By Guy Leonard, County Times
HOLLYWOOD, Md. (March 5, 2009)—The St. Mary's County government still wants to incur a $30 million debt from Wall Street this year to fund future public construction projects, according to the county’s top finance official, but they may not make the trip until sometime this summer.
“We still need to go,” said Elaine Kramer, chief financial officer. “We’re still looking at what the right time will be.”
The county had initially planned to go to New York City last month to make a case for their bond debt but the financial meltdown that hit late last year made that date untenable.
“We said ‘Let’s not rush into this,’” Kramer told The County Times, but added that the economic troubles were not the only reason for their holding off.
Kramer said the recently passed federal economic stimulus package meant that the county might be able to borrow from banks at a more favorable rate, which meant they might not have to go to Wall Street at all.
Under county law the commissioners must adopt a balanced budget for all operating expenses and departments, but when it comes to building projects like schools, roads and the like they could, and sometimes must, go into debt.
But the county has not had to borrow money for construction since 2005, which, she said, was a good sign.
So far, Kramer told The County Times, the county’s debt service, or the amount of money they have to pay each year to work towards eliminating the debt, was equal to about 7 percent of the operating budget.
This percentage, Kramer said, was very manageable.
County Commissioner Thomas A. Mattingly (D-Leonardtown) said that the federal government’s change in law that allowed for potentially better interest rates on loans also allowed them to borrow up to $30 million from banks on the open market.
The county has used that method in the past, he said, but the cap then was set at just $10 million.
Mattingly said that the extra $30 million in bond sales to either Wall Street or getting it from banks would bring the county’s total debt load to about $130 million.
But, he said, that was well within the county’s limits on debt service.
“It’s well within our affordability limits,” Mattingly told The County Times.