SENATE OF MARYLAND
ANNAPOLIS. MARYLAND 214O1-1991
By
Oh, the temptation. Maryland has a surplus of more than $100 million. Wouldn't it be nice to expand some existing programs, add some new ones, tack on some additional personnel and make everyone happy. I don't think so.Maryland has gotten itself in financial trouble in the past by doing just that. The law of economics is: what goes up must come down. In those downturns we wind up in terrible fiscal shape because we haven't planned for those rainy days.
The better, more fiscally prudent approach is to hold the line on programs, and even try to shrink them if at all possible, and use the savings for needed capital expenditures. We in Southern Maryland know all too well the financial burden on our counties of the increased population. That burden translates into the need for more or improved schools and more or expanded roads.
There's another temptation: to conclude that floating bonds is a painless way to do capital projects. After all the cost is spread out over time. What could be easier. Well the cost of that debt service is one of the parts of the state budget which is increasing the fastest. And even though we, here and now, don't have to pay for all of the cost, your children and grandchildren will continue to pay and pay for those decisions now.
The best approach is to use unexpected surpluses, achieved in boom times, to pay for capital projects. These are one shot expenses which don't put a continuing burden on the taxpayers. And in adopting a pay-as-you-go policy on capital expenditures, we are in fact reducing the amount of money we will have to pay for debt service in subsequent years, be they boom or bust. That helps the operating budget's bottom line.
Taking this prudent approach will allow us to continue to have a high bond rating when it comes time to go to the bond market for necessary projects. Bond rating agencies like government entities that don't always go to the bond market at the drop of a hat. After all the reputation of bond rating agencies is staked on how well they assess an area's fiscal stability.
Maryland so far has managed to retain a high bond rating: AAA from Moody's, Standard & Poors and Fitch's Services. Maryland is the first state to receive a AAA rating from all three rating agencies. The latest bond sale of $250 million was at an interest rate of 4.63 percent.
As I go around my district of Calvert and St. Mary's counties, I am constantly hearing these days about concerns for our ability to accommodate the new people coming in this summer. Some roads have reached gridlock in the last month. Some schools will be overcrowded this week as they open for the new year.
Last week I talked to State Highway Administration District Engineer Paul Armstrong about the road problems, particularly Routes 5 and 246 in the Great Mills area. As Route 235 becomes worse and worse, people are choosing Route 5 as an alternative. I have an on-site meeting scheduled with Mr. Armstrong to go over a proposal for creating three lanes on Route 5. The added third lane would reverse directions in morning and afternoon rush hours.
I recently attended a public hearing on the extension of Route 765 in Solomons. The majority of the persons in attendance, and the county commissioners, agree that the project is needed. They view it as a way to reduce the amount of traffic that needs to go out on Routes 2/4, and thus reducing congestion on that busy major highway. I agree. This is another example of where that surplus money can be used for good purposes.
We also recently got a letter from Maryland Transportation Secretary David Winstead saying he would seriously consider my suggestions for a traffic light at Route 5 and Abell/Moakley streets in Leonardtown and signs warning of congestion on Route 5 in Charlotte Hall.
Let's take some of that $100 million plus surplus and use it for infrastructure here in Southern Maryland. Last year Baltimore schools got the bulk of the largess from Governor Glendening. While we have received substantial state support for infrastructure, we need more and we need to accelerate what has already been promised. This surplus provides the ideal opportunity to do just that.