The Capital Debt Affordability Committee, dominated by appointees of Gov. Martin O'Malley, raised the state's debt limit by $150 million Monday over the dissent of Comptroller Peter Franchot.
The move increases the state's capacity to borrow money for such projects as roads and school construction from $925 million to $1.075 billion. The committee's action in effect borrows lending capacity from the future, saying the extra spending during the coming budget year should be repaid in 2017.
Voting in favor of the measure were state Treasurer Nancy K. Kopp, who chairs the panel, and the three members appointed by the governor – Budget Secretary T. Eloise Foster, Transportation Secretary Beverley K. Swaim-Staley and member Paul B. Meritt.
Franchot voted no, saying the move was irresponsible at a time when the state had recently lowered its estimate of sales tax revenue by $216 million.
"One week we are taking in less money, the next week we're spending more money," said Franchot, widely viewed as a possible contender for governor in 2014. "It's Christmas a week early because $150 million is being given to the governor and the legislature.
O'Malley has expressed an intention to move forward with capital projects while the economy is still in the doldrums as a way of boosting employment in Maryland. But Franchot, who has been staking out a position as the fiscal conservative in the likely Democratic field, called that a "failed policy."
"Let the private sector create jobs," Franchot said.
Matt Gallagher, O'Malley's chief of staff, said the move was in line with recommendations made by the General Assembly's Spending Affordability Committee last week that the governor accelerate borrowing to create jobs as long as the state stays within its current ratios. The move would bring the state's borrowing close to one of those ratios — debt service to revenue — in 2017 but would not exceed the 8 percent limit.
The administration estimates that $150 million in additional borrowing could generate more than 1,000 jobs for the state construction industry. Gallagher said the increased capacity will not necessarily translate into $150 million in additional spending when the governor releases his budget next month.
Under the plan adopted Monday, the debt authorization will increase for one year before returning to $925 million in fiscal 2014, then resuming a gradual increase of about $10 million a year. The debt level had been expected to jump in fiscal 2018 to $1.2 billion. Under the new plan it would go up to $1.05 billion.Copyright © 2015, The Baltimore Sun