A Senate plan to fund school construction and repair cleared the chamber’s appropriations committee meeting today, but only after some Democratic lawmakers questioned whether the proposal is really better than a House plan to put a school construction bond bill on the ballot.
Senate Bill 5, Building North Carolina’s Future, would use money from the State Capital and Infrastructure Fund to raise money for school construction. The SCIF gets 4 percent of state revenue to take care of the state’s debt and for capital projects for state government and the UNC System. The Senate bill proposes increasing the share of state revenue that goes to that fund to 4.5 percent, and then splitting the funds between the K-12 system, UNC and Community College Systems, and state agencies. One-third will go to K-12, one-third to the higher education systems, and one third will go to state agencies, for a total of about $2 billion each. That bill has passed the full Senate.
Before the holidays, Moore announced a bond bill to go before voters that would include $1.9 billion for education construction needs. That would include $1.3 billion for K-12 capital construction and $300 million each for the UNC System and for North Carolina community colleges. During a stop on a statewide tour to discuss the bond this month, Moore changed the details of the bond slightly, saying that it would include about $1.5 billion for new K-12 schools and about $200 million each for the UNC System and Community College System. His bill hasn’t yet been filed.
Chaudhuri pointed out to Brown that the Senate plan relies on the assumption that future lawmakers would adhere to the terms of the Senate plan instead of choosing to change how the SCIF funds were used. He pointed out that the North Carolina lottery originally had a relatively large percentage of proceeds promised for school construction needs but that the percentage has slowly been whittled down over time.
Brown maintained that the Senate plan is superior to the House plan because it doesn’t accrue new debt but rather pays for construction as the state gains money in the SCIF fund. The SCIF has about $237 million available this year but will grow as the state pays off its debts, according to lawmakers. By 2028, the fund should have about $1 billion available each year under current law.
“School capital is a priority,” Brown said. “We just think our plan is the right way to go because it dedicates more money faster and for less cost.”
Senate Democratic Leader Dan Blue, D-Wake, challenged the assertion that the Senate plan would make money available to school districts faster. He said that the Senate plan would accrue money over time, meaning that all the money wouldn’t be available all at once. He said that if a bond passed, that money could all be available immediately.
Multiple lawmakers disagreed with Blue. Sen. Bill Rabon, R-Brunswick, said that bonds don’t work that way and that the release of money would be gradual under the House plan. Brown said that money from the Senate plan would begin to be available in 2019, which is two years sooner than the House plan.
Rabon raised a number of other concerns about using a bond to fund construction. He said the House plan relies on one big assumption: that the bond will actually be passed by voters. He said there is no telling what will happen to the economy between now and whenever a vote could be held, and a slowing economy could lead voters to turn against the idea of a bond.
“We may be shooting ourselves in the foot,” he said, adding of the Senate plan that: “We have a sure thing here that I think has a lot of merit.”
Rabon harped on the idea that a recession is bound to happen sooner or later, and he said the impacts of that could be dire if the state went the route of using a bond for school construction needs.
“One’s coming folks,” he said. “We don’t know when. And it’s going to be pretty deep.”
Bonds create debt, he said, and debt is one of the first things the state has to pay. If a recession hits, that debt would be a priority, and that may lead to a situation where the state is forced to cut other areas of government, such as education.
Sen. Don Davis, D-Pitt, asked Brown why the Senate plan has to be an alternative to the House plan. He wondered why the General Assembly couldn’t do both.
“Instead of an alternative, how can it be an enhancer, because I think we all understand the enormous magnitude of the infrastructure needs across the state,” he said.
According to a report heard by lawmakers back in 2017, the facility needs in counties around the state were close to $8 billion. That number has only grown over time. See that report below.
Brown said that the state just did a bond a few years ago and that another one so soon after wouldn’t be a good idea. In 2016, North Carolina voters approved the Connect NC bond, which allowed the state to borrow $2 billion for school construction and infrastructure for public universities, community colleges, and a handful of other projects.
Community College System President Peter Hans spoke at the committee meeting today, expressing his thanks for lawmakers attempt to address construction needs around the state.
“We very much appreciate the opportunity to discuss being included in the State Capital and Infrastructure Fund,” he said. “Previously, that has not been the case.”
Kevin Leonard, executive director of the North Carolina Association of County Commissioners, also spoke. He started off by saying that his organization likes both the House and the Senate plan.
“Whether it’s this bill, or whether it’s a House bill … we wanted to say thank you today for taking this issue so seriously. It’s been a number one priority for county commissioners all around the state.”
The Committee voted unanimously in favor of the Senate plan. It will go to the Senate rules committee next week.
The committee also gave a favorable vote to a bill that would allow the College of the Albemarle, a community college in Elizabeth City, to use Connect NC bond money for construction and renovation of facilities in Dare County.