Three New York-based bond-rating agencies gave Maryland their highest marks yesterday, affixing a gold star to the state's financial condition even as leaders continue to wrangle over budget cuts, taxes and more legalized gambling.
Maryland's debt was awarded an AAA rating from Moody's Investor Service, Fitch Ratings and Standard & Poor's Corp., meaning the state will receive the lowest possible interest rate Wednesday, when it sells $500 million in general obligation bonds.
Lower interest rates mean fewer taxpayer dollars needed to repay the debt.
Some officials had worried that Maryland's score could be lowered, a fate suffered by several states in recent months as they grapple with declining tax revenues, mushrooming health care costs and other expenses. The state has had a triple-A rating from Standard & Poor's since 1961.
"It's not completely luck," said state Treasurer Nancy K. Kopp. "Some of it has to do with the Maryland system and the Maryland reputation. We have a good reputation for prudent fiscal management."
Kopp was part of a contingent of officials -- including Gov. Robert L. Ehrlich Jr. and Comptroller William Donald Schaefer -- that visited the Manhattan agencies last month to demonstrate that a government newly divided along party lines was up to the task of closing a $1 billion budget deficit projected for next year.
"I think the bond-rating folks were reassured that we were talking -- not the same language -- but we were making sense together. We were Marylanders," said Sen. Ulysses Currie, chairman of the Senate Budget and Taxation Committee and a Prince George's County Democrat.
Democratic legislative leaders support higher taxes to pay for state programs, while Ehrlich says he will veto taxes and wants to balance the budget through cuts or revenue from slot-machine gambling.
While the stellar rating may be good news, state officials face deep divisions over those choices as they work toward closing the anticipated budget gap, trying to find money to pay for next year's $365 million installment for a public-schools funding plan and other needs.
"It's breathing room, with a short leash," said Del. Peter Franchot, a Montgomery County Democrat and member of the appropriations committee. "Next year, you don't have the one-time transfers from the transportation trust fund, or the cuts from higher education. And slots may be mired in political scandals."
Ehrlich has said he will look to close the gap entirely through cuts, some of which could be announced soon. He recently impounded 10 percent of the budgets of most state agencies while he reviews how deeply to trim.
Ehrlich budget secretary James C. "Chip" DiPaula Jr. is scheduled to brief the House and Senate budget committees on Tuesday, and lawmakers will be listening for details on where the governor is planning cuts.
"We'd love to have the political gamesmanship stop, and that specific cuts be articulated, so that the legislature can react and the agencies can make adjustments," Franchot said.
But in an interview Thursday, Ehrlich said he had just begun to examine specific cuts, and that final decisions were still pending.
"We had the first meeting the other day," Ehrlich said. "These meetings will continue for weeks."