ANNAPOLIS — Maryland’s treasurer briefed Gov. Martin O’Malley on Wednesday about a credit rating agency’s concern over the state’s unresolved budget situation, telling the governor that Moody’s Investor Services wants to be kept informed about developments.
Maryland Treasurer Nancy Kopp, who briefed O’Malley before a meeting of the state’s Board of Public Works, said Moody’s Investor Services was assured Maryland will have a balanced budget before the next fiscal year, whether through a special session or cuts by the board. Moody’s rates bonds issued by state and local governments. Favorable ratings can make it easier for governments to borrow money for infrastructure like roads and schools.
“They were understanding, but skeptical,” Kopp told the governor, adding that they made a special point about some counties being on credit watch because of concerns about the federal government’s credit standing. “So they’re watching us.”
Kopp also noted that the Moody’s representative mentioned that budget situation is unusual for Maryland.
Kopp said Moody’s is looking specifically at counties that have triple-A ratings, such as Montgomery, Baltimore and Prince George’s counties.
“The longer we go without a final conclusion in terms of deciding whether there will be a special session or not, the more concern it raises because as the rating agency representative pointed out the local governments have to write their budgets,” Kopp said in an interview after the meeting.
O’Malley asked Kopp to reach out to county executives to let them know about Moody’s concerns.
“There’s a lot of denial right now, denial that the Legislature really did this, denial that these cuts have the effects that they will have,” O’Malley said.
Timing of a special session is now in limbo. O’Malley wants to call one as soon as possible. But he says he won’t call one until a consensus has been reached between the House and Senate on how to reconcile differences between the two chambers on an income tax increase to help fill the budget gap.
Kopp underscored that Moody’s understands Maryland’s Board of Public Works, including O’Malley, Kopp and Comptroller Peter Franchot, has the unique capability to make budget cuts while the Maryland General Assembly is not in session. She also said the call from Moody’s on Tuesday was more to make the state aware that the rating agency is monitoring the state.
“They are watching,” Kopp said. “There were no threats regarding our bond rating or anything like that, but they just wanted us to be aware of the fact that they want to be informed on a regular basis of what’s happening, and they’re watching as things develop and they understand the serious adverse impact on the local budget and local finance if we simply have the budget with all the budget cuts and no relief.”
Meanwhile, Maryland state employees will be unveiling a “Doomsday Clock” to count down when about a half a billion dollars in budget cuts will take effect July 1, unless a special session is called to change the budget, which would currently make substantial cuts to education. About 500 state jobs would be cut, and state employees would have to go without a cost of living adjustment.
The Maryland State Education Association is planning to show the clock on Wednesday at its Annapolis office.