As of the end of FY2005-2006, North Carolina’s total net indebtedness exceeded $5.69 billion. Of this, $4.98 billion consisted of general obligation bond debt issued on behalf of local governments, as well as the state’s university and community college system, for school building projects and a variety of other expenditures. The state also owes approximately $650 million in various forms of “special indebtedness” or appropriation supported debt, such as certificates of participation, lease revenue bonds and purchase/leasing contracts. As the following charts show, tax-supported debt grew rapidly in North Carolina, doubling from $2.8 billion in 2001 to $5.7 billion in 2006.As the debt has risen, so has debt service – i.e., those payments on the principal of the debt, plus interest.
According to the 2006 Comprehensive Annual Financial Report, in FY2001 the state’s debt service was $281.5 million; as of FY2006 it had risen to $657.7 million. Similarly, debt service as a percentage of non-capital expenditures went from 1.3 percent in 2002 to 2.07 percent in 2006.General obligation bond debt rose from $131.36 per person in 1996 to $656.74 per person for 2005. When such debt is added to lease purchase revenue bonds and certificates of participation, per capita debt increased from $204.91 per person in 1997 to $730.45 in 2006.
The annual Debt Affordability Study, usually issued in early February, provides additional information on the state’s debt and is often used by policy makers to calculate how much additional debt the state can take on without jeopardizing its bond rating. A copy of the study can be found at www.nctreasurer.com.