The North Carolina Legislature gave its final approval Monday, Aug. 22
to a bill that would allow the state to issue transportation bonds financed
with federal funds.
House lawmakers voted 81-32 to agree to changes made to the bill by the
Senate. It now heads to Gov. Mike Easley, who has endorsed the idea.
The measure – HB254 – would allow the state to issue about $950 million
in grant-anticipated revenue vehicles, or GARVEE bonds, to use on
transportation projects in 2007 and 2008. 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 debt. This allows the state to get money needed
for the project up front.
Because the bonds are repaid with future
federal dollars, they don’t affect the state’s credit or impose an ordinary
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