DLS: Maryland's FY27 capital plan shrinks to $2.6B as bond proceeds plug operating gaps
Loading...
Summary
DLS analysts told the Capital Budget Subcommittee the FY27 capital program falls to about $2.6 billion as transfers, bond proceeds and deauthorizations are used to cover operating shortfalls; the Baltimore Therapeutic Treatment Center was paused and WMATA grant funding is being shifted to bond financing.
Delegate Malcolm Ruff convened the Capital Budget Subcommittee hearing and invited DLS analysts to review the governor's FY27 capital plan. DLS presented a five‑year capital overview showing the total program decreases to roughly $2.6 billion and that the general obligation (GO) bond authorization meets the spending affordability limit of $1.75 billion.
DLS analyst Emily Haskell said the budget relies in part on deauthorizing prior‑year projects to create about $75 million in GO capacity and includes roughly $58 million in PayGo/general funds. Haskell also noted a $14.6 million first installment of an eight‑year, $116.5 million commitment tied to an expansion of AstraZeneca facilities.
Matt Bennett of DLS described several mechanisms the administration is using to create room in the general fund. He said the FY27 plan shifts some revenue sources to bond financing and transfers, including $72 million of transfer‑tax revenue being fully replaced with geobond funds and a planned $167 million WMATA grant funded by bonds rather than general funds. He also cited a $187 million transfer from the fiscal responsibility fund and a $70 million transfer from the Bay Restoration Fund (with $50 million programmed for FY27 and $20 million in FY28).
Bennett warned the committee that the capital plan's current structure increases pressure on the GO bond program as previously authorized projects enter issuance and begin to drive debt service. He highlighted that the state keeps a self‑imposed 8% debt‑service‑to‑revenue target and that the combination of large off‑budget issuances (such as stadium authority debt) and other liabilities contributed to Moody's downgrade from AAA.
On major projects, DLS said the administration placed the Baltimore Therapeutic Treatment Center on pause. Bennett described the project as previously planned with significant funding and said the pause is intended to create fiscal room and ‘‘offer an opportunity for the state to reevaluate the size and scope of this project.’’ He also flagged a shortfall in bond premiums after a June sale produced less premium than anticipated and said the governor proposed a capital bill amendment to authorize using bond premiums in an upcoming sale to cover a roughly $35–40.5 million gap.
DLS analysts emphasized timing risks for Built to Learn bonds (the school construction financing stream), noting delayed issuance pushed expected revenue‑bond proceeds out of FY27 into FY28, and repeated that continued use of bond funds to support operating needs or large recurring grants will constrain the GO bond program unless the debt limit is revised.
The briefing closed with members asking DLS for recommendations. Bennett said DLS will return with targeted options, and Chair Ruff pressed whether the approach is sustainable in the long term. The hearing moved next to agency briefings on specific program requests.
