|
On tlu; subject of the State's credit rat-
ing, you should know that the two credit
rating agencies. Standard and Poor, and
Moody, have each said: This will not ad-
versely affect the State's credit rating. Ac-
tually, if we conduct the affairs of the State
in the future in the same manner in which
they have been conducted in the past, we
will keep the best credit rating- that is
available, namely AAA, and this action,
including the action of substituting the full
faith and credit of the State in its un-
limited taxing power, rather than a specific-
tax, and we will have our AAA rating'.
Of course, if we start throwing our
money away, it does not make any differ-
ence what our bond principals are, how
you try to protect yourself, that would be
something that would adversely affect it.
Now, we have provided and believe that
what we have done here means that when
we issue bonds this is for a public purpose,
and it is not in order to pay off other
bonds. The State must provide for the pay-
ment of its bonds, and not let them all
balloon until one day a g-reat big lump
sum becomes due.
We continue to provide that these gen-
eral obligation bonds will be paid from
revenues of the State.
Now we come to a matter which will re-
quire further discussion. There is one word
in the second sentence of section 6.01; it
appears on line 13. This actually says,
"The State shall have the power to incur
indebtedness for any public purpose." This
is used in order to distinguish this from a
private purpose. The State cannot issue its
bonds just to please you or me, or for a
purpose which is not a public purpose. But
what does public purpose mean? Here 1
have to go back into history. I hope you
will bear with me. It requires perhaps a
repetition of what appears in the blue book,
what we call the Eney Report. 1 shall not
repeat it, but let me g'ive it to you in the
very general way, touching' on the high-
lights.
When those disastrous effects began to
be felt this long- time ago, and the State
had thrown away its patrimony in these
bad investments and it became necessary to
provide these protections, the State re-
quired by its Constitution that there could
be no bond issue. They said "The credit of
the State shall not in any manner be given
or loaned to or in aid of any individual,
association or corporation, nor shall the
General Assembly have the power in any
mode to involve the State in the construc-
|
tion of works of internal improvement
which shall involve the full faith and credit
of the State, nor make any appropriations
therefor," et cetera.
They were going to make sure that as
far as our State was concerned they would
not g-et caught again in any Baltimore &
Ohio investments that were bad, nor were
they going to get caught in any canal
building investments and get hurt that
way.
In the course of years bond issues were
provided for by the General Assembly, and
with the approval of the governor who
signed the bill, but nobody could tell
whether the purpose was in conflict with
this constitutional limitation. Here indeed
was the State now being held back and
prevented from doing some of those things
which the elected representatives of the
people felt were necessary. And every time
a problem arose and there was a bond is-
sue about which there could be even the
slightest question, this meant that it was
necessary to arrange to have a taxpayer
file a suit, and then this taxpayer would
object in this suit to the issuance of these
bonds for this purpose because it violated
the provisions of the constitution.
It might be construed, they said, as a
gift. It might not have been for a purpose
which was permitted because it was a pri-
vate purpose; and so a whole body of law
has grown up in Maryland.
The Commission and our Committee have
adopted the words which we believe will
provide that no bond issues shall be ap-
proved unless they are for a public pur-
pose.
Now, we cannot circumscribe the mean-
ing of the word "public" because in the
dynamic era in which we live, items which
we believed a few years ago were utterly
inconceivable as being within the realm of
what governments should be interested in
today are accepted as normal.
Today, the State of Maryland has the
choice: Shall it build gigantic hospitals
throughout the State, expand its own uni-
versity hospital, or is it better for the
State to provide aid to private non-sec-
tarian hospitals?
The State faces the question of whether
the great universities, other than its own
state universities can find a means of pro-
viding for pupils to give them an oppor-
tunity to live on campus in dormitories
which can be built with federal aid, along-
with state aid, but they are not universities
owned and run by the State.
|
