- ‘I know it's probably more interesting to talk about what caused this fire than it is discussing how we're going to put this fire out, but anyone in the firefighting profession will tell you, you put the fire out first," said Briner.
North Carolina State Treasurer Brad Briner gave an overview at Tuesday’s Council of State meeting of some of the challenges his department is facing this year.
For context, he started with the state’s financial history so members would have a good idea of their areas of responsibility, and how to advocate for their priorities with the General Assembly and explain his department’s challenges.
Briner said that being fiscally conservative, including being named one of 14 AAA-rated states, has served the state well financially for many years. The state had almost no debt, but that would change in 2000 with the passage of the $3.1 billion North Carolina Higher Education Improvement Bond Referendum, the largest higher education bond issue in US history.
2000: $3.1 billion bond passes
Voters overwhelmingly voted in favor of the measure that would include paying for all or part of renovating laboratories, classrooms, academic buildings, and worker training facilities and providing other capital improvements at the 59 institutions of the North Carolina Community College System, renovating and replacing classrooms, laboratories, and academic buildings and provide other capital improvements at the 16 campuses of the constituent institutions, the affiliated institutions, and the Center for Public Television (UNC-TV) of the University of North Carolina System in order to meet large expected student enrollment increases, and continue to provide UNC-TV public television to the state’s viewers.
“We entered a very different chapter financially,” he said. “Debt servicing costs ballooned. We conceived the Debt Affordability Advisory Commission in 2004 as a result. It’s a committee whose sole task remains to advise the state on how much debt it can reasonably incur.”
During that same year, the state didn’t have a pension deficit or a required contribution into those funds. If there was a liability associated with the State Health Plan (SHP), Briner said nobody even knew it.
“Much progress has been made financially in the state in the last 15 years in paring back some of that state debt and building reserves, but the pension and the healthcare liabilities have only grown,” he said. I bring this up as the Debt Affordability Commission released its annual report yesterday.”
While the state’s level of traditional debt remains very modest, Briner said debts and liabilities from the pension plans and the State Health Plan are not.
“The state contributed $3.3 billion in the teachers’ retirement fund alone last year and over $4 billion into the State Health Plan,” he said. “Those twin challenges are what we face at the Department of State Treasurer, and I’ll look forward to your support and being sure we develop a long-term plan to ensure that they do not become the only funding priorities of our state.”
Western NC lending program update
He also gave an update on the recently enacted $100 million Cash Flow Lending Program as part of Hurricane Helene relief funding in SB 382, which became law in December. The General Assembly asked the treasurer’s office to administer it.
“Since taking office 34 days ago, the Department of State Treasurer has created a new division to run this program, coordinating with the North Carolina Association of County Commissioners and the League of Municipalities, gathering feedback directly from impacted local governments, communicating with legislators from western North Carolina, developing a lending agreement, devising an equitable allocation methodology, and ensuring accountability for taxpayer dollars because these are loans not grants,” Briner said. “The Department of State Treasurer has never been in the lending business, so we developed this from a standing start.”
According to a press release by Briner’s office on Tuesday, local governments must provide damage assessments to the NC Department of Emergency Management no later than Feb. 14, as detailed in an earlier memo, to be approved for a loan. Those assessments will be used to calculate loan amounts. Once the loan amount is determined, the governing board of impacted local governments will need to vote to approve the loans.
The first loans could be issued as soon as Feb. 24.
“When we hit this goal at the end of the month, we will have built this program faster than the legislation that created it was passed, and twice as fast as the last time North Carolina tried to do any kind of blending of this sort,” he said. “The Department of State Treasurer obviously cannot appropriate taxpayer dollars nor execute the important work of physically rebuilding the western part of our state, but we can fulfill our statutory responsibilities well. We’ll make sure pension payments are paid, we’ll provide health insurance, and we will safeguard the funds of the state in so many ways.”
state health plan deficit
The final topic Briner addressed was the status of the State Health Plan, which is projected to have a deficit of $507 million in 2026 and $1.4 billion in 2027. The problem, he said, is that the plan’s expenses have a materially higher growth rate than its revenues, and there aren’t any reserves to make up the difference.
‘I know it’s probably more interesting to talk about what caused this fire than it is discussing how we’re going to put this fire out, but anyone in the firefighting profession will tell you, you put the fire out first, then figure out what happened and make sure it never happens again,” Briner told council members. “Years spent focusing on pointing fingers at others for our problems instead of focusing on finding solutions have caused this fire to burn out of control. That ends now.”
He added that his department must get price transparency to solve the long-term healthcare challenges in the state and in the country, and they are committed to doing that, but they will do that in partnership with other payers and with the providers in the state.