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The Gazette Kopp: State
can afford more debt by Sean R. Sedam
and Diana Mota Morgan Kopp made the proposal two weeks ago at a meeting of the state's Capital Debt Affordability Committee, which she heads. She argues that the additional borrowing would not violate the state's debt guidelines in a letter she is preparing to send to Gov. Robert L. Ehrlich Jr. (R), Senate President Thomas V. Mike Miller Jr. (D-Dist. 27) of Chesapeake Beach and House Speaker Michael E. Busch (D-Dist. 30) of Annapolis. "The CDAC's capital debt authorization limit guidelines -- outstanding debt no higher than 3.2 percent of state personal income and debt service no more than 8 percent of state general fund and property revenue -- would permit such an increase over this period," Kopp wrote, "although this would increase debt service and limit alternative use of the authorization capacity." She also recommends that the governor and legislature also look at alternatives, such as creating a new School Construction Authority to float bonds based on revenue other than general state taxes. Kopp's letter, however, stops short of recommending the additional borrowing. The money would meet the state's portion of the $3.85 billion that a school construction task force last year said is needed to provide basic school facilities around the state. "I think what Nancy is proposing in her suggested letter is an invitation to both the governor and the General Assembly to fund this additional $150 million," said David S. Bliden, executive director of the Maryland Association of Counties, which plans to lobby the General Assembly for the additional money next year. It is a question of cash, Ehrlich said in an Aug. 24 interview with Gazette reporters and editors. "It's how much money do you want?" Ehrlich said. "Do you want to up your debt load a little bit? William Donald Schaefer's not crazy about that. We're a little more open to it." Schaefer, who, as comptroller, sits on the CDAC, could not be reached for comment Thursday. With interest rates already low and the state no longer having the luxury of cash on hand to put toward school construction, now is the time to raise the debt limit, Busch said. "I've always been a believer that when the interest rates are low we ought to expand our debt capacity," he said. "... As long as it's construction projects, you're putting people to work. That money filters back into the economy." The state already has conservative debt limit guidelines, Busch said. As long as interest rates remain low, Busch said, the state should be able to pay off the debt without jeopardizing its AAA bond rating. The state's bond rating allows it to borrow money at discounted rates. Given the state's needs for more schools, "There's no reason not to [do it]," Busch said. "Let's go forward with it." Del. Richard S. Madaleno Jr. (D-Dist. 18) of Kensington proposed a bill during this year's legislative session that would have allowed the Maryland Stadium Authority to raise up to $600 million for school construction. He agreed that Maryland would be able to increase its debt while maintaining good standing with lending agencies. "They look favorably on debt that is going to have a good economic impact," he said. "Those two things are funding for education and transportation." The CDAC plans to discuss the proposal at its next meeting. "The state does face a short-term operating problem," Madaleno said. "But from the capital standpoint, we have tremendous unused debt capacity." This year, Ehrlich proposed spending about $100 million on school construction and the legislature increased that to $117 million -- less than half the amount the task force said was needed. "We'll do better than 117 [million dollars] next year," Ehrlich said. "But the problem is, given the growth patterns in the state, and the cost involved, if it was 217 [million dollars], you'd ask me the same question." Kopp was out of the country on vacation and unavailable for comment. The proposal is getting broad support from around the state. "I think it is critical and I think there is room for debt capacity, and I think Nancy Kopp is on the right track," said Montgomery County Councilwoman Marilyn J. Praisner (D-Dist 4) of Calverton. Frederick County Commissioner Jan H. Gardner (D) said state officials have to decide, "Is this where they want to take on debt in the state? Should public schools be at the top of the priority list?" The answer, she said, should be yes. Gardner said she is trying to win support for Kopp's proposal. On Tuesday, she presented the idea to commissioners at their work session, asking for their support. "It'll be a huge help to Frederick County in securing seats for our students," said Commissioner Michael L. Cady (R). "I will partner with her every step of the way." The Frederick County school board plans to decide whether to include the proposal in its "wish list" of laws for the General Assembly to consider, said Ray Barnes, Frederick schools facilities director. "We will discuss it with our board to see if it should be something on our legislative agenda," said Joseph J. Lavorgna, director of planning and capital programs for Montgomery County schools. "When we sit down with our state delegation before they go to Annapolis, we will clearly make the case that this is a good thing." Sen. Patrick J. Hogan (D-Dist. 39) of Montgomery Village served on the school construction task force, which was headed by Kopp. "It's definitely something I'm looking to explore," said Hogan, who is vice chairman of the Senate's Budget and Taxation Committee. The need for construction money goes beyond the state, Hogan cautioned. "Even if we increase the debt ceiling ... that's just the state's share," he said. "Do the counties have the matching dollars?" While assuming more debt to pay for new schools may be seen as "an invitation toward all kinds of needs and programs to say, 'We have needs, too,'" Hogan said, he puts education in a different category from other state needs. "The one thing that makes education different is the Constitution of Maryland, which specifically says the state should provide a free, thorough and sufficient education system," he said. Still, he said, the state should be careful: "I want to be very cautious not to get overextended. That can happen to a state as easily as it can happen to an individual." Montgomery County's needs are greatest in fiscal 2005 to fiscal 2007, Lavorgna said. The school system's construction plan includes 10 new schools and 22 additions between now and fiscal 2010. Modernization of aging buildings is also a priority. This year, Montgomery schools asked the state for $59.7 million for school construction. It received $9 million, making it the fourth straight year that state support for construction has dropped after an all-time high of $51.2 million in fiscal 2001. The county, which planned for only $25 million in state aid in its budget projections, was left to make up $16 million to meet the school system's $165.5 million construction budget. Lavorgna said the minimum amount the state needs to put into school construction is $250 million a year. Kopp's proposal could offer a way for the state to fulfill its responsibility to education, he said. "This is a golden opportunity and it has nothing to do with revenue from slot machines or anything else," Lavorgna said. Madaleno agreed. "We have the money, we have the need," he said. "All we need is the political will to do it." Staff Writer Steven T. Dennis contributed to this report. |
