Md. keeps top bond rating

O'Malley praises 'difficult decisions

' $600 million in bonds to go on sale Wed.

February 19, 2010|By Annie Linskey | annie.linskey@baltsun.com

All three major rating houses gave Maryland a fiscal stamp of approval Thursday, affirming the state's AAA bond rating.

"We have made the difficult decisions to protect our State's long-term financial health," said Gov. Martin O'Malley in an e-mailed statement pointing to the high rating.

The state plans Wednesday to sell $600 million in bonds, with much of the money tobe used for schools, community colleges and hospitals. The top rating means the state will be able to borrow with low interest payments.

Before issuing the ratings, analysts from Moody's, Fitch and Standard and Poor's grilled key finance officials on O'Malley's proposed $13 billion general fund operating budget for fiscal 2010. The spending plan has been criticized by Republicans, who say it is irresponsible because it relies on a series of one-time transfers of funds and stimulus money.

In the report explaining why the state earned the high rating, Standard and Poor's said that Maryland has no plans to touch its rainy-day fund and kept its debt "low." Also, the agency pointed to the state's "economic strength" and "historically strong financial and debt management policies."

However, Standard and Poor's warned that the unfunded liabilities connected with the state's pension system have "grown significantly." Also, it forecast that the state "will continue to face a structural imbalance for the next several years" and "will have to find ways to balance operations while the economy recovers."

State Republicans have repeatedly predicted that Marylanders will face tax increases next year after the election.

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