Legislators would no longer have latitude to take on billions in new debt without voter approval under a measure enacted Tuesday by the state House.

House Bill 491, Repeal State Capital Facilities Finance Act, would revoke a law passed in 2004 that authorized lawmakers to incur “special indebtedness” through state-issued certificates of participation, or COPs, a method of borrowing that doesn’t require legislators to obtain voter approval.

Interest rates for COPs are higher compared to other forms of debt, such as general obligation bonds, because lawmakers technically don’t pledge the full faith and credit of the state government. As with any form of debt, COPs must be repaid.

The bill passed the House 65-52 and now heads to the Senate.

Republicans have railed against the debt approach for years as a violation of the state constitution, but their effort to overturn it won Democrats’ scorn during floor debate yesterday. The minority party claimed a COPs ban would hamstring the state’s ability to bankroll badly needed real estate and construction projects.

“We need to keep this flexibility,” said Rep. Deborah Ross, D-Wake. “North Carolina does not have excessive debt. We’re one of the best and most responsible states for how we handle our debt, and taking this tool out of the toolbox will only create problems in the future.”

Ross also claimed that situations arise where a project might not be “sexy” enough to gain voter approval through general obligation bonds. She gave two examples: building new prisons and repairs and renovations to existing structures.

In response, Republican sponsors steered the debate back to the question of unsustainable spending. Between 2004 and 2009, the state has taken on $3.3 billion in debt from COPs, and the state’s total debt service payments alone will total $685 million next year, said Rep. Rayne Brown, R-Davidson.

“We the people of this state have the right to be consulted before we’re obligated,” Brown said. “We need to honor the intent of our constitution, and the repeal of the Capital Facilities Act will accomplish just exactly that.”

Rep. George Cleveland, R-Onslow, agreed. “I think it’s time we come back to what our constitution says: the folks that pay the bill authorize the financing,” he said.

Another sticking point for Democrats hinged on a slippery slope argument. The measure doesn’t ban local governments from using COPs, but Rep. Bill Owens, D-Pasquotank, warned that a local ban would be the next step.

“If you do make this mistake today, there will be another bill out that won’t allow locals to do COPs, and that will cause major, major problems with local units of government,” Owens said.

David N. Bass is an associate editor of Carolina Journal.