The Capital Debt Affordability Committee (CDAC) met on December 18 and voted to increase its previously agreed upon recommendation of $990 million for new general obligation (GO) authorizations by the 2010 General Assembly by $150 million, bringing the total recommended authorization to $1.14 billion. The recommendation also includes language to reduce future year debt authorizations to around $925-955 million in order to avoid exceeding the State’s debt affordability criteria. The Spending Affordability Committee supports the revised CDAC recommendation.
At the CDAC meeting, Secretary of Budget and Management T. Eloise Foster supported the increase, arguing that: (1) more funding for capital projects would take advantage of the low-interest rates and construction costs; and (2) the increase would create additional capacity to shift general fund operating costs into the capital budget. Comptroller Peter Franchot voted against increasing the authorization, expressing concern about the uncertain economic situation and the fact that public efforts at stimulus and job creation will not work until the private sector comes back.
CDAC also reviewed the December 16 Board of Revenue Estimates (BRE) write-downs. The BRE gave write-down of $14-15 million for FY 2010 and $62 million for FY 2011. The BRE predicts a -4.7% revenue drop for FY 2010 but a 3.0% revenue increase for FY 2011.
CDAC also discussed revenue projections, including property tax revenues. Representatives from the State Department of Assessments and Taxation (SDAT) indicated that property tax revenues continued to grow modestly even though residential assessments were generally decreasing, in part because: (1) commercial assessments have been rising; (2) assessments are phased in over a 3-year period; and (3) the impact of the homestead tax credit has been reduced. Comptroller Franchot challenged SDAT on the need for a statewide assessment program, arguing that the counties do nothing and get the benefit of a tax increase. Treasurer Nancy Kopp responded that having assessments done statewide ensures neutrality and prevents a local jurisdiction from underestimating its assessments in order to take advantage of wealth-based state aid formulas.