The Maryland Transportation Authority, pinched by the need to lend money for the Baltimore area's light-rail line, is restructuring its bond payments, driving up interest costs by an estimated $43 million.
State transportation officials said today that as much as $20 million of the unexpected borrowing costs are attributable to the light-rail project, which already has been hit by budget overruns.
State legislators learned yesterday that the transportation authority is restructuring its bond payments to stretch some of them out over 15 years, driving up interest costs. Of those costs, "less than $20 million" is attributable to the light-rail project, deputy transportation secretary Stephen G. Zentz said today.
Under a plan outlined before the Senate Budget and Taxation Committee, the authority will lend the Department of Transportation $75 million for the light-rail line. But the authority will not have enough cash to make that loan if it also pays off $55 million in 1989 bonds. Originally, those bonds were to have been paid off in five years.
So, to raise money for the loan and bond payments, the authority plans to issue $78 million in additional bonds next year on a traditional, 15-year repayment schedule, forcing its interest costs higher.
"It's a disgrace, pure and simple," Sen. Julian L. Lapides, D-City, said today.
"It's the first time they are doing this by creative financing in transportation. It's bad enough with the cost overruns that taxpayers already face, but now Marylanders must pay for the errors of rushing projects through, doing things too hurriedly."
Lapides also lashed out at the so-called independent nature of the authority. "What independence?" he asked. "The secretary of transportation chairs the authority; the vote on this thing was unanimous."
Transportation Secretary Richard H. Trainor today defended the move. "We borrow money all the time for projects, so what's the problem? We are within our budget that we proposed."
The senators can take no action on the decision to restructure the debt, because the authority does not need legislative approval.
That, however, didn't keep Lapides and others from expressing their disgust with the plan.
"It's a systemic problem. The authority is completely dominated by the department [of Transportation]," said Sen. John Cade, R-Anne Arundel.
Although the bond restructuring means an increase in interest costs for the Transportation Authority, Department of Transportation officials said their direct costs for completing the project are still projected to be $446 million. Originally budgeted at $290 million, the cost of the Central Corridor Light Rail jumped 41 percent last year.
The legislature's fiscal analysts, in a report released yesterday, noted that costs for the light-rail spurs may drive the price even higher.
"Most of the light-rail systems built in the country in the past 15 years have experienced cost overruns," the report said.
Yesterday's report also noted that construction of the main corridor line through the city and Baltimore County is on schedule. The report also noted the slowdown in the construction industry has made the bids for the construction projects quite competitive, often coming in below estimates.