The State Treasurer’s office released today its latest debt affordability study, which showed that not only did North Carolina maintain its AAA credit rating, it reminded us once again of the stark contrast between the fiscally conservative approach of the last decade compared to the irresponsible spend and tax legislatures of the past.
As the report notes:
“After showing substantial growth in the early 2000s, the State’s outstanding net tax-supported debt peaked in FY 2013 at approximately $6.2 billion and has since declined to $4.1 billion by June 30, 2020.”
This nearly one-third reduction of state debt frees up the General Funds budget for other priorities, as annual debt service payments become less burdensome.
Issues still remain, however, as the state still maintains unfunded obligations of roughly $40 billion, comprised of promised healthcare benefits for state retirees along with their pension obligations. Without “meaningful action” to address these liabilities, according to the report, the state’s credit rating could be jeopardized. The report recommends a contribution of $100 million to the Solvency Fund to begin to more proactively funds these liabilities.
Conservative leadership in Raleigh should be lauded for responsibly allowing state debt to decrease significantly these last several years. Even with the 2016 passage of the Connect NC Bonds, state General Fund debt levels will level off for a couple years then continue its downward trend.
There is, however, more work that needs to be done to address the state’s unfunded liabilities.
