The Capital Debt Affordability Committee (CDAC) met on September 24 to discuss setting State debt levels, which includes school construction funding, for FY 2014. However, CDAC delayed making a decision in order to further debate an alternative proposal that would increase would authorize an annual additional $150 million in capital debt for FY 2014 through FY 2018 ($750 million total). CDAC sought more time to review the financial impacts of the recommendation and gather additional information on how the money will be used.
The recommendation to increase the State debt by an extra $150 million is based in part on the current availability of low financing rates, and the number of jobs that could be created by taking additional debt. By adding an additional $150 million to the debt over successive years, the recommendation is intended to create a stable funding source from year-to-year. That funding source is anticipated to create between 7,500 and 9,000 jobs.
The additional funding would allow to State to remain below its debt affordability guidelines, which include limits on the debt outstanding as a percent of personal income (4%) and debt service as a percent of revenues (8%). The funding could be spent on projects identified by the Governor, or those pre-approved by the General Assembly. Secretary Foster is currently meeting with agencies to identify a list of shovel-ready projects for which the funds could be used.
The Committee is expected to make a final recommendation on Monday, October 1, 2012.