North Carolina House lawmakers overwhelmingly approved a
bill July 13 that would allow the state to issue transportation bonds financed
with federal funds.
The measure would allow the state to issue $900 million in
grant-anticipated revenue vehicles, or GARVEE bonds, to use on transportation
projects. No specific projects have been identified, The News & Observer reported.
The funding program
breaks from the traditional pay-as-you-go method and allows the state to borrow
money against the federal transportation dollars that come each year to pay for
construction. The bond issue – or loan – is based on the assumption that
federal funding in future years would pay off the bonds. This allows the state
to get money needed for the project up front.
Because the bonds
would be repaid with future federal dollars, they don’t affect the state’s
credit or impose an ordinary state debt.
Supporters say it
makes sense to use future funds now, when highway construction costs are
cheaper, the newspaper reported. They note the cost of construction is
escalating at a rate higher than the cost to borrow money to build roads.
Opponents worry that
spending future dollars now could leave the state in an even tighter pinch on
projects in years to come. They also worry about relying on future revenue that
is expected but not guaranteed.
The funding plan has the support of Gov. Mike Easley. He
will get a chance to sign the effort into law if state senators, as expected,
cast their votes in favor of the effort.