Deep in the weeds of the House budget is a provision that would authorize the state to issue just shy of $300 million in new debt to pay for five large projects. Each of these projects (listed below) has merit, but this proposal raises two important questions:
1) Why do we have to issue debt to pay for these projects?
2) What will we have to give up down the road when the bill comes due?
North Carolina shouldn’t have to borrow the funds for these projects. Don’t forget, the tax cuts passed in 2013 already cost the state nearly a billion dollars this year, much more than would be needed to cover the costs of these projects.
The 2013 plan will also slash corporate taxes even further over the next two years. If the scheduled corporate tax cuts go into effect, it will cost the state an additional $100 million next year and another $300 million the year after that. If we hold off on additional corporate tax cuts, North Carolina could pay for these projects outright.
Ultimately, this means throwing money out the door in interest payments to keep cutting taxes for wealthy individuals and corporations. The Fiscal Research Division estimates that interest payments on the new bonds will start at $22.7 million next year and then rise past $28 million in the subsequent years.
The interest payments alone would be enough to cut the waiting list for pre-K in half, or put 1300 teacher’s assistants back into North Carolina classrooms, or avoid raising tuition at Community Colleges (as is slated to happen in the House’s budget).
Overall, the House spending plan is moderate compared to budgets we’ve seen over the last few years. But, even while it’s taking a step in the right direction, the House still cannot get around the enormous hole that we started digging in 2013. That’s why, when we need to invest in North Carolina’s future, the House is reaching for the credit card instead of writing a check.
Projects to be funded with bond revenues:
- Phase 1 of new Highway Patrol Training Academy ($30 million)
- DHHS Medical Examiner Lab ($13 million)
- NC State Engineering Building ($65 million)
- UNC Charlotte Sciences Building ($90 million)
Appalachian State Health Sciences Building ($71 million)