The Capital Debt Affordability Committee Monday recommended that the state could afford to float an additional $150 million bonds in fiscal 2014, bringing the total to $1.075 billion – but not the extra $750 million over five years the O’Malley administration had requested.
State Treasurer Nancy Kopp, who chairs the debt committee, made clear they were only authorized to recommend “what could be prudently affordable” for a single budget year, not any long-term expansion of borrowing power. Kopp said that level of debt was “ affordable” but “not necessarily desirable.”
“That, I think, is the decision of the legislature and the governor to make,” Kopp said.
“This committee is not responsible for what the specific amount should be,” she said.
Comptroller Peter Franchot, who held up the recommendation at a meeting last week, as expected strongly opposed increasing the debt limit based on slightly increased revenues in a very shaky economy. As he had predicted to MarylandReporter.com Friday, he was outvoted 4-1 on the recommendation, continuing his long-running but losing battle against what he sees as overspending in the face of a sluggish economic growth.
The new debt was approved by the other four committee members: Kopp, Foster, Acting Transportation Secretary Darrell Mobley, and public member Paul Merritt, a banker.
Franchot had asked for more specifics about the spending, which he complained were totally missing last week. O’Malley Budget Secretary Eloise Foster provided some in a three-page memo, citing several university buildings already authorized that would be funded.
Foster said that the extra debt would “allow the governor to expand current or invest in new initiatives that are ‘shovel ready,’” and support the creation of more than 7,500 jobs. Foster said the spending was justified by an uptick in revenue estimates of $181 million approved last month by Board of Revenue Estimates, on which she, Kopp and Franchot also serve.