I’ll admit if I was a genius at stock market timing, I might not be serving in the NC Senate. I also suspect the same holds true of most folks serving in state government. So it’s interesting to watch the ongoing debate in Raleigh over how to fund NC’s long-ignored infrastructure needs.
One side says now is the time to borrow a couple of billion dollars – because interest rates are low and cannot go lower.
That may be so. But, then again, it may not.
While market timing is tempting, as a lot of folks have learned the hard way, it’s also risky. And when it comes to borrowing a couple of billion dollars it’s hard to ignore gathering clouds on the economic horizon.
While Greece gets most of the recent headlines, it’s also a fact that the stock market in China has lost about a third of its value since mid-June. And the drop in industrial commodity prices, like oil and copper, suggest the world economy may be slowing.
At the same time, both the wizards of Wall Street and the typical American family are reducing debt . In fact, the only sector actively adding to its debt burden is government.
I don’t pretend to know if this is the right time to borrow billions – and I’m not sure anyone else does either.
Another option is to redirect roughly $900 million currently held by the Golden Leaf Foundation and use that money to pay for the same infrastructure projects. That sounds a lot safer than borrowing.
In other words, NC taxpayers have close to $1 billion in cash on hand – so why take on the risk of borrowing?
I realize some will protest (loudly) that Golden Leaf was supposed to help rural areas that were dependent on tobacco, but a review of their grant allocations by county show some pretty prosperous counties – like Wake and Durham – at the top of the list.
And there’s another consideration. Several state leaders are actively promoting a new tax structure because they want to shift sales tax dollars from urban to rural counties. But, if we are going down that road, we can surely eliminate the special programs buried in the labyrinthine state bureaucracy – like Golden Leaf – that were set up to accomplish the same goal.
Let’s make those infrastructure improvements. But let’s do it with available cash, not by increasing a debt burden that will quickly weigh on current taxpayers as well as future taxpayers.