North Carolina will take a look at $800 million GO bond package.

ATLANTA -- North Carolina's legislature will soon consider approving a package of general obligation bonds that could total as much as $800 million, state officials said yesterday.

Heading the list of proposed new-money debt is a record request from the University of North Carolina system for $300 million of state general obligation bonds, said Dave Crotts, senior analyst and economist for the Legislative Fiscal Office.

He said lawmakers are also considering a request for about $240 million of GOs for community colleges and over $100 million of GOs for water and sewer improvements.

The bonding is intended to deal with a backlog of construction needs that has built up during the national recession, Mr. Crotts said. But with the downturn straining state finances, detailed consideration of the proposals will have to wait until lawmakers complete an operating budget for fiscal 1993, which begins July 1, he said.

Last Friday, the House of Representatives approved an $8.15 billion budget, and the Senate is working on its version this week. Differences between the two chambers are expected to be reconciled next week.

"After the operating budget is finalized, legislators will settle down on a capital budget and that could well include between $600 million and $800 million in new bonds," Mr. Crotts said. "There is a lot of support for the bonds, given the state's capital needs, but there is also a fair amount of uncertainty on specifics."

Another legislative aide said House leaders have been skeptical about the bonding, while Senate leaders, including Ways and Means Chairman Kenneth Royall, D-Durham, have strongly supported it.

"Everybody is in total agreement on the need for capital spending at the state's colleges and universities," she said. "The question is whether the state should saddle itself with new debt service at a time when the budget is under strain. I would say the changes of new bonds are about fifty-fifty at this point."

Sen. Royall and other legislative leaders could not be reached for comment yesterday.

Mr. Crotts and other officials also linked prospects for a large bond authorization to the fate of a bill that would permit a state lottery in North Carolina. The Senate approved the legislation last year, but the House so far has rejected it.

If approved, the lottery could add about $175 million a year to state coffers, Mr. Crotts said. Besides providing funding for debt service on bonds, the lottery proceeds would be targeted for cash payment of infrastructure projects and replenishment of the state's rainyday fund.

Bob High, deputy treasurer and secretary of North Carolina's Local Government Commission, which oversees debt in the state, also said that legislators will soon consider a bond package totaling between $500 million and $700 million.

Speaking of the proposed education bonds, Mr. High said, "A good argument can be made for them, and when you consider that they would cover 16 campuses, the amount is really not so great." He said lawmakers may also be inclined to approve the school bonds, given the fact debt service could be supported by tuition.

The operating budget approved last Friday by state representatives would add $150 million to an $8.15 billion 1993 budget lawmakers approved last year as part of the state's biennial budget.

The proposed increase in fiscal 1993 appropriations would fund a rise in the state Labor Department's budget, the hiring of 733 new teachers, a 2% pay raise for all teachers, and $522 for each of the state's other employees. North Carolina would pay for this by raising community college tuition by 10%, university tuition by 5%, and court costs by $5 per case.

The North Carolina legislature meets in a "long session" on odd-numbered years to set spending for a two-year period. Spending for the second year of the biennium is then fine-tuned in a "short session" held in even-numbered years.

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