Gov. Larry Hogan's decision to withhold $25 million that would have helped local governments pay education costs is not helping the credit of Baltimore and most of Maryland's 23 counties.
Moody's, one of the nation's three large bond rating agencies, said Thursday that the governor's refusal to spend the money the General Assembly allocated for teachers pensions and aging schools is a "credit negative" for 21 counties and the city.
The governor's move was part of a larger decision to forgo spending $80 million that lawmakers had "fenced off" to fund a variety of programs — some favored by the legislature and some proposed by Hogan. The budget bill specified that Hogan had to spend all of it or none of it.
Doug Mayer, a spokesman for Hogan, said the responsibility lies with the Assembly's majority Democrats, saying that if they thought the funds were important, "they shouldn't have included them in their self-admitted budgetary trap."
Legislative leaders said they structured the budget that way so Hogan couldn't "cherry-pick" programs he favored while giving their priorities short shrift.
Moody's noted that its credit negative finding is not a downgrade of its ratings of the affected jurisdictions' bonds but it can be a factor in future decisions. The agency made no comment on the state's Triple-A bond rating, which remains unchanged.
The withheld money includes $19 million for pension assistance, favored by the legislature, and $6 million for a program that helps maintain and renovate older public school buildings — spending proposed by the governor.
Three counties most heavily affected by the decision — Baltimore, Montgomery and Howard — all retain their top ratings, Moody's said. Baltimore city has Moody's third-highest rating, which also remains unchanged.
David Jacobson, a Moody's spokesman, said the agency is not making a judgment on the wisdom of Hogan's decision, just an assessment of the risks to the city and counties.