ATLANTA -- Despite North Carolina's recently enacted fiscal 1992 budget, which was designed to cover a deficit that had been estimated at $1.2 billion, Standard & Poor's Corp. last week said it is maintaining its "negative" outlook on the state's AAA-rated general obligation debt.

"We are still not entirely convinced that the state has worked out a long-term solution to its fiscal problems," William Chew, a Standard & Poor's senior vice president, said Friday. "What we have seen so far are basically interim measures."

Mr. Chew said the agency was particularly concerned that North Carolina's budgetary problems have hurt initiatives to improve education, roads, and economic development begun in the late 1980s. Those initiatives, he said, have tended to depend on the growth of existing revenues rather than new enhancements.

He pointed out that to balance its books in fiscal 1992, which began July 1, the General Assembly opted to reduce aid to local governments and cut capital spending.

On the other hand, Mr. Chew said, the credit rating of North Carolina's GO debt continues to benefit from the relatively low volume of such borrowings.

"With less than $500 million in GOs outstanding, the state is in a better position than many others that have comparable budget problems, but much larger debt burdens," he said. "This low level of bonds outstanding gives North Carolina the flexibility pay for capital programs through bond issues should it want to do so."

Last month, after six months of squabbling, North Carolina lawmakers settled on a $7.8 billion 1992 budget that imposed $657 million in tax increases and $653 million in reduced funding for existing programs.

At the center of the budget is a one-cent increase in North Carolina's sales tax to 6%, to raise $450 million annually. The budget cuts will eliminate about 3,000 state jobs and include substantial reductions in the state's overall spending for education, which currently accounts for about two-thirds of North Carolina's outlays.

In a written analysis released last week elaborating its position on North Carolina, Standard & Poor's praised the state's legislature for "creating additional revenues and holding the line on expenditures." But the report also noted the legislative action carries the "cost of reduced financial flexibility to meet further unforeseen budget problems and the deceleration of many program implementations."

According to Standard & Poor's, the state's "recurrent fiscal strain has called into question the clarity of [its] long-range vision and commitment to maintaining the economic momentum achieved throughout the 1980s."

"As more definitive financial information becomes available, S&P will reassess the state's rating" the report continued. "However, if a rating action were to occur, North Carolina's rating would not fall below the double-A category. A downgrade would be taken if persistent financial difficulties result in the further curtailment of the central programs and the the loss of the state's ability to sustain its long-range directives."

Moody's Investor Service also rates North Carolina's debt at triple-A.

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