RALEIGH, North Carolina — The amount North Carolina could borrow without losing its top credit rating continues to grow as revenues rebound and the legislature has kept to a no-new-debt diet since the Great Recession, according to an annual report released Monday by State Treasurer Janet Cowell.
The findings within the 2015 Debt Affordability Study is good news for Gov. Pat McCrory and legislative leaders who are considering new borrowing this year to complete road and building projects. McCrory has said he will propose a transportation bond of at least $1 billion, and there's talk of another package for government infrastructure.
After a borrowing surge by the General Assembly on state buildings just before the economic downturn, there was little or no capacity to issue more debt unless the state wanted to risk its triple-A credit rating. The principal on this and other active debt has slowly been paid down.
"We've obviously been very prudent with our debt and we can issue some reasonable amount here," Cowell said in an interview, but "it's not going to solve all of our problems," particularly with transportation, she added.
The panel that writes the report, led by Cowell, found officials could approve $698 million in new debt annually for the foreseeable future and still remain within self-imposed fiscal limits. This kind of debt is repaid with general tax revenues. A year ago, the annual additional capacity was $570 million.
For transportation debt backed by gasoline and car-sales taxes and other fees, there's additional capacity of $226 million annually compared to $209 million a year ago. If the legislature wanted to authorize all of its excess transportation debt in one year, the capacity would go above $1 billion, the report said.
The transportation capacity isn't growing as quickly because gasoline taxes haven't been as robust, Cowell said.
The state had $6.8 billion in outstanding debt supported by taxes of all kinds as of last June, the report said. Cowell's office said the state made $722 million in debt payments in the previous fiscal year.
The legislature would have to sign off any new debt. Senate leader Phil Berger, R-Rockingham, said in an interview last week he believes fellow Republicans don't want to borrow beyond what Cowell, a Democrat, believes is reasonable. Berger said they are waiting for details from McCrory.
"We don't want to get ourselves into a situation where we jeopardize the bond rating," he said, but added "I think there will be some support for some bonding level. I think it all depends on the amount, the specifics."
The study panel, whose members include State Budget Director Lee Roberts and State Auditor Beth Wood, said it preferred new debt be approved by voters in a statewide referendum. Legislators borrowed often during the past decade with a form of debt that didn't need voter approval.
The last statewide debt referendum occurred in 2000, when voters backed $3.1 billion of debt for universities and community colleges.