Maryland considering $1.75 billion in new debt

Maryland's Capital Debt Affordability Committee, which reports to the governor is doubling down on plans to borrow $1.75 billion to finance capital projects despite economic headwinds blowing in from Washington, D.C.

"Maintaining the current level of debt at the $1.75 billion will enable the state to continue to make progress on priority capital needs, including school construction, economic development, housing affordability and replacement of state-owned facilities," said Marc Nicole, acting budget secretary for the Capital Debt Affordability Committee.

"Recommending any less than $1.75 billion will hamper our progress on these critical investments."

The quote came from the Committee's unanimously-approved and non-binding recommendation on Thursday as reported by Maryland Matters.

The $1.75 billion adheres to the Committee's 2023 recommendation which was made before Moody's Ratings, slapped the state with a downgrade of its issuer rating, and general obligation bonds to Aa1 from Aaa in May.

"Maintaining the level at $1.75 billion should not raise significant concerns for the two bond rating agencies that are continuing to rate us AAA, as we are matching our prior year plans," said Nicole.

The CDAC reviews the size and condition of the state tax-supported debt which includes the University of Maryland System, Morgan State University, St. Mary's College of Maryland, and Baltimore City Community College.

The eight-member committee works out of the state treasurer's office, and each year submits its estimate of "the maximum amount of new general obligation debt that prudently may be authorized for the ensuing fiscal year" to the Governor and the General Assembly.

Maryland is bearing the brunt of job losses caused by the Trump administration's attempts to shrink the federal workforce.

According to numbers from the Bureau of Labor Statistics gathered before the shutdown, Maryland has lost more than 15,000 jobs since the start of the year.

The turmoil has not slowed the state's visits to the market. Earlier this month the Maryland Department of Transportation issued $842.7 million in Consolidated Transportation Bonds via a well-received competitive sale.

In September the MDOT released a $21.5 billion draft budget with hopes pinned on federal matching funds that now seem less than certain.

Maryland Gov. Wes Moore has an ongoing feud with the Trump administration over who is paying to rebuild the state-tolled Francis Scott Key Bridge that was demolished in a collision with a container ship in March 2024.

In August, Moody's analyst Mark Zandi proclaimed that Maryland's economy was in a recession/high risk category along with 20 other states and the District of Columbia.

"State-level data makes it clear why the U.S. economy is on the edge of recession," said Zandi via a post on X. "Based on my assessment of various data, states making up nearly a third of U.S. GDP are either in or at high risk of recession, another third are just holding steady, and the remaining third are growing."

Zandi lays the blame for the economic distress happening in the D.C. region on government job cuts.