ANNAPOLIS — The county plans to borrow more money in the upcoming budget year than ever before, county officials Wednesday told Carroll's state legislators, who generally commended the new financing philosophy.
The county has asked for authorization to borrow up to $23.4 million through bond sales in fiscal 1992 for construction of such public projects as schools, roads, libraries and waste management facilities.
Budget Director Steven D. Powell said the proposal represents a continuing trend away from the "pay-as-you-go" approach to financing capital projects, the more fiscally conservative method the county traditionally preferred until about five years ago. Under the old philosophy, construction often was deferred and facilities became overburdened. Eventually the county was forced to turn more toward borrowing to pay for projects to accommodate a growing population.
Powell, who came here with County Commissioner Julia W. Gouge, assured that thecounty still is "financially sound."
"We've been very responsiblein our bonding program," he said. "We've moved from low to the low range of moderate" under standards used by major bond-rating agenciesto measure borrowing and debt affordability levels for government entities.
The $23.4 million proposal for bonding represents about half of the budget department's recommended $45.3 million fiscal 1992 capital budget, sliced from an original request of $93.4 million in response to the current sluggish economy.
Delegate Richard N. Dixon,D-Carroll, an advocate of borrowing to pay for long-enduring projects to spread costs over time rather than paying up-front with available revenue, lauded the intent and timing of the proposal.
"This is a good time to be selling bonds," said Dixon, a vice president with the investment firm Merrill Lynch Pierce Fenner & Smith Inc. "Interestrates are the lowest they've been in seven or eight years. I'm glad to see this is the year the county is bonding the most."
Powell said the county plans to borrow to build one school each year for the foreseeable future, counting on state approval and reimbursement eventually.
He said county officials will discuss with Carroll Community College board members whether to borrow money to move ahead with construction of additional campus buildings -- currently dropped from state budget proposals -- while attempting to get the projects reinstated in the future. A new classroom building once slated to receive state money for planning and construction in the next two years has been dropped, he said.
Last year, the county received authorization to borrow up to $21 million, and it sold $15.5 million in government-backed bonds for construction projects. It was authorized for up to $17 million in bond sales in 1989 and $12 million in 1988 and sold a total of $21.5 million. By contrast, in the previous 20 years, the county issued a total of about $40 million in bonds.
The amount of cash from the operating budget designated for capital projects has dropped steadily for four years, from $11.5 million in 1989 to a proposed $3.8 million for 1992.
Following the meeting, Delegate Richard C. Matthews, R-Carroll, cautioned against becoming too nonchalant about increasing the county's debt load.
"It puts a burden on future generations," he said. "By living too much on future payments it sometimes encourages not as prudent management of the county."
However, he agreed that economic conditions are favorable for selling bonds -- lower interest rates could result in large savings over the life of the loan -- and that the county is in good shape financially.