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Baltimore County seeks to refinance $3 billion in bonds, issue millions for school, infrastructure projects

Baltimore County is seeking to refinance billions in bonds and issue $365 million in new bond anticipation notes to pay for capital projects.

Through a bill introduced at the County Council’s work session Tuesday, County Executive Johnny Olszewski Jr.’s administration is asking for approval to refinance up to $3 billion in bonds, effectively reducing the amount of interest the county owes on $2.38 million in bonds collected between 2009 and 2020.

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The county saved $9.4 million in interest payments, for instance, when it refinanced $54.1 million in bonds in July, according to the bill’s fiscal note.

The proposed bill comes without a set date for when the money must be refinanced, so it’s unclear how much interest may be pared through refinancing.

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Not having a deadline for when to refinance allows the county to wait until market conditions turn favorable before refinancing, giving county officials more flexibility as they consider capital funding priorities amid the COVID-19 crisis that has hammered local economies and will continue to take a toll on local government budgets without federal relief in sight.

Despite the uncertainty, budget director Ed Blades told council members Tuesday that there is no hard stance on stopping capital projects amid the pandemic.

Of the $365 million requested in new bond anticipation notes — short-term notes that are sold before long-term bonds are sold at a later date — $135 million would go to school improvements; $40 million for construction on roads, bridges, sidewalks and storm drains; $20 million to government building improvements; $18 million to Community College of Baltimore County capital projects; $10 million for waterway improvements; $5 million each for trash disposal, agricultural land preservation, and parks and preservation projects; and $2 million toward community and economic improvements, according to the fiscal note.

The leftover $125 million, once issued, would go toward water and sewer projects.

The county also has a fund balance at 15% of its total revenues, Blades said, or about $32.4 million. He expects the county to end fiscal 2021 with that balance and put it toward pay-go costs for capital projects in the next fiscal year.

Baltimore County maintained its Triple-A bond ratings this year from all three major rating agencies, meaning the county can continue to issue bonds at the lowest possible interest rate. Credit analysts, according to the county, feel that a Triple-A-rated county should have an ending fund balance that is at least 5% of budget.

Because the county reduced its fiscal 2021 budget by more than $127 million and has so far received $10 million more in income tax revenue than finance staff expected, Blades said that even without more federal relief money, county finances would still be in “a good position.”

Still, he told council members, administrative staff is continuing to divide the county’s $144 million in federal coronavirus relief money to cover all eligible operating costs. And tough decisions may have to be made later, he added.

Staff members are also considering which relief programs, like food distribution and coronavirus testing, will still need to be paid for even after the federal spending deadline expires Dec. 31.

In March, Congress passed a $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act containing unemployment assistance, business loans and grants, and aid to state and local governments and public transit systems. U.S. Senate Republicans have resisted a House-passed, $2.4 trillion package that GOP leadership says is too large, and some senators are seeking this week to forge a bipartisan compromise.

Through Sept. 30, the latest public data available, the county had spent $54 million of its relief funding apportionment through the federal Coronavirus Aid, Relief, and Economic Security Act, according to the Pandemic Response Accountability Committee.

Baltimore County is one of five Maryland jurisdictions that reports its CARES Act spending directly to the U.S. Treasury Department, which has only released spending figures through June 30.

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The Towson Times submitted a public records request last month seeking a breakdown of the county’s relief spending.

“It feels like this deadline’s fast approaching,” said County Councilman Tom Quirk about the deadline set to spend the relief money.

Congress has “gotta get something passed — even if it’s not perfect,” he added.

While the council met, Gov. Larry Hogan during a news conference urged federal lawmakers to approve a new stimulus relief package to help states and small businesses cope during the pandemic.

“Every day I hear from small business owners who say that without this help they may not be able to keep their doors open,” Hogan said. “The time for partisan politics is over.”

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