Bill would give North Carolina voters closer look at bond referendums

Voters in North Carolina may get to know a little bit more about the debt they will be taking on when they approve a bond referendum.

A bill filed in the state Senate would mandate additional information be published with bond measures on the ballot.

Senate Bill 99 was introduced in February by primary sponsors Todd Johnson, Carl Ford and Eddie Settle, all Republicans in a body controlled by the GOP.

The bill’s required disclosure includes “the total amount of interest estimated to result from the proposed bond using the highest interest rate charged when looking at the immediately preceding years for a term equal to the maximum issue term of the proposed bond.”

It would also require language describing the increase in property tax liability for each $10,000 of property tax value necessary to service the debt.

As a result, the form on the bond ballot would be changed and lengthened significantly.

State Treasurer Dale Folwell said he backs the intent and purposes of the bill, which promises to make the bond issuance process more transparent to the general public.

“This something that I’ve been in favor of since I was in the General Assembly,” Folwell told The Bond Buyer on Tuesday.

Folwell, a Republican, served in the North Carolina House of Representatives from 2005 to 2013.

“When you apply for a credit card or buy a house or do any kind of transaction in the banking or credit world, there are always pages of disclosure. But all we really do when we ask the voters to increase the credit limit on the credit card of their communities, all we put in there are 25 words on a ballot,” he said.

“I’ve long been in favor of full disclosure, of telling people who are going to be paying these property taxes based on the issuance of these bonds, that they know what the estimated interest cost and the present value of all that is, so just to be about as transparent on that as we are with everything else that we deal with in terms of getting a credit card or buying a house,” Folwell said.

Most bond sales in the state must be approved by the state Local Government Commission, which is chaired by Folwell. It examines whether the amount of money that municipalities want to borrow is reasonable for the projects being proposed and looks to see if they can pay it back.

“At the Local Government Commission, we are also trying to do things so that we have clarity of thought and put things in the right sequence,” he said. “For example, Guilford County, which is the fourth largest county in North Carolina, voters there on the same day, on the same ballot, approved a $1.7 billion school bond, but disapproved the funding of it. One referendum passed 60% to 40% and one failed 60% to 40%.”

He added that municipalities sometimes come before the LGC to get approval to issue bonds and they then would use the commission’s approval to issue bonds and go back to the voters and say the LGC had already approved the sale, despite the need for voter input.
“We are getting this sequence all straightened out to where we are going to be approving bonds at the LCG after the voters approve the GOs,” he said.

Last week, the school board in Charlotte-Mecklenburg School Board asked the county to put a $3 billion school bond referendum on November’s ballot, surpassing Guilford County’s $1.7 billion bond request last year.

The school board will make their pitch to county commissioners in a joint meeting Saturday morning.

The county will decide how much to put before voters and set the tax rates for paying the bonds back. According to published reports, the county has been looking at bond referendum of $2.5 billion.

Senate Bill 99 was referred to the Finance Committee.

Any bills that emerge from the GOP-run legislature will go to the desk of Gov. Roy Cooper, a Democrat.

He delivered his State of the State of the State address Monday night at the state capitol in Raleigh.

“North Carolina is cementing its place as a leader in the global clean energy economy — no longer the industry of the future, but the flourishing business of today,” he said. “North Carolina is a clean energy destination, bringing good paying manufacturing jobs to parts of our state that years ago knew more factory closures than ribbon cuttings.”

He highlighted the electric vehicle industry, saying it is projected to grow into a four hundred billion dollar global market in just five years with a substantial presence in North Carolina.

“From the battery manufacturing in Randolph County to the semiconductor production and the electric vehicle manufacturing in Chatham County, to the charging station production in Durham County, North Carolina has a claim to every link and every job in this fast-growing, lucrative supply chain,” Cooper said.

“The private sector electric vehicle market is about to take the world by storm and North Carolina is riding the first wave,” he said. “And that means more money in the pockets of North Carolinians even as we do our part to fight climate change.”

He added that by having bipartisan cooperation in the General Assembly, North Carolina became the second state in the Southeast to put carbon reduction requirements into law.

Additionally, he said the state is using federal funds to make investments in clean water projects.

“Across the country, we’ve seen the consequences of neglected water systems, particularly in our rural communities,” he said. “Without reliable clean drinking water, families struggle, new business won’t come to town, and communities can wither.”

He noted that in a normal year, our state invests around $200 million in clean water infrastructure.

“But with this new federal funding, we’re investing more than $2.3 billion over two years to rebuild hundreds of water systems in nearly every county in our state,” he said.

He also noted the bipartisan effort to expand Medicaid throughout the state was taking shape.

“I’m grateful for our unified Democratic legislators and some Republicans who have been relentless for years in this effort to expand Medicaid. I commend the Republican leadership of this legislature for now embracing this and coming together in agreement,” he said. “When we get Medicaid expansion across the finish line, it will save lives.”

He said he hoped to see more of the same.

“And as we look to the future, I challenge this General Assembly to keep us off the front lines of those culture wars that hurt people and cost us jobs so we can continue our successful bipartisan work,” Cooper said.