Contact: Schorr Johnson (919) 807-3132


February 4, 2014

Treasurer Janet Cowell Releases 2014 Debt Affordability Study

Report Shows Improved Debt Capacity for State

RALEIGH, NC – Today at the Council of State meeting, State Treasurer Janet Cowell announced the results of the 2014 Debt Affordability Study, which was sent 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 improvement in debt capacity from last year.  The General Fund has capacity of $570 million for each of the next 10 years. The combined debt capacity of the Highway Fund and the Highway Trust Fund is approximately $805 million for this year.

“One of my top priorities is protecting the State’s ‘AAA’  bond rating, which keeps financing costs low and also says to industries looking to locate here that we are a state in solid shape,” said Treasurer Cowell.

The Committee is also charged with providing recommendations regarding other debt and financial management-related policies consistent with the sound management of the State’s debt.  The Committee strongly emphasized centralized debt authorization and management and strongly encouraged the General Assembly to adopt language restricting the ability of any State entity to enter into financial arrangements that incur debt or debt-like obligations.  The Study noted that, “Sponsoring agencies whose mission is to provide a particular service or assets are not in the best position to make decisions that prioritize the use of the State’s debt capacity.”

The State’s “AAA” bond rating has been 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 composed of all states rated “AAA” by all three rating agencies, of which North Carolina is one of 10.

The 2014 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; Bradford B. Briner, Senate Appointee; Brian T. Balfour, House Appointee; and Murchison “Bo” Biggs, House Appointee.

View the 2014 Debt Affordability Study​