Merritt Votes Against Increasing State Building Debt

RALEIGH, N.C. -- The state's top elected officials agreed Tuesday to issue $200 million in bonds to pay for building projects despite Republican worries that the move could tip North Carolina over a self-imposed borrowing limit.

The General Assembly already has signed off on the debt, part of a $1.4 billion building program kicked off in 2003 that includes three psychiatric hospitals, several university medical programs, prisons, a new public health lab and a North Carolina Museum of Art expansion.

None of the debt requires approval by voters, but the state treasurer and the Council of State, comprised of the governor and nine other statewide officials, must agree on it.

With two members absent and Easley traditionally not voting on board matters, the council voted 4-3 to allow the so-called "certificates of participation" debt to be sold starting Sept. 27. The board approved a similar amount of debt last year.

The debt is being issued over several years to avoid placing a large fiscal burden on the state. Treasurer Richard Moore's office released a study in February saying that North Carolina could take up to $214 million in new debt annually for the next 10 years and remain financially sound.

Deputy State Treasurer Vance Holloman told the council that the new debt approved Tuesday wouldn't alone cause the state to surpass the voluntary limit. North Carolina would be $11 million above the new debt limit in 2007 and more than $20 million over in 2008 if the maximum amount of debt allowed by the Legislature is issued, he said.

"This presumes that all the amounts are issued on schedule," Holloman said, but recent history shows that is unlikely due to construction delays. Moore's office said later Tuesday it won't permit the debt to exceed the limit.

That didn't assuage the concerns of the council's three Republican members who voted no. The state has more than $6 billion in outstanding debt.

"When you borrow money you have to pay it back," said State Auditor Les Merritt. "I'm a little nervous about getting things started and the economy may turn down."

Easley, who has asked the Legislature without success to require voter approval of certain types of debt above $25 million, said he was comfortable with the assessment by Moore's office that found the new debt "fiscally appropriate." The state budget director also believes the financing is sound, Easley said.

"Once they get to this point, they have been through all of those hoops," he said.

Lt. Gov. Beverly Perdue, Attorney General Roy Cooper, Secretary of State Elaine Marshall and Superintendent of Public Instruction June Atkinson _ all Democrats _ approved the debt. Labor Commissioner Cherie Berry and Agriculture Commissioner Steve Troxler joined Merritt in voting no. All of them are Republicans.

The council also agreed Tuesday to spend more than $17 million to acquire just more than 10,000 acres statewide to improve water quality, protect endangered species and expand park and game lands. Most of the money will come from dedicated trust funds, federal grants and nonprofits.

The largest tract purchased _ 5,521 acres from The Nature Conservancy _ will expand the Angola Bay Game Land in Pender and Duplin counties at a cost of $3.7 million.

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