RALEIGH, N.C. — State Treasurer Janet Cowell Tuesday advised legislative budget writers of the critical factors that could affect the state’s “triple A” bond rating.

North Carolina, like many other states, faces serious financial and budgetary pressure caused by the economic recession and market volatility while juggling increased demand for social services, retiree benefits and infrastructure.

The federal stimulus package lessens some of this pressure because it helps stimulate the economy through capital projects and provides money to states for education and health care programs.

States that prudently manage stimulus money and address budget challenges head-on will be highly rated, according to a recent report from Moody’s Investors Services, a key bond-rating agency.

“Typically, no single factor is responsible for a downgrade in the state’s bond rating,” said Treasurer Cowell. “However, a combination of short-term fixes like delaying debt payments, ordering furloughs and rapidly depleting reserve funds will negatively affect the state’s bond rating.”

Moody’s has outlined six variables that factor into a state’s bond rating in an economic recession in their report entitled: Outlook Remains Negative for U.S. States.

·         Revenue Decline – The amount of revenue decline for an individual state will be a significant factor in evaluating the impact of the current environment on the state’s rating as well as the level of reserves that it has maintained to buffer the effects of recession-induced revenue shortfalls.

·         Liquidity Position – States that operate with thin reserves or are dependent on market access for cash could experience not only budgetary deficits but cash deficits as well. States which experience strained cash positions are more exposed to downward rating pressure than states that maintain healthy liquidity positions.

·         Recession-Induced Spending Pressures – All states are expected to experience higher spending pressures driven by rising unemployment and the increased demand for social services. Some states with industry or sector concentration will be more significantly impacted due to severe downturns in those industries or sectors.

·         Deficit Financing – States that rely on borrowing to close budget deficits for multiple years are more exposed to the uncertainties of the credit markets and are therefore at greater credit risk than states that can manage without deficit borrowing or states with very limited deficit borrowing needs.

·         Federal Stimulus – How states effectively manage federal stimulus money and close large projected budget gaps will affect the likelihood of negative rating actions.

·         Management – The willingness to promptly address financial problems as well as the ability to enact solutions without the constraints of state-imposed statutory or constitutional barriers will also be considered as a factor in assessing creditworthiness.

RALEIGH, N.C. — State Treasurer Janet Cowell announced Thursday a series of reforms to strengthen public trust and provide greater transparency of the state’s investment decisions.

The reforms include:

• Instituting a one-year “cooling off” period for former and future employees. Covered persons cannot lobby and/or market services to the Treasurer’s Office for a year after leaving government service.
• Establishing a request for proposal process for firms that seek to do legal work with the Department.
• Expanding the state’s Investment Advisory Committee to include more members with investment expertise.
• Posting quarterly reports on the Department’s website, www.nctreasurer.com, on the state’s investment performance to include overall fund performance and asset allocation.
• Hiring an independent consultant to evaluate the investment program’s policies and practices, including those governing: ethics, oversight and accountability; transparency; and investment decision making.

Treasurer Cowell’s announcement comes as citizen groups, government watchdogs and the media commemorate “Sunshine Week.” The annual event serves as a reminder that access to government meetings and documents is enshrined in the state’s constitution and is one of the pillars of a strong democracy.

“One of the many casualties of the current economic crisis is the erosion of public trust in government and financial institutions,” Cowell said. “We must restore that trust by making it easier for citizens to see where the state’s money is invested and how those decisions are made.”

WINSTON-SALEM, N.C. – Former State Treasurer Richard Moore said Tuesday he has no plans, for now, to run in 2010 for the U.S. Senate seat held by Republican Richard Burr, saying he’s happy after nearly two decades in elected or appointed office.

Moore left office less than two months ago after eight years as treasurer. The Democrat unsuccessfully ran for governor last year, losing to eventual winner Beverly Perdue in last May’s party primary.

“I am taking it easy,” Moore said after a speech at Wake Forest University in Winston-Salem, where he went to college and law school. “I’m doing what I want to do.”

Asked about a bid for the U.S. Senate, Moore replied: “We’ve just finished one election cycle, and I don’t have any plans right now. You know, you never say never, but I don’t have any plans right now.”

Attorney General Roy Cooper and U.S. Rep. Heath Shuler, D-N.C., have been mentioned by fellow Democrats as potential challengers to Burr, who will be seeking a second six-year term. Both officials have been mum about a bid to unseat him.

Moore was coy about his future outside of politics, telling reporters he will continue to serve on the New York Stock Exchange board and has agreed to join a couple of other unnamed corporate boards.

Concerning the financial markets and the stimulus plan, as the nation tries to dig out from the recession, Moore warned more than 100 students and Wake Forest staff that the old principles of investing remain true.

Although there are always anomalies where investors make outsized returns on new products and services, most people need to be comfortable with making a return equal to the inflation rate plus 3 to 5 percentage points.

On Monday, the Dow Jones Industrial Average reached a 12-year low.

