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Md officials warn state debt threatens construction projects

CAMBRIDGE — As much as $200 million worth of state construction projects could be canceled next year because the state can't afford them, a General Assembly budget expert warned leaders of local governments Friday.

"Some people who were expecting things to be built, they're going to be disappointed," state Sen. Edward J. Kasemeyer, chairman of the Senate's budget committee, told officials gathered for a Maryland Association of Counties meeting. "I think this is going to be a year of [missed] expectations and disappointments."

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Kasemeyer, a Howard County Democrat, said the state's ballooning debt payments cost so much that Maryland will have to curtail its construction projects for the next five years.

Republican Gov. Larry Hogan's chief legislative officer agreed that the rising cost of paying off debt incurred during the previous administration will prevent the state from building projects already on the books.

"It's exploded," Joe Getty, the governor's top lobbyist, said of debt payments. He said next year, Maryland will have to pay more for debt than it will for building new schools.

"We can't build as many schools because we're still paying the debt on the ones we already built," he said. "We won't be able to fund everything. There are going to be tough choices."

Neither legislative leaders nor the Hogan administration has identified which projects might be canceled or postponed to keep borrowing costs down.

Speaking hypothetically, Getty said canceling one large project such as a building for a university would resolve most of the problem because such projects can cost upward of $150 million.

There are more than $380 million of projects "pre-authorized" for next year, with more than $270 million scheduled for the following year, and about $58 million for the year after that.

Projects on the list with the biggest cumulative price tags belong to universities: $72.5 million for a health science research facility at the University of Maryland, Baltimore; $99.5 million for a new bioengineering building at the University of Maryland, College Park; $96 million for a life sciences building at the University of Maryland, Baltimore County; $30 million for a behavioral and social sciences building at Morgan State University.

State analysts recommended this month that the annual capital, or construction, budget not exceed $995 million for the next five years. Last year, it was $45 million more than that, Kasemeyer said.

Maryland's debt grew, in part, because of the way Gov. Martin O'Malley, a Democrat, and the General Assembly chose to deal with budget shortfalls. Construction projects that would have been paid for in cash were instead financed with debt, the freed-up revenue used to support the ongoing expenses of running the state government.

The warning about canceled projects came as legislative leaders briefed local officials on the coming Assembly session, which begins next month.

"The honeymoon is over," Senate Minority Leader J.B. Jennings of Baltimore County said. With a Republican governor and a Democratic-led legislature, Jennings said he expected friction from the start and was bracing for Democrats to override vetoes Hogan issued in April.

Hogan vetoed a bill that would have given felons voting rights as soon as they were released from prison, rather than forcing them to wait until parole or probation is completed, as they do now. Hogan also vetoed a bill addressing how to tax hotel reservations made online through websites such as Expedia.

Democrats did not signal intent to immediately stoke controversy.

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"Senator Jennings says it won't be a love fest," joked House Speaker Michael E. Busch. "I don't see why not."

Busch, a Democrat from Annapolis, gave a lengthy presentation about how state money is spent, the relative wealth of jurisdictions and how rural areas receive significantly more money than they contribute to the state pot.

He pointed out that Montgomery County, which is home to more than 1 million people, contributes heavily to state government.

"If their economy is not booming, the rest of the state will take a hit as well," Busch said. "We can't make it work unless we work together."

Hogan addressed the gathering Thursday night and promised to spend more money on roads and to deal with the rising number of deaths from heroin overdoses. Both are issues of particular importance to the state's rural areas, which elected Hogan by large margins last year.

Busch said the legislature wants to work "hand in glove with the governor on addiction" issues.

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