Capital Spending Options Offered Up

At the Spending Affordability Committee meeting on November 18, analysts from the General Assembly’s Department of Legislative Services (DLS) offered options for modest growth in state capital spending in the years ahead.

The staff options follow on the recommendations of the Capital Debt Affordability Committee (CDAC), who recently recommended flat capital funding of $995 million for the coming year and onward:

CDAC recommends authorizing $995 million in general obligation (GO) bonds for the fiscal 2018 capital program. For planning purposes, the committee also recommends maintaining annual expenditures at $995 million through fiscal 2026.

…noting that the proposed level of funding remains below the State’s long-held limitations for borrowing:

• CDAC’s policy is that State tax-supported debt outstanding should not exceed 4.0% of Maryland personal income, and State tax-supported debt service payments should not exceed 8.0% of State revenues.

In the staff report, DLS lays out two options for capital spending beginning in FY 2018:

Increasing Authorizations by 1% Annually — effectively allowing the funding to grow by 1% per year, still lower than the state’s forecasted growth in property tax revenues, the funding source for debt service

Increasing Authorizations to 2015 SAC Level — effectively re-setting spending levels to that recommended by the Spending Affordability Committee a year ago, namely $1.065 billion

Both suggestions, with fiscal ripple effects laid out in detail in the staff report, would remain below the two spending limit ratios described above through fiscal 2022, the full period analyzed.

The Spending Affordability Committee will make its recommendations later this year, as an input into the considerations of the budget and related policies by the General Assembly.