One good thing about raising the roof is that it provides a good look at what is inside.

The Baltimore Sun reported late Monday that State officials, disregarding the current economic crunch in Maryland, voted to raise the two-decades old the debt limit, allowing borrowing for schools, construction and roads.  Facing weak tax revenues, the O’Malley administration warned that the failing to raise the debt ceiling would require delaying over $800 million in planned construction and other State projects.

In short, despite the dire economic forecast, O’Malley continues to push his spending agenda, making certain that there are adequate monies for his personal project fund.

At least Comptroller Peter Franchot showed some good sense, casting the sole dissenting vote of the five-member Capital Debt Affordability committee.

“I get the need for new capital improvements, but I also think the state and the country are at a particularly perilous moment right now. We have a responsibility to put the brakes on.”

The state issues construction bonds to pay for capital improvements.  The bonds are typically repaid using property tax dollars and supplemented with general tax monies.

But Delegate Anthony J. O’Donnell, House Republican leader and one of O’Malley’s frequent critics on out-of-control spending noted:

“One way or another, taxpayers have to pay for that on an annual basis. These folks don’t seem to get it that we can’t afford more spending right now.”

With perhaps a $1 billion projected shortfall in the state budget, O’Malley and friends will be hard pressed to come up with the cash to balance the budget.

But increasing the debt ceiling does not address the fundamental problem.

Raising the debt ceiling is like asking the bank to increase your line of credit even though you have just taken a huge pay cut at work.  You want to be able to acquire more debt as a cushion, hoping that your income will eventually increase to cover the obligations.

A few years ago, the bank might have acquiesced, noting that though your income had declined, your asset was increasing in value, minimizing the risk for the investor.

But in today’s distressed capital and declining value markets, the bank would deny your application, citing lack of revenue stream to support any increasing debt.

In 2007 Virginia, Pennsylvania, and Delaware all showed increases in numbers of households.

Maryland’s households—that is, tax base—declined significantly.

The question politicians should be asking is how can we keep businesses and families in Maryland?

The answer is so simple, yet is at odds with a Democratic leadership known for making political paybacks to retain power.  And with a fiscal gale on the horizon, it will be interesting to see which of the $800 million projects survive the storm.

But raising the roof just made all of us in Maryland more economically vulnerable…and some of us know it.

This entry was posted on Thursday, September 11th, 2008 at 10:35 am and is filed under Fiscal Conservative, Maryland Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.