Contact: Walton Robinson (919) 807-3132
February 1, 2013

For Immediate Release

Treasurer Janet Cowell Releases 2013 Debt Affordability Study

State has debt capacity for the first time since 2009

RALEIGH, NC – Today, State Treasurer Janet Cowell released the 2013 Debt Affordability Study to Gov. Pat McCrory and members of the General Assembly. The report provides the Governor and the General Assembly with a basis for assessing the impact of authorization and issuance of additional debt on the State's fiscal position and enables informed decision-making regarding both financing proposals and capital spending priorities. 

The annual study, approved by the Debt Affordability Advisory Committee showed that, after a period of weak revenue growth that constrained the State’s ability to issue new debt, the General Fund now has capacity in each of the next 10 years. The combined debt capacity of the Highway Fund and the Highway Trust Fund remains exhausted until fiscal year 2014.

“For the first time in several years the State has debt capacity for capital projects - this is a good indicator of continued economic recovery,” Treasurer Cowell said. “While this is a positive development for the State’s finances, we need to continue to apply conservative debt management practices in order to protect the State’s ‘AAA’ bond rating.” 

The Study recommended continuing the State’s conservative debt management practices and urged caution with regard to the issue of shifting $2.546 billion in liability for unemployment benefit payments from the private sector to the State. The Committee stressed that doing so would exceed the State’s debt capacity limitations and increase the State’s debt burden by 35 percent.

The Study also emphasized centralized debt management as key best financial management practices and strongly encouraged the General Assembly to adopt language restricting the ability of any state department, agency, institution, board or commission to enter into financial arrangements that incur debt or debt-like obligations. The study notes that continuing to replenish the State’s rainy day fund (reserve) should remain a priority.

The State’s AAA bond rating was recently reaffirmed by all three major national rating agencies. Currently, all of the State’s debt ratios remain at or below the median levels for the State’s peer group comprised of all states rated “triple A” by all three rating agencies.

The 2013 Debt Affordability Study was prepared by the staff of the State and Local Government Finance Division of the Department of State Treasurer, and approved by the Debt Affordability Advisory Committee, which was created by the General Assembly in 2004 and is chaired by Treasurer Cowell.

Other committee members are Lyons Gray, Secretary of Revenue; David McCoy, State Controller; Art Pope, State Budget Director; Beth Wood, State Auditor; Frank H. Aikmus, Senate Appointee; William T. Graham, Senate Appointee; Dr. James V. Porto, House Appointee; and Dr. Jack Vogt, House Appointee.

A full copy of the report is available on the Department of State Treasurer’s website under the “State and Local Government” section.  

View the 2013 Debt Affordability Study​