If the health plan is passed separately, why should the state care about bond ratings anymore?

While the state employee health plan is sucking up the oxygen of attention, it does not occur in a vacuum.

Also in the news of late is newly-minted State Treasurer Janet Cowell's warnings here and here about the state's bond rating should we not fully fund the state employee pension plan (in some part of the biennium - the two-year budget cycle).

While the Governor, apparently unstoppably, raids the rainy day fund to cover the state employee health plan debacle, the state employees are also coming to scream for more money for the pension fund.

The health plan issue would normally be wrapped up into the regular budget discussions and omnibus bill, so it usually wouldn't surprise anyone that a partisan split vote on a budget matter occurred as it did yesterday in the NC Senate. So, with this other issue coming down the road, why did Rand force a vote yesterday to break up the budget?

Back to the pension issue, the Governor's budget only provides $42 million for the pension fund. Cowell wants several hundred million more to "protect our bond rating."

Protecting what Moody's thinks of NC bonds used to be a good argument, but after the rating agencies got caught with their pants down stamping AAA on any damn thing, like say a wildly unstable mortgage backed security, and causing our present financial metldown, why should we care about the rating agencies and enable these idiots further?

A little historical perspective on state bond ratings. Also, some info from another bond rater on more recent specific NC bonds --- which DON'T all carry a AAA stamp.

If Treasurer Cowell really wanted to make a mark on the wrecked financial industry and do well by NC citizens, she would develop a plan to bypass the bond market and save NC taxpayers millions. She's got some smart people in her office. It's time to truly think outside the broken box that has trapped this state, other states, and people around the world in this unprecedented financial failure.

Janet, you've got NC's pristine history on your side to build a new infrastructure. Think big.

Comments

Great post!

Lots of good questions asked and points made.

The only reason to continue worrying about bond ratings is because others will care and we are still a growing state that needs to raise money by issuing bonds. I'm not smart enough to figure out how to bypass the bond market, but I say it is worth a go.



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