Howard County should authorize borrowing $80 million in bonds for building projects next fiscal year, and perhaps for several years to come, according to a tentative decision yesterday by the county's Spending Affordability Committee.
That is $10 million higher than the group recommended last year, but about what the County Council authorized in May. Once finalized, the figure will be one more ingredient in next fiscal year's spending mix as the administration of County Executive James N. Robey struggles to satisfy $170 million in capital budget requests - including $115 million for schools.
"I'm glad it's higher than last year," said Courtney Watson, chairman of the school board, who has pushed for more new classrooms to reduce crowding. "It's one piece of the puzzle."
"It sounds about right," said County Council Chairman Guy Guzzone, a North Laurel-Savage Democrat.
Robey sang his song of fiscal woe later to about 100 people at an Association of Community Services luncheon at Owen Brown Interfaith Center.
He said he expects about $40 million in new revenue for next year, noting that outgoing school Superintendent John R. O'Rourke has asked for $42 million more for schools.
"Once you take out $42 million, you have a $2 million shortfall," he said to a few chuckles.
Robey promised not to cut grants for the nonprofit social service agencies that make up ACS, though some fees - such as parking fines - may go up.
Judy Clancy, director of the Domestic Violence Center, suggested raising Howard's $35 marriage license fee to $50 or $60 as a way of funneling more money to her group.
The Spending Affordability Committee met earlier yesterday at the county's Gateway building, and much of the discussion was along similar lines.
"So much of what we're doing is driven by that education number," said Bruce Rothschild, a lawyer and committee member, referring to Howard County's high spending for public schools. He later recommended the $80 million bond sale.
Unlike last year, however, when a few committee members talked about borrowing up to $100 million, the impulse this time was the opposite.
"All three rating agencies have raised red flags" about the county's economic situation, noted Margaret Murphy, a retired vice president of the Federal Reserve Bank of Richmond.
Kenneth Solow, a private investment adviser, said, "Our role is to decide what's affordable," based on expected revenue, rather than respond to every need.
Several members, including Murphy, wanted to stick with $70 million as a recommendation.
"I'd be in favor of keeping it consistent with what we did last year," said Kevin Bell, a Clarksville auto dealer.
And Sharon Greisz, the county finance director, said, "Rating agencies don't want to see us living too close to the edge year after year."
Howard County is one of two dozen among 30,000 jurisdictions nationwide with a triple-A bond rating, guaranteeing prestige and the lowest interest rate for bond borrowing.
The rating agencies issued warnings last year based on Howard's struggles with the recession and revenue shortfalls.
"There's going to be a very vigorous debate about the level of education spending," said Raymond S. Wacks, the county budget director, especially since Robey won't approve all the capital budget requests and is not likely to propose any tax increases.
Last year's recommendations, Wacks noted, were made before Robey and County Council Democrats pushed through a 30 percent local income tax increase.
Wacks gave the committee a chart showing $7 million a year from the new revenue going into the capital budget and $2.5 million a year of surplus that will be used to bolster the county's Rainy Day Fund.
The annual trick, he said, is to provide enough money to fill the most pressing capital budget needs without creating so much debt that the interest payments later cripple flexibility in the operating budget.
The county expects to pay $59.2 million in interest on bonds next fiscal year - an amount that will climb slowly as authorized bonds are sold two or three years later. If the county continues to authorize sale of $80 million in bonds for the next three to four years, Wacks' chart shows annual surpluses diminishing to zero by fiscal 2009.
And Wacks warned the committee that the excise tax approved on new homes by local General Assembly members would not mean that all $58 million raised through that source would be available for school construction in the next fiscal year - even if it is finally enacted by the legislature.