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Maryland House gives initial OK to capital budget

ANNAPOLIS — The House of Delegates gave preliminary approval Tuesday to Maryland’s fiscal year 2012 capital budget, which authorizes $925 million in new borrowing for infrastructure.

The capital budget includes $250 million for school construction. There’s also $198 million for higher education projects, including $60 million for 21 projects at community colleges.

The budget also includes about $40 million for the Department of Public Safety and Correctional Services and the Maryland State Police, including $20 million to help replace the state’s aging Medevac helicopter fleet.

The capital budget includes $267 million for environmental and agricultural projects, including $180 million for nutrient removal technologies in 67 of the state’s largest wastewater treatment plants.

During a debate, Democrats were quick to point out that the capital budget contains $215 million less in borrowing than the fiscal year 2011 capital budget to stay within self-imposed debt limits. Republicans, however, claimed Maryland has relied too much on borrowing during the recession.

Delegate Steven Schuh, R-Anne Arundel, noted that Maryland’s total outstanding debt has more than doubled in less than 10 years, from $4.7 billion in fiscal year 2002 to $10.8 billion in fiscal year 2012. It’s projected to grow to $12.2 billion in fiscal year 2016. The state also is on track to spend 7.9 percent of its revenues on debt service in four years, just under in 8 percent cap.

“We’re going to go from 6.85 (percent), which gives us a little bit of room today under that 8 percent cap, but by four years from now — four fiscal years from now — we’ll be at 7.89, almost right at the max of 8 percent. That’s risky,” Schuh said.

Democrats said borrowing has increased because of the recession. They also emphasized the limits are self-imposed guidelines the state uses to maintain the highest possible bond rating from three major financial agencies.

“If we were going above those limits, then I would be on the floor arguing that we need to cut this capital budget,” said Delegate John Bohanan, D-St. Mary’s. “We’re not.”

Maryland is one of eight states to have a Triple A bond rating. The rating is significant because it means the state can borrow money for building projects at lower interest rates.

The House is scheduled to take a final vote on the capital budget Tuesday afternoon. The budget bill will then go to the Senate.

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