateful that Cooper doesn’t hold the purse strings by himself.
Read more about the debt ceiling debate here.