Howard County Maryland Blog

Local Politics and Current Events

2007 Capital Budget III

Posted by David Keelan on Tuesday, April 4, 2006

I am sure answers will be forthcoming….

Here are some of my observations and questions.

I am no accountant. So my concerns need further scrutiny.

I understand that the metro bonds are self-sustaining. By that I mean outside the General Obligation Bonds. However, they are backed by the full faith and credit of the County. If they default then the County has to pay. The reason they have my attention is because I see them as one budget category and as such they are the single largest budget item. Almost $90M and 140% increase over 2006. Perhaps these projects are unavoidable, but can we afford them?

Water and Sewer has an operating deficit. When ad valorem taxes are added the Water and Sewer account generates $2M in surplus every year. Can it afford another $70M in bonds? Also, why not borrow from the State Water Quality Bonds (SWQB)– the rates are 40% below market (2.41% v 4%)? When I reviewed the balance sheet for Water and Sewer I think they may have maxed out this option out based on what the State thinks we can afford. We have debt up to $72M in 2005 from SWQB. I don’t know what the current balance is but as of January I don’t think it changed much. Additionally, the June 2005 audited statements show that the County can afford (by Charter) another $34M in Metro Bond Obligations, but we are borrowing over $70M in Metro Bonds. Did we pay off a lot of those existing bonds in 2005/2006?

Did you know by charter there are no other debt limitations applicable to Metropolitan District debt? I guess it is managed by what the market will loan. If my concerns are legitimate I also wouldn't be surprised to see a rate increase – which I think is a fair question to ask the County Executive. As I said, if my concerns are justified then Mr. Robey or the next County Executive may need to raise rates.

As early as January 2006 the County projected on $16M in Water and Sewer capital projects for 2007, but we have $88M in capital projects proposed for 2007. What happened? If these projects are obligations we have made to other jurisdictions then we could have projected them as part of the annual 5 Year Capital Improvement Program Summary. Why didn't we?

I do see that many of the college projects are closing out which can account for the drop in capital projects here.

I do understand that the $21.2 mil in cash that is being used in the Capital Budget is coming from past and future anticipated revenue surpluses, based on the good employment and real estate economy. According to the Spending Affordability Committee projections for future Personal Income Growth and Real Estate Assessments are good. However, where is the allocation for the rainy day fund? Didn’t Mr. Robey say he was allocating $4M to $6M for the rainy day fund? What is the current balance of the Rainy Day Fund? Is it $41.7M? The County was to have brought it up to the mandated level last year, but why isn’t the County contributing this year despite what Mr. Robey said?

With that said if he isn't going to contribute to the Budget Stability Account (Rainy Day Fund)why not use some of the surplus funds toward debt relief in order to relieve the operating budget. Could the County pay down some expensive debt in exchange for lower interest debt at least?

One Response to “2007 Capital Budget III”

  1. Anonymous said

    Thanks for adding the sound the money makes as it is taken out of our paychecks, mortages, pockets and where ever the county takes it from. Your blog is the sound of the shameless wasting of our taxpayer dollars without any accountibility!

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: