NC Treasurer on inflation, retirement systems and local government spending

State Treasurer Dale Folwell

RALEIGH — North Carolina State Treasurer Dale Folwell discussed his concerns of recent inflation trends, labor shortages, and the impact on small towns and counties during his monthly “Ask Me Anything” press call on March 1.

With inflation rates hitting a 40-year high at 7.5% in January, Folwell was asked about the impact and status of both the Teachers’ and State Employees’ Retirement System (TSERS) and the Local Governmental Employees’ Retirement System.  

“Your pension is safe,” said Folwell on the status of the retirement systems. “This plan has always been very conservatively managed for the last 50 years.” He added that when markets have dropped in the past, the state’s pension plan situation has not fallen as much.  

“The pension plan has lost about 4% at the high mark at the end of December,” Folwell said. “And that is about half of what the stock market has lost.” 

The same day as the treasurer’s call, the Local Government Commission (LGC) also held a meeting to discuss upwards of $1 billion in financing for various projects around the state. All of the items on the agenda were approved by the close of the meeting. 

“As I have said before, inflation is a thief,” Folwell said when asked about the impact of inflation on current requests for bonds and funding to the LGC. “It’s not just a thief to people, but to local and state governments.” 

Folwell called the inflation situation “highly serious” and that it impacts the final cost of purchases and services funding requests being reviewed by the LGC. He gave an example of buying sewer pumps at $548,000 for a community that ends up costing over $800,000.  

Referencing a recent report on the state debt for North Carolina, Folwell said that over the last five years and over the next four upcoming years the state’s debt is “projected to be cut in half.” 

“We are in great shape on the debt side, but we are very concerned about inflation for the local governments,” said Folwell. He added they are watching the impact of inflation on the stock market as it relates to the retirement systems but that his office is also paying attention to investment opportunities in fixed income at higher rates of interest. 

Two primary areas of debt covered in the report are General Obligation debt and N.C. Department of Transportation (NCDOT) debt. Referring to the NCDOT debt chart, Folwell said, “We’ve maxed out that credit card,” due to issues with money and project management within the agency over the last three years. 

Topics of discussion at the LGC meeting included the North Carolina Housing Finance Agency asking for the approval of $850 million in home ownership revenue bonds aimed at helping low to moderate income earners afford a home and increase affordable housing over the next two years. 

According to a related press release from the treasurer’s office, the Housing Finance Agency plans to use the bonds proceeds to buy pooled mortgage loans and to refund previously issued bonds. 

Also discussed by the LGC was the refunding of $185 million in federal Transportation Infrastructure Finance and Innovation Act (TIFIA) bonds related to the construction of the Monroe Expressway, an 18-mile stretch of toll road that runs through Mecklenburg and Union counties. The North Carolina Turnpike Authority is seeking that refunding to save $8.7 million through lower interest rates, according to Folwell’s office.

Additional financial requests covered at the LGC meeting included: 

Guilford County – $41 million in general obligation bonds to replace, modernize, and repair HVAC systems and elevators, as well as waterproofing/roofing for various public buildings and sewer infrastructure, and dam improvements for the Bryan Park North area. No tax hike is expected. 

Union County – $20.6 million in general obligation bonds to meet the needs of a growing population and increased service demands such as design costs for a new elementary and new high school, renovations and improvements at South Piedmont Community College, the main library, and park amenities. Additionally, the bond will go towards renovations to law enforcement facilities, its historic courthouse, the government/judicial center, Progress Building, and radio shop. No tax hike is expected. 

Lake Lure (Rutherford County) – $12 million for a revolving loan for sewer lines and other infrastructure for Phase 1 of a plan to replace the existing 95-year-old system.  

Town of Holden Beach – $3.3 million installment contract to purchase pier property and an adjacent lot, a project that has stirred controversy among residents but the town says is necessary to provide regional public beach access, public parking, beach nourishment and public safety.

About A.P. Dillon 656 Articles
A.P. Dillon is a North State Journal reporter located near Raleigh, North Carolina. Find her on Twitter: @APDillon_