“I think there’s got to be a real gut check moving forward about what you can make,” Moore said at the Worrell Professional Center auditorium on the Winston-Salem campus.
 
As state treasurer, Moore had the sole legal responsibility to manage the state retirement system, comprised of several funds covering 820,000 state and local government employees and retirees.

The funds lost $17 billion in value in 2008, falling to $60 billion during Moore’s final year as treasurer as the nation entered a recession. But Moore predicted the public pension fund would be rated the nation’s best this year in part because his office shifted its investments more toward conservative bonds and steadier securities to avoid the stock market decline.

Moore supported his successor, fellow Democrat Janet Cowell, in telling the Legislature the plan needed $359 million over the next two years to keep it financially sound in the long term.

“She’s doing her job by asking for it,” Moore said.

RALEIGH, N.C. – State Treasurer Janet Cowell Friday released the 2009 Debt Affordability Study to Gov. Perdue and members of the General Assembly.

The annual analysis found that the state can authorize $50.2 million in new general fund-supported debt for each of the next five years and remain within the 4 percent debt service to tax revenues target ratio.

However, the combined debt capacity of the Highway Fund and the Highway Trust Fund has been exhausted through Fiscal Year 2011-2012 and recovers only modestly thereafter over the 10-year model horizon.

“The committee specifically recognizes that there is over $2 billion of debt already authorized that will provide a significant opportunity for economic stimulus when it is issued,” Cowell said. “In addition, increasing the amount of debt service in the budget over and above the 4 percent target could leave the state with less flexibility to address other potential budgetary challenges in the next few years.”

Treasurer Cowell and the Debt Affordability Advisory Committee continue to urge the Governor and the General Assembly to move away from issuing non-voted debt, so-called “special indebtedness”, and return to the use of general obligation debt, which requires a vote of the people and costs less.

North Carolina currently maintains a reasonable level of debt when compared with its peer group composed of the other states rated “triple A” by all three bond rating agencies. The calculation of the state’s general fund debt capacity is based on the recommendation that debt service should be targeted at no more than 4 percent of general fund tax revenues and should not exceed 4.75 percent.

Currently, all of the state’s debt ratios are at or below the median levels for the state’s peer group and are considered manageable at current levels. In the current economic climate, draw-downs of state reserves may be inevitable. However, Treasurer Cowell and the committee strongly recommend that fund balances be replenished as quickly as possible and that budgetary structural balance, a key factor in maintaining the state’s “triple A” bond rating.

The study was prepared by the staff of the State and Local Government Finance Division of the Department of State Treasurer, and approved by the Debt Affordability Advisory Committee, which was created by the General Assembly in 2004 and is chaired by Treasurer Cowell.  Debt Affordability Advisory Committee members include:  Cowell, Secretary of Revenue Kenneth Lay, State Budget Officer Charles Perusse, State Auditor Beth Wood, State Controller David McCoy and legislative appointees Christopher Henson and James Porto.

A full copy of the report is available at www.nctreasurer.com under the “State and Local Government” section.

RALEIGH, N.C.  – North Carolina’s new state treasurer wants future elections to be free of suspicion that campaign donations bought big-money contracts to manage state pension funds.

Janet Cowell said Thursday she supports a bill in the General Assembly that would add her post to the statewide offices that could receive taxpayer campaign funds. Voluntary public financing already is available to candidates for appellate judge, insurance commissioner, schools superintendent and state auditor.

State offices such as treasurer and labor commissioner are out of the public eye at election time, but draw intense interest from businesses the state officials would regulate. Investment firms that manage the state’s public pension system were big contributors to the treasurer’s race.

Facts about North Carolina’s 2009 inauguration:

WHEN & WHERE: 10 a.m. Saturday, in front of the Office of Archives & History Building, 109 E. Jones St., Raleigh. This will be the seventh time the building has been the site for the inauguration, dating back to 1981 and the second term of Gov. Jim Hunt. The event, which is open to the public, will begin with a concert, followed by the actual ceremony at 10:30 a.m. About 5,000 chairs will be set up for the event.

WHO: The ten members of the Council of State elected in November will be sworn in to office, capped by administration of the oath of office for Gov.-elect Beverly Perdue by state Supreme Court Chief Justice Sarah Parker. Incumbents getting sworn in for additional four-year terms are Attorney General Roy Cooper; Secretary of State Elaine Marshall; Labor Commissioner Cherie Berry; Superintendent of Public Instruction June Atkinson; and Agriculture Commissioner Steve Troxler.

NEWCOMERS: Four people will begin their first terms on the Council: Walter Dalton as lieutenant governor; Beth Wood, state auditor; Janet Cowell, state treasurer; and Wayne Goodwin, insurance commissioner.

CEREMONY HIGHLIGHTS: Television icon Andy Griffith, a Manteo resident, will give a special reading. William Swart, 12, of Fuquay-Varina, will lead the Pledge of Allegiance. Swart’s father is a National Guard member training to deploy to Iraq. A military flyover and 19-gun salute for Perdue also are expected. Outgoing Gov. Mike Easley, Hunt and former Gov. Jim Holshouser are scheduled to attend.

