RATING NEWS; North Carolina's Oversight Board Contributes to Higher-Than-Average Debt Ratings for Local Governments, Reports Moody's

Business Wire, Jan 24, 1997

NEW YORK--(BUSINESS WIRE)--Jan. 24, 1997--A model for state oversight organizations, the Local Government Commission of North Carolina (LGC) has contributed to the higher-than-average ratings for local governments, Moody's Investors Service analysts reported in today's issue of Moody's Credit Perspectives.

At the local government level, 81% of general obligation bond ratings in North Carolina are rated A or better versus 69% nationwide. Over a three-year period ending June 30, 1995, local governments in North Carolina successfully sold $4.9 billion of general obligation and revenue bonds. Currently, there is over $11 billion of local government debt outstanding in North Carolina (whose general obligation debt is rated Aaa).

Unlike other states that wait until a crisis situation for state intervention, the LGC in North Carolina, under ordinary circumstances, must approve any proposed bond issue. The LGC's extensive powers include enforcing uniform reporting standards of financial performance, oversight of debt issuance, and compliance with disclosure requirements. The LGC's authority extends to the levy of taxes, adopting budgets, spending, and all financial powers of a locality's governing body. For over 65 years, the LGC has a unique and highly effective control over local governments. However, its effectiveness would not be possible without the political will of the government officials.

Debt issuance in the state is critical to finance school and utility needs that support the state's steadily growing population and burgeoning economy.

LGC Assisting State JPA to Become More Competitive

In the era of industry deregulation, the LGC has been working with the state's joint power agency, Electricities, to improve the competitiveness of its 51 member cities' municipal electric systems. These municipal systems support Electricities' substantial revenue debt of $6 billion -- representing a third of the state's total debt. LGC's actions are helping to reduce member utility expenses by requiring members to implement formal transfer policies to reduce electric revenue transfers to their General Funds and by requiring members to phase out subsidies to other utilities by the electric enterprises.

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