Republican aversion to borrowing

By Scott Mooneyham | Mar 28, 2014

RALEIGH -- A couple of years ago, a friend who was working to raise money for a major cultural project in the state asked my opinion about the likelihood of winning a state grant from legislators.

My response was quick: "Have you looked in the back pages of the budget lately?"

The "back pages" referred to where, in a "money report" that accompanies the annual budget bill, state-funded construction projects are found.

Since Republicans have gained control of the state legislature, those pages have been pretty sparse.

That result is not entirely related to ideology.

Republicans took over the levers of power in Raleigh during tough financial times, and state construction and building repair have historically suffered during economic downturns.

Even so, Republican lawmakers may be more reluctant to embrace any substantial new building programs, even as building needs accumulate, because those programs have traditionally been financed by borrowing.

Government debt, meanwhile, has a pretty bad name among conservative voters, some of them unlikely to distinguish between operational debt like that at the federal level and the capital debt incurred by state and local government.

But Republican lawmakers have already taken steps to curb a bad practice of their Democratic predecessors, the borrowing of constructions dollars without seeking voter approval.

Any major state construction plans in the near future would likely take place only if a referendum were put before voters, something that hasn't happened since North Carolinians approved a $3 billion bond issue for university and community college construction in 2000.

Lt. Gov. Dan Forest recently raised the possibility of a bond referendum while speaking to a group of building contractors and architects.

Both Forest and Gov. Pat McCrory have commented on how struck they were, upon taking office, at the poor condition of some state buildings.

Their impressions were backed up by a report from the State Construction Office that found state agencies and universities facing more than $3.9 billion in building deficiencies because of deferred maintenance and repairs.

Forest and McCrory, though, are not standing for election this year. State legislators are.

Because of that, don't expect legislators to jump on the idea of a big construction/borrowing plan when they return to Raleigh in May.

At some point, though, state lawmakers won't be able to ignore building needs that are piling up.

A few years of financial prudence have already lowered existing levels of debt, meaning the state has more room to borrow money without creating much in the way of additional taxing pressure.

Interest rates also are low, something that might change in the near future. And borrowing money at low interest rates for long-term capital projects makes as much sense for state government as it does for individual borrowers who finance their homes.

Then there is that ultimate check on whether plans to borrow money to build are a good idea: With a referendum, voters get to decide.

Comments (4)
Posted by: Scott Lilly | Mar 29, 2014 12:18

3 Interesting statistics that would compliment this story:

 

1) Baseline of survey: Percentage of Republicans and Democrats in survey.

2) What percentage of Republicans and Democrats have credit cards.

3) What percentage of Republicans and Democrats carry balances on the credit cards more than 3 months out of the year.

 



Posted by: Charles Zimmerman | Mar 29, 2014 15:16

        "rayguns" set the principle whereby republicans spent without responsibly taxing, crippling the next democrat with undue burdens. We got lucky with Clinton. 'O is doing pretty fair considering.

 

              C.Z.



Posted by: Grass Roots WNC | Mar 29, 2014 19:58

There is an interesting but little known economic concept -  states that lower taxes actually increases the amount of TAX dollars collected.

1- less fraud and unpaid taxes 2 - Grows the economy on which taxes ARE increased and collected 3- Debt is expensive - which takes money out of the budget and competes with other things we could spend those interest payments on



Posted by: Scott Lilly | Mar 30, 2014 08:02

"We got lucky with Clinton." -- It's amazing that the more Republicans hold the congress, the luckier we are in regards to finances.  I remember Newt Gingrich shutting down the government to force the budget to be balanced during Clinton's years.



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