RALEIGH – The recession mandated by Governor Roy Cooper on account of Pandemic Panic made huge dent on the bottom line of the State of North Carolina. With economic activity brought to a near halt at the snap of Cooper’s fingers, and tax deadlines extended, tax revenues expected to fill government coffers slowed to a trickle.
But tightening belts and leaning on savings to get through tough times just isn’t in the makeup of legislative bodies that control other people’s money. That means actual spending reductions or program eliminations are total non-starters, even with Republican majorities. The spending must go on, so the only question for the state legislature is from where to get the money?
Well, they’ll get it from YOU eventually, but in the meantime, they’ll borrow it from investors by giving those investors an IOU backed by the full faith and credit of North Carolina taxpayers. As long as 50 percent +1 agree, of course.
“The House gave preliminary approval Thursday to putting a $3.1 billion bond referendum before voters this November.
A final vote is set for Monday night after the initial 113-4 vote in favor.
About $1.15 billion would go to the state Department of Transportation for operational expenses like maintenance, as well as projects that are already approved in the Strategic Transportation and Infrastructure Plan.
The remaining $1.95 billion would be divided among universities ($600 million), community colleges ($300 million) and local K-12 school districts ($1.05 billion) for construction and repair needs. The formula for local districts would be based on enrollment but would be weighted to favor smaller or more rural counties with less robust tax bases on which to draw. Every district would be guaranteed $5 million.
At a House Finance committee meeting Thursday morning, House Speaker Tim Moore, the sponsor of House Bill 1225, said he was told by State Treasurer Dale Folwell that the state could afford to borrow up to $3.16 billion in general obligation debt. The total proposal comes in just under that. […]”
That’s another $1+ billion in borrowed money for the same NCDOT that overspent it’s budget by nearly $2 billion and actively concealed the movement and improper borrowing of funds from the Highway Trust Fund to plug the holes. It still wasn’t enough, so they were forced to admit the shenanigans to the General Assembly while begging for a rescue.
The DOT bond money goes into operational maintenance and projects already in the pipeline presumably because they have so mismanaged their finances that they cannot easily fund these real time needs on their own.
The rest is going to education, a common denominator among all big debt proposals, because, when it’s for the kids it’s hard to vote against. That’s nothing new; remember the Connect NC bonds? Have they spent all that money yet?
The real question concerning the $3 billion borrowed and spent with these bonds, to be paid by future tax-filers, is will it be spent in place of otherwise dried up revenue streams due to Pandemic Panic? Or, when it all shakes out, will this be billions in additional spending, merely paying interest to do it with out all the haggling?
Yes, interest rates are very low. Yes, it is cheaper to borrow money when interest rates are low, rather than when they are high. No, you don’t have to take on debt just because it’s extended to you, but it is easier to swipe the credit card when you get the feeling you’re not paying for it, which is exactly how bond referenda are viewed by large swaths of voters.
Speaking of credit cards, if someone had your credit card and called you up to ask what the limit was, wouldn’t you be nervous? That’s what lawmakers did; they asked the Treasurer what the limit on the People’s credit card was, and now their seeking your permission to max it out.