Patrick raises state's borrowing limit
BOSTON --Gov. Deval Patrick is raising Massachusetts' borrowing limit, saying the state needs more money for transportation projects, public safety improvements and repairs to the university system, beaches and parks.
The so-called bond cap -- the amount the state can borrow each year to pay for capital projects -- will increase from $1.25 billion to $1.5 billion. The last time the bond cap was raised was in 2002.
"Our public assets have endured a long period of neglect that has put many of them in serious need of repair," Patrick said. "We must begin reversing that pattern."
Patrick made the announcement ahead of the release of his five-year capital plan -- typically used to pay for bigger projects outside of the regular state operating budget.
The governor has already proposed some ambitious, big-ticket projects, including a $1.4 billion commuter rail line from Boston to Fall River and New Bedford.
The administration can change the cap without legislative approval, but Wall Street pays close attention and will punish the state with high interest rates if borrowing gets out of control.
Raising the bond cap is a bad idea and will lead to higher taxes, according to Barbara Anderson, executive director of Citizens for Limited Taxation.
"If we borrow too much, and spend too much, we end up raising taxes to cover it," she said. "We're always opposed to raising the bond cap."
But Patrick said even with the extra borrowing, the percentage of the budget the state will be spending to cover the debt in 2012 will be smaller than in 2007.
Two recent reports found the state is facing huge deficits just to maintain its existing infrastructure.
One, by the Boston-based Pioneer Institute, found Massachusetts is facing at least $17 billion in immediate deferred maintenance costs, from roads and bridges to jails and universities.
The report says the state should consider the maintenance costs for a project even before it is built, and factor those costs into the initial estimate.
Earlier this year, a blue ribbon commission found the state is also looking at a budget shortfall of up to $19 billion over the next two decades to maintain the state's roads and rails, with no additional money to expand transportation systems.
Michael Widmer, president of the business-backed Massachusetts Taxpayers Foundation and a member of the Transportation Finance Commission, said Patrick's decision to increase borrowing is fiscally responsible, but won't by itself solve the state's infrastructure maintenance problems.
"They're not opening the floodgates," he said.
