RALEIGH – Depending on economic factors and the results of the 2006 elections, 2007 could be turn out to be the Year of the Charge Card in North Carolina government.
While politicians, activists, and journalists may be focused on hot-button, symbolic issues this fall, there is a substantial bloc of the state political class that will be dreaming of debt – mountains of debt, in the billions of dollars, that they believe North Carolina taxpayers should incur to finance infrastructure critical to the continued success of a growing state. They want healthy revenue flows and most incumbents re-elected so they can get on with this important work free from distraction or obstruction.
They are misguided. Danger, danger, Will Robinson! Going along with this agenda will perpetuate practices, such as poor priority-setting and short-term thinking, that have repeatedly gotten North Carolina state and local governments into fiscal trouble.
The objects of the debt-peddlers’ wistfulness aren’t all frivolous. Indeed, few would doubt that rapid growth and poor maintenance have conspired to create legitimate needs for new schools, roads, and psychiatric hospitals, for example. But the list of proposed bonds includes arts facilities, open-space preservation, affordable housing, and another round of ornate buildings throughout the University of North Carolina system. These are either questionable as proper state functions or, in UNC’s case, more appropriate for private or user financing.
Given that responsible public officials of both parties have recognized an upper limit to North Carolina’s borrowing capacity – and we’re not far from that now, particularly given the Council of State’s approval of another $200 million in certificates of participation this week – it is imperative to put public dollars and debt to their highest-priority use. I think the General Assembly should use any spare General Fund dollars next year to eliminate 1) the counties’ share of Medicaid funding, freeing up hundreds of millions of property-tax dollars to finance school-construction bonds, and 2) the transfer of hundreds of millions of additional dollars from the Highway Fund and Highway Trust Fund to general state operations, freeing up those dollars to speed up needed highway improvements, perhaps via a statewide bond.
Of course, advocates of the other projects will cry foul. Aren’t museums, parks, and affordable-housing projects valuable? Of course. But for one thing, saying that something is valuable is not to make a coherent argument for coercive taxpayer funding. North Carolina governments are in the public-education business for longstanding constitutional and republican reasons. They are in the highway business for longstanding practical reasons. Assuming that every conceivable project cannot be funded at levels of taxation that North Carolinians would find tolerable, policymakers must make choices. Surely schools and roads would top the priority list for most North Carolinians, with prisons and psychiatric hospitals not far behind.
Lawmakers have demonstrated a disturbing tendency in recent years to use debt as a way to placate spending lobbies without having to levy sufficient taxes in the short-run to deliver on their promises. Out of sight, out of mind. It is imperative that advocates of fiscal responsibility bring these hidden obligations back squarely into public view.
Hood is president of the John Locke Foundation.