The planned $160 million Plant Sciences Research Complex at North Carolina State University would be financed with state bonds, if voters approve a state bond measure March 15.

BRADENTON, Fla. — North Carolina voters decide March 15 if the state can issue $2 billion of general obligation bonds.

Tar Heel state voters have typically supported local and state bond issues.

Gov. Pat McCrory, a Republican, proposed the "Connect NC" bond initiative last year, and successfully shepherded it through the GOP-led Legislature.

More than half of the bond proceeds would fund higher education projects across the state, while the remainder would pay for state agency and National Guard projects.

North Carolina's 2016 Debt Affordability Study, released Jan. 27, said that the state has capacity to issue the Connect NC debt.

In addition to the infrastructure bond program, the state has the capacity to issue another $210 million of GOs a year over the next 10 years, according to Treasurer Janet Cowell.

"This report is of elevated importance this year as voters consider approval of the Connect NC Bonds," Cowell said. "Our findings demonstrate that North Carolina has maintained a conservative posture on debt and has the ability to responsibly invest in its future, and keep the AAA bond ratings if the Connect NC bonds are approved."

If the bond referendum, being held in conjunction with the state primary election, passes, the preliminary plan of finance calls for borrowing to start in July.

Across the country, state and local governments responded to the recession by delaying infrastructure investment as revenues dropped.

After nearly $400 billion in issuance last year, many market participants expect a similar or even higher pace of issuance in 2016, according to analysts at Barclays.

"In theory, impending rate hikes and a flatter yield curve argue in favor of a pickup in refunding activity, while the need to start fixing the U.S. infrastructure should support new money issuance," the analysts said in a report Jan. 14.

However, bond volume could be lower than last year, they said, because new money supply has frequently declined in election years, and large infrastructure undertakings could be pushed forward once again.

Municipal issuance could drop to $350 billion this year if the election year trend plays out, Barclays said.

Hoping to buck that potential trend, other Southeastern states are also pushing for major infrastructure funding.

In Virginia, Gov. Terry McAuliffe is seeking a $2.43 billion bond package for education, workforce, and agency capital funding.

Last week, Alabama Gov. Robert Bentley announced that he plans to push for $800 million of bond financing to build four new prisons in order to close 14 aging facilities that are costly to operate.

Georgia Gov. Nathan Deal proposed $850 million of state GO bonds in his fiscal 2017 budget, as the state continues its annual borrowing for capital.

In North Carolina, McCrory argues that it's been 15 years since voters last approved state GO bonds, and in that time the state has added two million people to its population.

McCrory also points to the U.S. Census Bureau's December 2014 results showing that North Carolina edged past Michigan to become the country's ninth-most populated state with a total of 9,943,964 residents.

State officials have said that the Connect NC bonds would not require a tax increase, and that the state's debt level would still decline within five years despite the new borrowing authority because of its rapid pay down of outstanding bonds.

"This is a sound economic financial decision," McCrory said at a North Carolina State University rally Jan. 6. "It's fiscally responsible."

In addition to McCrory's numerous appearances across the state, voters are being bombarded with information about why they should vote "yes" on bonds March 15.

Social media and websites have been used to make details about the bond program available. One website is named after Connect NC and another one urges voters to Vote Yes to Invest.

Until last month, the proposed bond program seemed to receive widespread support.

NC Against the Bond launched a website calling itself "a grassroots referendum committee" urging people to sign their online petition pledging to vote against the bond program in March.

No organizers or members names are listed on the opposing website.

"A bond is not free money, it's debt with heavy interest that is left to the next generation to pay without their consent," a story on the group's website said. "If an item is important enough then it should be budgeted and our elected officials held accountable for the spending of NC tax dollars."

The state's claim that the bond program will not require a tax increase is "purely a marketing gimmick" because politicians today have no control over the future legislators and cannot guarantee taxes will not be increased to pay off the debt, the website said.

Under residential feedback on the website, state Rep. Larry Pittman, R-Concord, said he opposes all bonds.

"We have enough debt and certainly don't need to add more for no reasonable purpose," wrote Pittman, who voted against the Connect NC bonds. "I urge all of our citizens to vote no when your turn comes."

Lisa Baldwin, a Republican candidate for the state Senate, called the bond referendum "essentially a pork barrel of pet political projects that will saddle the next generation with debt."

State officials have said that debt levels will not increase under the program, but opponents point out that debt levels will not go down.

North Carolina typically issues 20-year GOs with level debt service, and rating analysts commonly cite the state for its rapid pay down of its bonds.

More than 65% of the state's bonds will be retired over the next 10 years, even if the Connect NC bonds are issued, according to the Debt Affordability Study.

Cowell said although the bond program still must be approved by voters, it would have distorted the amount of debt capacity remaining if the legislatively authorized bonds had been excluded from the annual study.

North Carolina had $8.1 billion of debt outstanding at June 30, 2015.

Of that, general obligation bonds totaled $3.47 billion. Except for the proposed Connect NC bonds, the state has no authorized but unissued GO or non-GO debt.

If voters approve the bonds in March, the debt study said four tranches of 20-year bonds likely would be issued starting with $306.8 million this July, $705.5 million in 2017; $595.8 million in 2018, and $391.9 million in 2019.

Bond proceeds would provide $787 million for the University of North Carolina System with emphasis on building and repairing science, technology, engineering and math facilities, while $193 million will be earmarked for improvements at historically black colleges and universities and $350 million will go toward the North Carolina Community College System.

Some $312.5 million in local water and sewer systems and parks would receive funds, while $179 million would go toward agriculture-related projects at state agencies and universities, $100 million would go for state parks and the North Carolina Zoo, and $78.5 million is planned for National Guard and public safety improvements.

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