by Anna Manning
From John Locke Foundation’s Joe Coletti:
Everybody wants a piece of North Carolina’s statutory debt limit. For the third consecutive year, the Debt Affordability Study recommends increasing the debt limit to 4.5 percent of General Fund revenue, up from the current 4.0 percent.
A one-half percent hike in the debt limit would be a $120 million increase. Debt service for the year will be $700 million, or 3 percent of General Fund revenue. Last year, lawmakers pledged 4.0 percent to pay down existing debt and fund new capital projects without new borrowing. That money will go through the newly established State Capital and Infrastructure Fund, with another $250 million in the fund available for construction, repairs, and renovation of facilities at colleges, universities, or other state government facilities.
The Debt Affordability Study suggests redirecting some of the construction funds and the extra $120 million to protect the health insurance benefits of retired teachers and state employees in the future. House Speaker Tim Moore, Gov. Roy Cooper, county commissions, and the North Carolina School Board Association want to add a $2 billion bond for school construction, renovations, and repairs. Senators want to set the debt limit to 4.5 percent and use the increase for schools. State Budget Director Charlie Perusse suggested using the full 4.5 percent to provide up to $10 billion in new debt for schools, water and sewer systems, and other state facilities.
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