Keeping the General Assembly in extended session last month until senators and delegates agreed on a tax and spending-cut package paid off handsomely for state officials this week as Maryland retained its prestigious Triple-A bond rating and then sold $120 million worth of bonds at the lowest interest rate in nearly 14 years.
That translates into substantial savings for taxpayers. The gilt-edged Triple-A rating from Moody's Investor's Service, Standard & Poor's Corp. and Fitch's Investor's Service assured financiers of the Maryland bond issue's safety and its high quality. When the sale took place on Wednesday, five bidders competed for the financing issue, with the winner setting the interest rate the state must pay at only 5.8 percent. Not since 1978 has Maryland been able to sell its bonds at such a low rate.
It's no secret why Maryland's bonds were so highly received on Wall Street. The willingness of Gov. William Donald Schaefer and the legislature to finally come to grips with a billion-dollar deficit contrasts with the resistance of other states to put their fiscal houses in order. While state taxes are being hiked by $250 million, the governor and legislature also have chopped state spending by $1.5 billion over the past 18 months. That clearly impressed the bond marketers.
Retaining the top bond rating and receiving the low interest rate will help officials maintain the state's property tax rate at 21 cents per $100 of assessed value in future years and relieve pressure on the general fund. It thus will free additional money for other purposes over the 15-year life of the bonds.
Now state officials have to turn their attention to preserving Maryland's Triple-A rating for the next bond offering, which could take place as early as July. The fiscal outlook could be determined by income-tax withholding receipts and sales-tax revenues tallied at the end of this month. But the determination of state political leaders to do whatever it takes to retain Maryland's financial integrity is heartening. It helps restore public confidence in elected officials working in the State House.