McCrory hits trouble with plan to pay for roads by borrowing

Gov. Pat McCrory
Gov. Pat McCrory cseward@newsobserver.com

Even as Gov. Pat McCrory touts growing public support for nearly $1.4 billion in highway bonds, his proposal has hit a roadblock in the N.C. Senate.

The highway bonds are part of the governor’s $2.85 billion “Connect NC” proposal, which also contains almost $1.5 billion for infrastructure projects, such as a new science building at UNC Charlotte and state park improvements.

But it’s the highway bonds that could stall in the Senate.

“There’s not an appetite in the Senate for a transportation bond issue,” Sen. Tom Apodaca, a Hendersonville Republican who chairs the Rules Committee, said Wednesday. “But the facilities (bond) issue I see picking up momentum.”

Apodaca and other Senate leaders say because their budget allocates transportation money for maintenance and construction – more than $300 million a year – they’re reluctant to borrow money in the form of bonds.

The bond proposals, like the budget, have a long way to go. The House and Senate have to reconcile differences in their respective budgets as well as their approach to capital needs like the UNCC building. The House included such projects in its budget. The Senate plans to fold them into a bond proposal.

McCrory has said his bonds would pay for 27 highway projects and put asphalt on 176 unpaved secondary roads. On Wednesday he cited support for his package from towns and counties in eastern North Carolina.

“Local leaders … realize that investing now will improve our state’s competitiveness and quality of life for future generations,” he said in a news release. “I applaud their motion to let the voters decide on these important investments.”

But in the Senate at least, his proposal appears to have hit a dead end.

“I don’t think there’s substantial support for the transportation bonds,” Senate President Phil Berger of Eden told WRAL-TV this month.

The Senate budget would stop the annual transfer of $216 million from the Highway Trust Fund into the general fund to pay for the Highway Patrol. It would add around $90 million in driver-related fees, which GOP senators say would be offset by new tax cuts.

Republican Sen. Bob Rucho of Matthews, who co-chairs the Senate Finance Committee, said that money could be put into road projects.

“If you have a pay-as-you-go (system), all the money goes into projects, not paying debt,” he said.

State budget director Lee Roberts said the administration is open to alternatives – as long as they find a way to fund the Highway Patrol and pay for the road projects in the governor’s plan.

“So far it’s not clear to us that we have a perfectly viable alternative,” he said. “These are all important projects.”

The timing of any bond referendum, whether for roads or infrastructure, also is an issue. McCrory wants it on the ballot this fall, before the Federal Reserve is expected to raise its record-low interest rates.

Apodaca said the Senate is leaning toward a vote in November 2016.

Roberts said every 1 percent hike in interest rates would mean an additional $30 million a year in interest payments on the governor’s entire bond proposal. In addition, waiting a year would delay needed projects. He said that’s why other states are moving forward with bond issues.

“Other states with which we compete are taking advantage of interest rates now,” he said.

Morrill: 704-358-5059

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