Don't dismiss bonds
Monday's lead editorial.
State Rep. Dale Folwell has called for a $62 million bond for Forsyth Technical Community College to be removed from the Forsyth ballot. He thinks the economic crisis should preclude a project that would increase taxes.
While Folwell may be well-meaning, his call for the bond’s removal seems like grandstanding. In Guilford County, removing items from the ballot at this late date isn’t an option. Guilford’s ballot was approved months ago by the State Board of Elections and the U.S. Justice Department. It’s too late to revise it. Also, many absentee voters already have sent in their ballots.
If voters don’t think it’s the right time for bond projects, they can easily show that by voting against them.
Still, it’s unwise to think bad economic times mean that all bonds should be rejected. Projects should be decided on a case-by-case basis.
In Greensboro, voters will decide on $205 million in bonds. An owner of a $200,000 home would face an annual property tax increase of about $50 if all four initiatives passed. Today’s economic conditions shouldn’t be the deciding factor on these bonds. The city’s long-term needs should be.
If passed, the bonds wouldn’t all be issued immediately and thus subject to higher interest rates often found in troubled economic times. The proposed issue plan, says city finance director Rick Lusk, is “four bond issues over the next eight years.” He adds that “bonds approved by voters have an initial seven-years authorization period that can be extended to 10 years.”
Also, voters should keep in mind that local governments in North Carolina are in better shape to handle bond issues than cities in many other states. That’s because of a system of state oversight put into place during the Great Depression. During the Depression, more North Carolina local governments defaulted on debt than in any other state except Florida, says government consultant Mayraj Fahim. That led, in 1931, to the creation of the N.C. Local Government Commission.
“The LGC has been careful in making sure localities are able to sustain their debt burden,” says Fahim.
Lusk agrees: “The oversight provided by the N.C. Local Government Commission has been very beneficial for North Carolina local governments for decades. The LGC approves all bond
referendums and the terms of all debt issues.” Lusk says the state’s conservative financial laws for local governments and the LGC’s work have resulted in higher bond ratings for governments here versus other states.
Higher bond ratings benefit taxpayers because they lead to lower interest rates. Of the nation’s cities with populations of 100,000 or more, only 23 are rated AAA (the highest), with six of them (Greensboro, Raleigh, Charlotte, Durham, Winston-Salem and Cary) in North Carolina.
The prudence of North Carolina’s Depression-era leaders gave us a valuable legacy. Voters can help sustain that legacy by evaluating bond projects individually.