A $21.4 billion budget approved by the N.C. House and Senate this week, and awaiting Gov. Mike Easley's signature, has some good features. It strengthens state education programs, pays for enrollment increases in the university and community college systems and grants teachers a much-needed pay raise.
And as the lead editorial today points out, the budget does a better job of providing for UNC Charlotte's needs at a time when it faces dramatic growth. Among other things, it would provide money to build the Energy Production Infrastructure Center at UNCC, one of a number of projects in the UNC system that will be financed through a type of borrowing called Certificates of Participation (COPs).
In all, the 2008-09 budget calls for $857 million in COPs financing. That's a lot of money – more than Gov. Easley proposed, and more than the House or Senate envisioned in their initial budgets. That's troubling because, unlike General Obligation bonds that voters must approve in a statewide referendum, COPs do not require a vote of the public.
For the past couple of years, State Treasurer Richard Moore has cautioned lawmakers about a rapid increase in the amount of debt incurred without the approval of the voters. Last summer, he pointed out that the last statewide bond issue approved by voters was in 2000. Since then, the state has relied exclusively on non-voted debt. With the $857 million in COPs approved in the state budget, non-General Obligation debt will represent 44 percent of the state's indebtedness by 2012.
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That's why legislators should rethink their excessive appetite for non-voted debt. Sending more bond issues to voters for their consideration would require lawmakers and the public to think about the state's priorities and whether there is public support for going further into debt. In addition, it would help institutions such as universities build broad public support for needed facilities. And it would help policymakers sort through competing needs and make better judgments about how much to borrow – and how to spend it.