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Bond Bite Is Too Big
By John Hood

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Apr. 27th, 2015

RALEIGH — Interest rates are low. There are very real needs for public capital spending across North Carolina, resulting from years of inadequate facility maintenance and an ever-increasing population. At the same time, Gov. Pat McCrory and legislative leaders have exhibited admirable restraint in crafting state operating budgets, thus creating fiscal space for servicing new debts without a tax increase. And they have committed themselves to submitting major new debts for approval by North Carolina voters, rather than skirting this constitutional requirement as previous governors and legislatures have done since 2000.

These are all valid, persuasive, and fiscally conservative reasons for placing a bond package on the statewide ballot as soon as this November. Unfortunately, there remains a valid, persuasive, and fiscally conservative reason for North Carolinians to reject the package the McCrory administration had proposed: it’s simply too large.

The details of the governor’s roughly $2.8 billion “Connect NC” plan emerged a couple of weeks ago. Half the debt would fund highway improvements, including $1.32 billion for 27 high-priority projects such as beltways and bypasses already permitted and ready to break ground plus $50 million to pave some 113 miles of rural secondary roads.

The other half of the debt would fund more than 100 new facilities or renovations across various agencies, functions, and regions of the state. The major chunks include $504 million for the University of North Carolina system, $200 million for community colleges, $200 million for the state ports as Wilmington and Morehead City, $100 million for rail lines and other non-highway transportation projects, $112 million for state parks and the North Carolina Zoo in Asheboro, $87 million for armories and infrastructure supporting military bases in the state, $76 million for state cultural and historic sites, $62 million for public-safety projects, and $51 million for health and human service facilities.

As I read down the list of infrastructure projects the Connect NC bonds would fund, I saw many undeniable needs and high priorities. There were $15 million worth of renovations and expansions of the state’s courthouses. There were essential repairs to aging state office buildings. There was $11 million to repair or replace roofs at historic sites and other Cultural Resources facilities across the state, a need to which any recent visitor to these locations can readily attest.

But I also saw many projects that raised red flags. Keep in mind that every dollar of debt the state incurs to build or renovate something represents more than a dollar in principal and interest over the term of the bond that can’t be used for state operating expenses — including core services such as public safety and education — or left in the hands of private households and businesses to spend on their own operating and capital needs.

Given that context, is it truly a high priority right now to borrow $7 million to upgrade the facilities at Cabarrus County’s Reed Gold Mine? To borrow $38 million to build three new medical-examiner offices in Buncombe, Pitt, and Forsyth counties? To borrow $54 million for two training facilities for Highway Patrol and other law enforcement officers? To borrow $115 million for a new science building at Western Carolina University? Or to go $300 million further into debt to expand rail services and upgrade the state ports?

I would submit that the answer to these questions is no. Some of these projects can wait. Some are inordinately expensive given any realistic projection of public use or benefit. My guess is that the governor and his team began with a smaller, more defensible list but then kept adding to it as agency heads and influential legislators weighed in. I’m not naďve. I know capital budgets and bond packages inevitably reflect local political considerations. But the process seems to have gotten away from them.

If the referendum were held today, I’d probably vote yes on the highway bonds and no on the infrastructure bonds. State lawmakers should boil the latter down to essentials before placing them on the ballot. Right now, they’re biting off more than North Carolina taxpayers can chew — and stomach.

John Hood is chairman of the John Locke Foundation. Follow him @JohnHoodNC.

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