There was interesting news out of NCGA yesterday, a new debt package is being supported by the GOP leadership in the House. Under normal circumstances, I would be calling attention to expanding state debt loads, but in this economic environment, we need to slow down. I am sure my friends will pile on that the time is perfect with the extraordinary low-interest rates, and how appropriate it is for governments to finance capital projects over their anticipated lifetime; however, these arguments miss important points.
Since 2016, just the past 4 years, the State of NC has issued $5.0B in debt on the Connect NC and Build NC Bond packages. These two packages were presented to the citizens of NC as a roll-up solution to two outstanding construction and growth needs in NC, Education Capital needs, and NC Highway Construction. Highway Construction bonds are paid for with Highway Trust Fund money. The Highway Trust Fund is financed with Gas Taxes and an allocation from the NCGA.
I wonder if gas tax receipts have increased or declined with COVID? We know the answer. The Raleigh N&O reported, “The problems highlighted by the audit made NCDOT more vulnerable to the sharp drop in tax revenue caused by the coronavirus outbreak. The department expects to receive $300 million less in revenue from fees and sales taxes on fuel and cars in March, April, and May alone.”
Now the NCGA wants to drop another $3.1B in debt on us. Half of which is for highway construction. All while a very public financing gap exists inside NCDOT and the NC Auditor’s study shows mismanagement. Yes, we need to deal with roads and highways, but is the timing right? Add all this up $8,100,000,000 in debt.
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