Thursday, January 30, 2020

Statement from North Carolina Treasurer Dale R. Folwell, CPA Upon Release of the Debt Affordability Advisory Committee’s 2020 Report

Jan 30, 2020

The Debt Affordability Advisory Committee’s report is an annual, nonpolitical, informational report from a bipartisan committee. It is required by statute to analyze the state’s debt capacity. That capacity is directly related to the state’s creditworthiness. The state is no more or less creditworthy today, than it was the day before the report was issued. 

However, the state is considered highly creditworthy because it has demonstrated the ability to make good decisions on living within its budget and knowing when to issue debt. The report’s increase in debt capacity is more related to a change in methodology than any real change in the state’s ability to issue debt. 

Additionally, the report does not endorse or speak to any proposal to issue debt. The change in debt capacity is analogous to a credit card company raising your credit limit. Higher borrowing ability does not mean it is wise for you spend up to that limit, particularly if you have sufficient assets to pay for needs without borrowing. The decision to use debt capacity for any proposal is appropriately the initial responsibility of the General Assembly.

We regret that the Governor has chosen to politicize a nonpolitical, nonpartisan, data-driven report based on math, not opinions. Perhaps his energy should be more appropriately focused on correcting the multibillion-dollar mismanagement at his own Department of Transportation, which, according to this report, has maxed out its credit card and has no remaining debt capacity for a decade. This would be a greater service to the public than using the important issue of school construction to try and score political points.