Pay-as-you go plan for school construction gets nod from Senate committee

State Sen. Harry Brown enthusiastically endorsed a pay-as-you go plan for school construction, telling senate colleagues this week that the proposal could vastly improve the state’s bottom line.

“I will argue that nine to 10 years from now when this ends, we will as a state be in, probably, the best financial shape the state’s ever been in,” said Brown, an Onslow County Republican.

The plan Brown touted is Senate Bill 5, a school construction bill titled “Building North Carolina’s Future.” It’s sponsored by Brown and Sens. Kathy Harrington (R-Gaston) and Joyce Krawiec (R-Forsyth).

The proposal is an alternative to a $1.9 billion bond referendum backed by Republican House Speaker Tim Moore.

Gov. Roy Cooper and other Democratic lawmakers also support a referendum.

Brown contends the pay-as-you go option would save the state $1.2 billion in interest payments over 30 years and put money in school district’s hands much sooner than a statewide bond referendum.

“We think our plan is the right way to go because it dedicates more money faster and for less cost,” Brown said during the chamber’s appropriation committee meeting on Wednesday.

SB 5 would raise about $6 billion for K-12, community colleges and the university system, with each receiving $2 billion for construction and renovation projects.

More than $8 billion in construction and renovation needs have been identified for North Carolina’s K-12 schools alone.

To pay for SB 5, the state would use money from the State Capital and Infrastructure Fund. The Fund currently receives 4 percent of state revenue to pay down debt and for capital projects for state government and the UNC System.

Under the plan, the amount of state revenue would be bumped up to 4.5 percent.

The bill was unanimously approved by the committee and will go to the Senate rules committee next week.

Democratic committee members peppered Brown with questions before eventually voting to send the bill forward.

Senate Democratic Whip Jay Chauduri, (D-Wake), wanted to know how lawmakers would ensure future General Assemblies honor the legislation, particularly in an economic downturn.

“Compared to a board issuance that would guarantee dollars to be allocated over the next 10 years, what guarantees can be made for these dollars going forward, especially given the fact that we have a projected $1.2 billion structural deficit projected by our fiscal research staff?” Chauduri asked.

Brown said there would be a lot of public pressure on lawmakers to continue funding the construction because the “need is there.”

“If you pass the bond, you’ll have the debt service that you’ll have to pay and if a recession comes you’re going to rely on the rainy day fund to address the shortfalls as well,” Brown said. “I really don’t see much of a difference in trying to figure out if you’re going to fund it or not.’

Sen. Gladys Robinson, (D-Guilford), wanted to know how many schools would be served in the initial allocation.

“We have great need across the state and we are delayed in term of building and repairing, especially with safety issues,” Robinson said.

Brown didn’t have the answer but said money would be awarded to the neediest schools first.

Senate Democratic Leader Dan Blue (D-Wake) took issue with Brown’s claim that SB 5 would help get money to school district’s sooner.

“If you pass a bond issue, regardless of the size of that bond, once you issue it, all of the money is immediately available,” Blue said, noting that SB 5 calls for money to be allocated over 10 years.

Brown explained that schools would get the money quicker because a bond would take two years to get on the ballot and passed. He said it would take even longer to distribute the money.

Under SB 5, Brown said money would become available this year.

Sen. Don Davis, (D- Greene) asked if it’s possible to do both, SB 5 and a bond referendum.

“What harm would be done to pursue “Building North Carolina’s Future” as well as some type of bond proposal whether it’s the one that exists or not?,” Davis asked.

Brown replied that it would be unfair to ask voters to support a new bond two years after they approved a $2 billion referendum.

“We’re just coming off the passage of a bond, and now to turnaround and pass another bond two years later and put basically $4 billion in debt on the state in a two or three year period puts the state in a tough position as far as debt service goes,” Brown said.

Sen. Bill Rabon, (R-New Hanover), said lawmakers can’t assume that a bond referendum would pass.

Rabon said SB 5 is the surest way to address the needs that lawmakers all agree exist.

“If the economy happens to downturn between now and the time to vote, we may be shooting ourselves in the foot,” Rabon said. “We have a sure thing here that I think has a lot of merit.”

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