In some editions of The Evening Sun Oct. 25 an editorial misstated Harford County's debt load. The correct total of principal and interest is $190 million, according to the county treasurer. The Evening Sun regrets the error.
Harford County's sale of $53.7 million in new municipal bonds this week represents a savings of $1 million for taxpayers. Two-thirds of the money will be used to pay off older, higher-interest rate bonds floated by the county in the past. The rest will be used for public school projects, the apprenticeship training center of Harford Community College and capping of the closed Tollgate landfill.
Lots of state and local governments are rushing to float new bonds to lock in the lowest interest rates in decades. Harford is not alone in securing a respectable 4.66 percent borrowing rate. In fact, the surge of municipal bond refunding nationwide has kept rates up, even as investors flock to these tax-free bonds to avoid higher income taxes.
The new bonds will save money on outstanding bonds that were issued between 1988 and 1992. But the bond issue also increases overall indebtedness of the county, for new projects, at a time when the economy is still sputtering and Harford already has a debt load of some $300 million.
Prudent borrowing for useful projects isn't a sin; it's how you use the money and what it costs to pay off the loan that counts. Harford's exceptional growth required some catching up on facilities that couldn't be financed immediately out of pocket.
On the other hand, there's less public urgency to build a county apprenticeship center outside Aberdeen, a project originally intended for private development in a prime location. Instead, the state and county will fund the initial phase, and continue to solicit investors from the private sector while hunting for paying tenants.
The debt load has not hurt Harford's credit rating, though. Two major bond rating services upgraded the rating for Harford's bonds, while a third had equally positive comments.
The bond raters cited the controversial "fund balance," or 5 percent reserve, of the county budget that the Rehrmann administration has set aside each year. While it has served as a comfortable fudge factor for the administration, the fund balance also seems to have achieved its purpose of impressing rating agencies, whose evaluations are critical in determining the interest rates bid by underwriters on municipal bonds.
Moody's Investors agency also praised the county's "fast track" approval process for new business, at a fortuitous time for County Executive Eileen Rehrmann. Her administration is fighting a County Council bill to add a community hearing to that expedited permitting process.