Capital Debt Affordability Committee Sets Agenda for First Meeting Amid Quirky Year

Maryland’s Capital Debt Affordability Committee will meet for the first of three days on October 11 to set the State’s capital debt limits for Fiscal Year 2024.

small plants sprouting from stacks of coinsThe Capital Debt Affordability Committee (CDAC), chaired by State Treasurer Derick Davis, will meet on October 11, 14, and 19, 2022, to discuss the State’s fiscal health and consider the limit on new state capital debt for the next fiscal year.

Maryland is in a particularly interesting position this year and the CDAC meetings and subsequent recommendations should reflect that. Economically, Maryland’s reserve looks good and the State is boasting a $2B surplus.

The State’s fiscal experts will probably say that we are in a position to spend cash or make more generous commitments than in a typical year. Fiscal conservatives, however, will want to pull back and be more cautious and perhaps further beef up the State’s coffers to save for the future.

Furthermore, traditionally, CDAC limits growth to around 3% 2% of which is for inflation. It will be interesting to see how the committee will account for this year’s high national inflation and how they will balance that to account for spending growth.

Adding an additional layer to this year’s quirkiness is the influx of federal funds, especially those relating to infrastructure support and development. CDAC will want to take that support into account and how it can beef up “one time” spending for capital projects.

Of course, CDAC’s forthcoming recommendations will not exist in a vacuum. The General Assembly’s Spending Affordability Committee will have the chance to approve, block, or adjust CDAC’s recommendations ahead of the 2023 legislative session and the state budget process.

Upcoming virtual meetings

The first agenda has been set. On October 11, CDAC will largely review the prior year’s fiscal health, capital programs, and any notable legislative moves from the 2022 legislative session.

Tuesday, October 11

  • CDAC agenda: Legislative review, revenue estimates, and the review of capital programs.
  • Presentations from Debt Management, Legislative Services, Revenue Estimates, Assessments & Taxation, Capital Budget Office, and Public School Construction

While the October 11 meeting is a retroactive overview, the remaining two meetings will tackle the state’s future economic forecast and will ultimately recommend the how much debt capacity and general obligation bond authorizations the state can healthy take on in Fiscal Year 24.

Friday, October 14

  • CDCA agenda: Review of tax-supported debt and the size and condition of debt of higher education institutions.

Wednesday, October 19:

  • CDAC agenda: Recommendation of general obligation bond authorizations.

CDAC will meet virtually and likely also livestream the October gatherings. A full agenda and materials will be made available on the Treasurer’s website prior to each meeting.

Full meeting materials and agendas will be available on the Treasure’s website ahead of the October 11 meeting.

About CDAC

CDAC consists of seven members: six serve ex officio, and one is appointed by the Governor. The State Treasurer serves as the Committee chair.

On a continuing basis, CDAC reviews the size and condition of Maryland tax-supported debt and the other debt of State units, including the University of Maryland System, Morgan State University, St. Mary’s College of Maryland, and Baltimore City Community College.

Annually, CDAC must submit to the Governor and the General Assembly each year an estimate of the maximum amount of new general obligation debt that prudently may be authorized for the next fiscal year. Although the committee’s estimates are advisory only, the Governor is required to give due consideration to the committee’s findings in determining the total authorizations of new State debt and in preparing a preliminary allocation for the next fiscal year.

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