North Carolina politicos have a State version of Barack Obama’s $800 billion stimulus for “shovel-ready” jobs. But it’s comparative chump-change; only $2 billion. Obama’s give-away of our money didn’t do anything to “promote the general Welfare” but it did promote specific welfare for interest groups—you know, those that have political clout.
Never mind that we’ve not heard of any need for spending more than what’s in the State budget, and a bond referendum being pushed will add to our debt, selling voters on something for nothing (no new taxes) is easy and low interest makes it cheap to borrow money—this year. Thus, “bipartisan” political support for a “Connect NC” bond referendum will be on the State ballot in the March primary election.
It’s expected to pass. The money is already promised and allocated to State wide political interests. Say the magic words and receive $2 billion: “education,” “public safety,” “children,” “veterans,” “parks,” and “agriculture.”
Voters are easily lured into passing on to themselves and everyone else debt for instantly gratifying projects as long as they believe they won’t be taxed. Of course eventually, taxes will be needed to pay the principle amount and interest on that obligation.
North Carolina has current debt of $5.2 billion. At the present rate of repayment in five years our debt could be reduced to $3 billion, but with $2 billion added we’ll still be where we are now, according to an article by Dan Way in the Carolina Journal (February 2016).
But there is no evidence of need for this. Unbelievably, a State budget director said, “We believe we would be committing fiscal malpractice not to take advantage of these historically low interest rates to finance these long-term infrastructure needs.”
Most responsible adults believe it is “fiscal malpractice” to borrow for something just because interest rates are low. The debt, plus whatever interest (it’s not free money) must be repaid. Left in the hands of the people who earned it that money would be put to better use.
One of our more responsible State legislators wisely said, “Although we are being told that this bond will not lead to tax increases, I never heard of a bond that didn’t.” He also noted that local government officials may discover they will have to raise taxes to match the loot from the State.
Further, what is the “need” claimed to be so necessary? The aforementioned Rep. Mark Brody, R-Union also asked why add new university and community college buildings “when they aren’t even using all the space they have now.”
Why, indeed? The UNC and community college systems are notoriously unaccountable to the public for their massive resources and empire building. (See Link below)
The Connect NC plan funnels $1 billion to UNC and $350 million to community colleges already heavily laden with buildings and proliferating programs. It’s even questionable that we need some of the programs (or campuses for that matter) now in existence because of their records of high cost and low output.
The Connect NC scheme is being sold as needs for “infrastructure.” That word commonly refers to “basic facilities, services and installations needed for the functioning of society.” None of the identified bond spending fits that definition. In fact, most people associate the term infrastructure with roads, highways and bridges, yet they are not part of the proposed bond spending.
While these real needs that truly serve the general welfare go unmet, the education lobby wants more funding with no evidence that the taxpayer’s money will benefit the learning process or close what Governor McCrory calls a “skill gap”; whatever that is.
Furthermore, in addition to General Fund debt, this State has huge unfunded public pension liabilities. (Link below)
It’s my guess that the Connect NC scheme was hatched up because of lobbying pressure from interest groups and bureaucrats finding a pretext to fund their wants—political business-as-usual. A State Affordability Advisory Committee chaired by State Treasurer Janet Cowell discovered that the General Fund had more than $2 billion in “additional debt capacity”—just coincidence, of course.
“Hey, I just found out that I can add $2,000 more debt to my Visa card before they’ll cut off my credit; I think I’ll buy some new furniture.”
Officials are cautiously hedging that “at the current time it does not appear that a tax increase would be necessary to service the new debt.” But, who knows, times change.
North Carolina’s debt burden is rated “low to moderate.” They tell us that borrowing a couple billion dollars more should not negatively affect the State’s AAA rating. So why not borrow and spend more money?
Prediction: when bad times come and taxes must be increased or bond ratings reduced these people will be nowhere found for interview questions about why they promoted more borrowing. Their excuse will be: “Don’t blame us, the voters approved the debt.”
Barry Smith (no relation), also writing for the Carolina Journal, reported about a big “kick-off” campaign held last month by the usual—and some unusual—suspects: Democrats and State bureaucrats naturally board this gravy-train. They benefit with votes and credits. But it surprised me to learn that our Republican governor engineered it. Silly me, he’s a politician.
It’s also suspicious that a Yadkin Bank president is “treasurer of the Connect NC bond committee.” His goal is to raise $3.5 million to push for the bond vote. Why?
Governor Pat McCrory trumpets the spending at UNC and community colleges to “help fill the skills gap we have in North Carolina so industries can find the talent needed to continue to grow.” What “skills gap”? Higher taxes and more regulations here than in some other Southern States may be bigger deterrents for industry expansion than lack of worker skills—assuming that is even an issue. How about reducing taxes and regulations to expand businesses?
Another prediction: Five years from now there will be no reports on how overall economic conditions in North Carolina have been improved by this spending, because there won’t be any evidence of it. But we will be told that taxes and fees must be increased to cover rising debt.
But State interest groups have shovel-ready projects for taxpayers to dump more money—and politicians and lobbyists hand out the shovels to dig holes of debt into which voters are expected to leap. It doesn’t make sense, but neither does most other spending projects foisted on us by government.