State keeps favorable bond rating

July 16, 2004|By Greg Garland | Greg Garland,SUN STAFF

Maryland has once again earned a triple-A bond rating from the three major rating agencies - one of only seven states to retain the highest possible rating, Maryland Treasurer Nancy K. Kopp said yesterday.

The rating means that Maryland can borrow money to undertake projects at the lowest possible interest rate, saving state taxpayers millions of dollars.

While the top bond rating by Standard & Poor's Corp., Moody's Investor Service and Fitch Ratings was welcomed, state budget officials said the financial future remains cloudy.

"It's good news, but we still have some major fiscal problems ahead of us," said state Sen. Ulysses Currie, a Prince George's County Democrat who is chairman of the Senate's budget and taxation committee.

Currie and James C. "Chip" DiPaula Jr., the state budget secretary, pointed to the "structural deficit" that state officials will have to confront in preparing a budget for the fiscal year that begins July 1 next year.

The state faces a structural deficit because revenues are not sufficient to pay spiraling Medicaid costs and also meet commitments to increase spending on public education.

The Ehrlich administration has forecast that the structural deficit could reach as high as $830 million.

However, revenue has been coming in at higher-than-expected levels this year as the economy improves, and that figure is expected to be revised downward.

DiPaula said it appears that revenues will be "in the range of $150 million" above projections for the fiscal year that ended June 30.

However, he said, it isn't clear how long that will continue.

In announcing the AAA bond rating, Kopp said it shows that representatives of the ratings agencies hold a "favorable view of Maryland's fiscal integrity and management."

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