Maryland officials voted for the first time in two decades yesterday to increase the amount the state can borrow for schools, roads and other projects, even as some fiscal leaders urged restraint in the face of a weakening economy and a possible $1 billion budget shortfall.
Without the increase, Gov. Martin O'Malley's administration warned, the state would have to roll back $800 million in planned construction and other projects over the next two years. The vote came a day before Comptroller Peter Franchot's office is due to release new revenue estimates that he said are a "sobering window" on Maryland's economy, a look that's expected to show tax collections falling far short of expectations.
"I get the need for new capital improvements, but I also think the state and the country are at a particularly perilous moment right now," said Franchot, who cast the only dissenting vote on the five-member Capital Debt Affordability Committee.
"We have a responsibility to put the brakes on."
The state repays its construction bonds largely through property taxes, but often it avoids raising that tax by supplementing the payments with general tax dollars.
"One way or another, taxpayers have to pay for that on an annual basis," said Del. Anthony J. O'Donnell, the House Republican leader from Southern Maryland and a frequent critic of what he and other Republicans characterize as out-of-control spending by the O'Malley administration.
"These folks don't seem to get it that we can't afford more spending right now."
A worsening budget picture has set off a touchy debate in Annapolis over how to solve the state's continuing financial crunch. It has been less than a year since O'Malley called a special session of the General Assembly to close a $1.7 billion budget gap largely through tax increases.
State law requires legislators to adopt a balanced budget, so revenue shortfalls must be covered by reduced spending, higher taxes or transfers from surplus accounts.
The administration contends that more borrowing for capital projects could stimulate the economy while construction costs and interest rates are relatively low. Budget Secretary T. Eloise Foster, who sits on the committee and serves in O'Malley's Cabinet, said the increase isn't a "significant departure" from current levels.
"This is precisely the time to prime the pump, if you will," said Transportation Secretary John D. Porcari, also a committee and Cabinet member. "This will be a shot in the arm at the right time."
