North Carolina has a surplus of debt

The following editorial appeared Tuesday in The Winston-Salem Journal:

WINSTON-SALEM -- The N.C. Senate wants to borrow another $451 million. House leaders should say no.

Under the proposal, the state would sell bonds for two major projects - new engineering facilities at N.C. State University and N.C. A&T State University. The rest of the bond-sale proceeds would go toward repairs for state buildings and equipment for both the UNC system and the community colleges.

We are not saying that these projects are unnecessary. The engineering-school facilities are needed and will be essential to the state's economy, and the state does not adequately maintain its own facilities, so repair money is always needed.

And when it comes to training equipment for students, the community colleges and the universities always lag behind the fast pace of technological innovation.

Nonetheless, in this economy, the state cannot buy everything it needs. It must set priorities, and it must be willing to wait until the economy improves before it spends on even some very high priorities. It's a matter of the money not being there.

The Senate leadership would say that we are missing the point. We can borrow now at low-interest rates and build while costs are competitive.

But we are not missing the point. While it would certainly be nice to have the luxury to borrow at today's interest rates and to build more at today's construction rates, the essential question is whether North Carolina can afford the annual payments.

It was only 20 years ago that North Carolina's entire public debt was less than a billion dollars. Now the state's annual debt service - in short, its minimum annual credit-card payment - is fast approaching that mark. About 4 percent of the state's total general-fund budget - about $20 billion - goes toward debt service. That, according to the last three state treasurers, is the upper limit for a well-run state government.

Legislative Republicans rightly oppose the bond sale, arguing that the state will struggle to find the almost $20 million for annual debt service the bonds will require.

When one looks ahead to the 2011-13 biennium and the likely loss of federal stimulus aid, it is hard to see how the state will balance its budget. This is not the time to be adding to that shortfall.

For 10 years now, state legislators have skirted the constitutional requirement of a public referendum on borrowing. This is exactly the kind of borrowing that, in the spirit of the constitution, should be approved first by voters. The lack of such a referendum is just one more reason to oppose this bond bill.