PARADE AND OPEN HOUSE: The inaugural parade will begin at 12:30 p.m. and travel up Fayetteville Street north toward the old Capitol building. The Executive Mansion, located at 200 N. Blount St., will be open to the public from 2:30-5:30 p.m.

PRAYER SERVICE: An Inaugural Service for Prayer and Worship will be held at 10:30 a.m. Friday at the historically black First Baptist Church on Capitol Square in downtown Raleigh. The event is open to the public.

HAVING A BALL: The Junior League of Raleigh again will host the Inaugural Ball on Friday night from 9 p.m.-midnight at the new Raleigh Convention Center. A Gala Presentation for ball participants begins at 8 p.m. and features performers Branford Marsalis, Eric Church and Vienna Teng, among others. Tickets for the ball and gala are $125 and can still be purchased one hour before Friday’s event. The governor-elect’s reception is sold out. For information, go to http://www.ncgovernorsball.com or call 919-783-8863.

WHO’S PAYING: The state has a $250,000 budget for putting on the inauguration, excluding events organized by the Junior League of Raleigh. The actual expenses for these events will fall well below that amount, said Tim Crowley, a spokesman for Perdue’s inauguration. The ball and other Junior League festivities are sponsored by corporations, outside groups and individuals. Net proceeds from the League events will go to the League’s new Center for Community Leadership to benefit nonprofits statewide.

With 84 percent of precincts reporting unofficial results, Democrat Janet Cowell led Republican Bill Daughtridge in the race for treasurer, capturing 53 percent of the vote to nearly 47 percent for her opponent.

With Richard Moore leaving office in January after eight years and a failed bid to win the Democratic nomination for governor, the winner will have to quickly deal with the loss of at least $6 billion in the state’s public pension funds, hit hard by falling prices on the stock market.

Cowell, of Raleigh, earned a master’s degree from the Wharton School of Business. She is currently a business consultant and a state senator. Cowell said she would consult with investment professionals who manage large pension funds.

Daughtridge, who is from Rocky Mount, has been in the state House since 2002. He earned a master’s degree in business at the University of North Carolina at Chapel Hill. Daughtridge focused his campaign on his intent to form a long-term infrastructure plan for the state.

The Cowell-Daughtridge race was one the lesser-known contests in the Council of State, which essentially serves as the governor’s cabinet.

A Democrat also led in the race to replace Jim Long as insurance commissioner. Long is stepping down after 24 years.

Wayne Goodwin had 51 percent of the vote, Republican John Odom had 44 percent and Libertarian Mark McMains just under 4 percent.

The winner will confront the issue of preserving the plan North Carolina created to insure coastal property.

Democrat Beth Wood has beaten incumbent Republican Leslie Merritt in the North Carolina state auditor’s race.

With 94 percent of the precincts reporting late Tuesday, Wood had nearly 54 percent of the vote, to 46 percent for Merritt. Wood is a certified public accountant and worked in the auditor’s office for 10 years.

The state auditor oversees how state government and nonprofit groups operate and spend public money.

Two-term incumbent Republican Cherie Berry was locked in a tight re-election bid for labor commissioner with Democrat Mary Fant Donnan, a program officer for the Z. Smith Reynolds Foundation in Winston-Salem.

With 84 percent of precincts reporting, Berry held less than 51 percent of the vote, with Donnan at 49 percent.

The commissioner is responsible for protecting the health and safety of the state’s more than 4 million workers. Agriculture Commissioner Steve Troxler, a Republican and Guilford County farmer, had 52 percent of the vote in the race against Democrat James Ronald “Ronnie” Ansley.

Troxler has concentrated on food safety since becoming head cheerleader for the state’s $70 billion agribusiness industry in 2005. Ansley said he would focus on developing the state’s biofuels industry using woody plants instead of corn and soybeans. Democratic Secretary of State Elaine Marshall had the largest lead in all the Council of State races in her re-election bid, holding nearly 57 percent of the vote in a race with Republican real estate lawyer and broker Jack Sawyer. The job includes enforcing ethics rules, overseeing legislative lobbyists, investigating securities fraud and cracking down on copyright infringement.

In the race for superintendent of public instruction, Democratic incumbent June Atkinson led Republican Richard Morgan, a former House co-speaker from Moore County. Atkinson had 53 percent of the vote, compared to nearly 47 percent for Morgan. Atkinson’s office has virtually no power or management duties, but Atkinson has seen her role as discussing ways to improve education.

According to the latest numbers from Public Policy Polling, Democrats are edging ahead in some races:

Treasurer:
Janet Cowell 45
Bill Daughtridge 39

Insurance Commissioner:
Wayne Goodwin 41
John Odom 34
Mark McMains 9

Labor Commissioner:
Mary Fant Donnan 43
Cherie Berry 43

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