BALTIMORE — Ending the tax exemption for municipal bonds would seriously impair the ability of municipal issuers to fix infrastructure, according to Maryland's treasurer.
"The tax status of municipal bonds is very much in play," Nancy Kopp said Thursday morning at The Bond Buyer's municipal distress, recovery and financial sustainability symposium at the Hyatt Regency Baltimore. "We have had a [public-private partnership] for the past 100 years. If we cannot continue the tax exemption, we will build fewer roads and schools and take money from the middle class."
Kopp, a former state lawmaker serving her third four-year term as state treasurer, called for spending to protect from storm surges. Hidden crumbling infrastructure poses a major challenge, she said, in comments one day after a major street collapse swallowed eight cars just north of downtown Baltimore.
"We need to invest in our core facilities. We're a coastal state and we have to worry about coastal infrastructure. Inland states have needs, too."
The state has undertaken several infrastructure public-private partnerships. According to Kopp, Maryland P3s include Port of Baltimore dredging, renovation of interstate highway travel plazas and the construction of the light-rail transit Purple Line, which will provide east-west access between Montgomery and Prince Georges counties outside Washington, D.C.
Maryland is one of 10 states with AAA ratings from Fitch Ratings, Standard & Poor's and Moody's Investors Service. The three vary in their interpretations of Maryland's debt load.
"I believe we are a fairly conservative state," said Kopp, a former state lawmaker serving her third four-year term. "We are limited in the amount of debt that we issue." State debt is limited to 15-year terms "that we can roll off quickly," she added.
Maryland in March sold $737 million of general obligation bonds. The state had about $10.9 billion of net state tax-supported debt outstanding as of Dec. 31, including about $8.2 billion of outstanding general obligation debt, according to the official statement with its bond sale.
Transitioning from manufacturing to a service-based economy underpins Maryland's economic strength, according to Kopp.
"We have health care, education, government and range of high-tech companies, and we have one of the best-educated workforces," Kopp said. "We have the flexibility to react to change."