A record capital budget

Craig's spending plan makes some officials uneasy

April 01, 2007|By Justin Fenton | Justin Fenton,[Sun reporter]

County Executive David R. Craig's philosophy toward addressing Harford's infrastructure needs could be: "If we build it, the funding will come."

Yet Craig's proposed $370 million capital spending plan has many county elected leaders feeling uneasy. The unprecedented amount nearly doubles last year's record high and marks a 360 percent increase since 2003.

The priorities include school construction, library expansion, a new detention center, an expanded water treatment plant and a new government administration building.

"These are projects that should've been done years ago and could've been done cheaper," Craig, a Republican, said Thursday.

The administration building project could prove to be the most contentious. Craig's aides have scheduled a news conference this week to head off anticipated criticism about the need for a new building.

That project accounts for a small part of the budget, however. Critics of the large increase in capital spending worry that this year's proposal could create long-term issues for the county, and some are concerned that it could create the need for a tax increase. The outgoing County Council president offered that prediction as a parting shot last fall.

"I think we'd have to have our head in the sand, if you don't realize that when you're going to take on major construction projects with bonded money without expanded revenue streams, it's on the full faith and credit of the county," said Councilman Richard C. Slutzky, a Republican from Aberdeen. "If things go bad, you're talking about tax increases."

School officials vented their frustration on Wednesday, when their capital budget amounted to $97 million, significantly less than the $140 million they had requested. Even at the higher level, school officials have expressed concern about the ability to carry out so many projects at once.

Craig's budget gives the green light to 31 school construction projects, including an addition to Aberdeen High School, a new Bel Air high school, an expansion of Deerfield Elementary, the modernization of Joppatowne Elementary, athletic field repairs, new textbooks and buses, security improvements and improved parking.

Craig unveiled the multiyear proposal at a news conference last year in front of Bel Air High. Council members were skeptical of the plan, but didn't have to take a hard look at it. He proposed $218 million for seven school projects, but only $8 million was budgeted for the current fiscal year.

"When it comes down to showing me how this will be paid for, five years out, it comes up lacking," Robert S. Wagner, then council president, said last year.

The tough work begins now.

"There's going to have to be a lot of prioritizing," Council President Billy Boniface said Thursday. He has requested a spreadsheet from the county showing how much the anticipated projects would cost the county, if no outside funding sources are included.

"I think it's important we look at the overall picture," said Boniface, a Republican.

Members of Craig's administration have said bonds are the way to go for the long list of projects. Craig has said the county will "grow into" the expenses with population and job growth.

"When interest rates are low, you should bond it so you can pay it over time," said Lorraine Costello, director of administration.

But there are limits to how much the government can borrow without affecting its bond rating. Typically, a higher bond rating translates into lower interest rates in financing capital projects.

"There's a real danger in maxing out the credit card, so to speak," said Del. Barry Glassman, a Republican who served two terms on the council.

The county has a AA+ bond ratings from Fitch Ratings and Standard & Poor's, and a AA1 from Moody's. In a 2005 analyst's report, Fitch Ratings noted Harford's "manageable capital needs."

To fund the Patterson Mill middle and high school complex, the county approved an impact fee, collected when homes are built, that would be funneled toward the project.

Also last year, the council agreed to funnel a specific portion of property taxes toward replacing Bel Air High.

The impact fee has yielded less than expected. The council attempted to trade the impact fee for a higher transfer tax, but was blocked by Harford's senators. Still, a higher transfer tax alone would hardly cover the balance.

Also looming in the distance is a tough financial picture statewide. Gov. Martin O'Malley provided $400 million for school construction this year, far more than in previous years. But that could be an aberration with a structural deficit looming, state leaders have said.

"If I was the county, I'd be treading lightly," Glassman said. "When we restructure the deficit, the counties are going to feel the effects."

The council will hold several all-day work sessions over the next five weeks to examine Craig's budget plan and look for efficiencies, Boniface said.

justin.fenton@baltsun.com

CAPITAL SPENDING

Harford's capital spending - funding for construction projects - has steadily increased since 2003. An unprecedented jump in next year's proposed budget has some officials concerned.

Fiscal year Capital spending

FY04: $82 million

FY05: $103 million

FY06: $156 million

FY07: $183 million

FY08: $370 million

[Source: Harford County government]

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