Howard County should issue no more than $33 million in bonds during the next fiscal year to finance construction of new schools, police and fire stations and other capital projects, a committee appointed by County Executive Elizabeth Bobo recommended this week.
In a report released Monday, the executive's bond affordability committee said that voluntary ceiling is the highest level of new debt the county can afford to assume without eventually jeopardizing its long-term financial health.
Bobo established the committee soon after taking office last year when she became concerned that the county government had been borrowing more than it would be able to pay back. The idea of such a self-imposed spending limit, she said, was to help the county maintain its prized AA+ bond rating without significantly raising taxes or reducing essential services.
Setting an early tone of fiscal restraint for the upcoming budget season, she said Monday that she planned to stay within the recommended limit when preparing her capital budget for the fiscal year beginning in July and hoped the County Council would do the same. Last year, council members authorized spending $9 million in excess of the committee's target, saying that when they received the information in May it was too late to influence their decisions.
Although the committee's latest recommendation is $8 million higher than the $25 million it previously said the county could afford annually, there is no doubt that it will fall far short of departmental requests.
The Board of Education already has requested $13.5 million in local construction funds for next year, and Corrections Director Gerald McClellan has indicated he will ask for money to expand the capacity at the county jail. Other administrators have said they, too, have space needs requiring satisfaction next year and new requests are arriving at Bobo's office almost daily.
"It's going to be an interesting budget year," said Public Works Director James Irvin.
County officials stress that while the local economy is strong, the level of Howard's indebtedness became an issue when budget analysts determined that long-term debt was equal to close to 10 percent of their revenue. That figure gave Howard the highest debt-to-revenue ratio of any of Maryland's biggest jurisdictions except Baltimore City.
According to Budget Administrator Raymond Wachs, the heavy debt was incurred because the county -- seeking to meet the needs of its rapid population growth -- had to build a large number of public buildings and roads within a short time.
The committee's chairman, John Whiteside, president of Commercial and Farmers Bank in Ellicott City, said the county's wealth so far had helped to offset the effects of its relatively high debt. He said the committee estimated that as the need for capital projects continues, the county can afford to pay up to 12 percent of its current revenue -- or $33 million -- in debt payments annually.