Moody's Investor Service last week gave the state a clean bill of health, reaffirming its Aaa rating on its general obligation debt.

"Financial operations have been restored to their historically healthy position after a period of strain experienced between 1990 and 1992," according to a report accompanying the rating confirmation.

"Conservative revenue assumption and sound budgeting proctices should result in similar balances throughout the current biennal," the report says. "The restoration of adequate reserve levels confirms the state's longstanding commitment to a sound financial position."

The rating affirmation comes less than two weeks before a competitive sale of$280.7 million of GO debt planned for Oct.6. The sale includes $87.5 million issue of new-money debt for prisons, with the remainder being refunding bonds.

The action by Moody's also comes six weeks before a voters' referendum on $740 million of proposed state general obligation debt. The package, which would be the state's largest ever, comprises $310 million for universities, $250 million for community colleges, $145 million for clean water projects, and $35 million for state parks.

The state has $580 million of GO debt outstanding.

The bond package, if approved, would be unlikely to strain the state's borrowing capacity, said George Leung, managing director of state ratings at Moody's.

"If it is authorized, we would need to discuss the pace and nature of the borrowing, and its impact on the state's finances," Leung said.

"But North Carolina is currently in a favorable position, with a good budget position and debt level in the bottom quartile. And while we view fiscal conservatism as a plus, there is also the other side: If a state does not meet capital needs, that could also affect its rating."

North Carolina's GO debt is also rated triple-A by Standard & Poor's Corp. and Fitch Investors Services.

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