North Carolina State Treasurer Dale Folwell speaks during the Tuesday, Aug. 4, 2020, Council of the State meeting.
(The Center Square) – North Carolina state officials approved $400 million in bonds Tuesday to support higher education institutions, agriculture, parks, safety and local water and sewer infrastructure.
The 10-member Council of State passed a resolution that initiates the sale of the bond, which is the second-to-last installment of the $2 billion Connect NC general obligation bond approved by voters in 2016.
North Carolina Labor Commissioner Cherie Berry was the only member of the panel who voted against issuing the bond.
Citing concerns over not having enough time to review the measure and the uncertainty surrounding the COVID-19 pandemic, Berry wanted to postpone the vote until September.
State Budget Director Charlie Perusse said, however, now was the best time to issue the bond because of record-low interest rates.
“We would probably anticipate it being like that for at least the next six months, but I would hate for it to go away, potentially meaning that we would get a higher interest rate in the future,” he said.
Perusse estimated that the state will be able to secure a 1.5 percent interest rate right now, “which is unbelievable,” he said.
Borrowing money through bonds allows the state to spread the costs across multiple years instead of breaking into cash flow or current revenue to cover the project expenses.
The goal of the Connect NC bond, according to House Bill 943, is to update the state’s public facilities to the 21st Century, “enhance the state’s economic development efforts, and attract new and assist existing industry, business, technology and tourism.”
Most of the Connect NC bond has been distributed in the past four years.
The state issued $200 million in 2016, $400 million in 2018 and $600 million in September 2019.
The majority of the total Connect NC bond was approved for the state’s universities and community colleges.
About $980 million from the $2 billion was secured to support 17 North Carolina universities, including building STEM facilities.
Community colleges were selected to get $350 million for construction, renovation and repairs at 58 campuses.
State Treasurer Dale Folwell raised questions about financing education construction projects in the wake of the COVID-19 pandemic.
“Given how public education is being – higher education, especially – is being delivered going forward, does that change the thinking about the issuance of these bonds, or the amount?” he asked.
Many campuses have discussed smaller classrooms, blending online and in-person classes and fully online courses for high-risk students or areas because of the COVID-19 outbreak.
Perusse said the $400 million in bonds approved Tuesday will be “an economic driver” for the state.
“The projects in the higher education space are almost all health and science-related,” he said. “… Those were buildings that were approved by the voters in the higher education area, and, quite frankly, the university system is sort of moving the projects along very quickly and doing a good job.”
Perusse said even though market costs have increased because of the pandemic, the state has been able to manage the weight.
There will be one more issuance of $100 million in the future that will deplete the $2 billion bond.
In addition to Berry and Folwell, the Council of State is made up of the governor, lieutenant governor, secretary of state, attorney general, state auditor, commissioner of agriculture, insurance commissioner and superintendent of public instruction.