Associated Press//October 1, 2012
//October 1, 2012
ANNAPOLIS — A Maryland panel on Monday recommended raising the state’s debt limit by $150 million in the next fiscal year.
The state’s Capital Debt Affordability Committee voted 4-1 to allow the state to increase it from the current limit of $925 million.
T. Eloise Foster, Gov. Martin O’Malley’s budget secretary, said the increase is affordable because the state’s revenues have grown faster than earlier projections.
For example, the state’s Board of Revenue Estimates recently increased revenue projections for the current fiscal year by $181 million. It also raised ongoing revenue estimates by $120 million to $185 million per year.
Foster said increasing the debt limit will enable the state to invest in infrastructure and boost jobs, while interest rates are low.
“It’s one that allows us to take advantage of historically low interest rates and allows us to invest in priority projects and shovel-ready projects,” Foster said.
Comptroller Peter Franchot voted against the increase. Franchot said there are too many questions about the economy to justify increasing the debt limit. He noted the potential for big federal budget cuts as one reason for greater fiscal restraint.
“There’s just too many questions, too many storm clouds out there,” the comptroller said.
The recommendations to O’Malley and the Maryland General Assembly are not binding.
State Treasurer Nancy K. Kopp noted that the increase in the debt limit would be used to pay for projects that already have been approved and put into the funding queue.
“It’s just you were planning on spending money when the money is more expensive than right now,” Kopp said. “These are not new things that have been added out of the blue, and on the other hand we are doing it for one year.”
Foster, in a memo last week to members of the committee, wrote that she was recommending raising the debt ceiling by $150 million a year for each year between fiscal 2014 and fiscal 2018. She wrote that adding a total of $750 million to the state’s debt capacity over the next five years would support thousands of jobs while taking advantage of low interest rates.
“Projects funded through the increased authorization levels will support the creation of 7,500 to 9,225 jobs,” Foster wrote. “In addition to providing employment for thousands of Marylanders, these jobs will generate additional [general fund] revenues in the magnitude of $30 million to $37 million over the life of the projects.”
In addition to Kopp, Franchot and Foster, the committee consists of PNC Bank Vice President Paul B. Meritt and Acting Transportation Secretary Darrell B. Mobley