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speech I was concentrating on the speech
while shaving and cut myself. His advice
to me waa cut the speech and concentrate
on shaving.
We have done more than that. Delegate
Sherbow and I have agreed to cut control
time from thirty minutes each to fifteen
minutes each and I will cut my speech.
The statement involves quite a dry sub-
ject, as you can look around and see how
many of us are here. We were unable in
committee to keep a reporter more than
ten minutes at any time except for the
lottery and I will try to keep below that
limit to keep all of you here.
Judge Sherbow told you Maryland now
has triple A rating in the bonds. This is
the highest rating you can get. The higher
the rating the lower the interest rate the
less you pay for the money you borrow. We
are talking here about general obligation
bonds and general obligation bonds only.
This amendment we propose is state issued
bonds, has nothing- to do with revenue
bonds, has nothing to do with county bonds.
It is stipulated by the minority, what the
judge said, that the mere change from 15
to 25 years would not hurt our credit
rating, not in and of itself. You must look
beyond that change to see what the effects
are.
First, of course, is obvious. The longer
you take to pay back the more dollars you
pay out for interest. The cost is higher.
Not only is the cost higher because you pay
longer but the rate of interest is increased
because of the additional time. We have
had testimony that the going from 15 to
25 years would raise the interest rate.
The second effect is the possibility of an
increase in debt. By spreading the costs
over a longer period oi? time you make
lower annual payments. I use this as an
example. Suppose you have a hundred dol-
lars a month and you wish to buy a car.
You know the bank will give you 36 months
or three years to pay for the car, $3600
you have to pay back in principal and in-
terest.
So you go down and pick yourself out a
Chevy for about $3300, assuming you can
get yourself a good deal on your financing
at six percent. You go to the bank and
they tell you that on this particular car
your payments are a hundred dollars.
However, of course, you are a delegate
here, they see your credit is good, there-
fore, they will give you five years to pay.
You do not have to pay a hundred dollars.
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You only have to pay $63.80 a month. You
say, wait a minute. You run out and you
take a look at the Cortina or Sunbeam or
one of those English cars to take ad-
vantage of that 14 percent devalued pound.
You come back with a contract on one of
the English cars. You say, now I got the
two contracts, I want to pay the hundred
a month. I will have two cars for that
same hundred dollars.
Now, the bank said to you, wait a min-
ute, Mr. Delegate. We talked to you about
$3600, we thought that was pretty high
and a pretty good risk for you. Now, you
bring us $6,000 in debt. We would now stop
and take a look at the situation. You too
now must stop and take a look at the
situation.
Judge Sherbow asked that I do not
hammer these words back to him too much
but I feel we must not only his words that
were written but some of his speaking-
words.
He says he now does not call this a com-
promise but also his words in another time
like a bolt from out of the blue comes that
it is not a compromise because all during
committee meetings it was a compromise
and until now it was not a compromise. It
was a compromise until now where we
hear it is not a compromise. This is some-
thing else. It is a compromise.
Or is it really a compromise? Is it just
really saying in excessive language, let us
extend the bonds to 25 years, a flat 25-year
limitation that the General Assembly will
raise all its bonds to? In the last nine
years in both houses there were only five
dissenting votes registered on bond issues.
Look about you. How many people sit here
and listen to bonds and financing? How
many of the legislators will listen and not
come in and vote?
The majority can say this offers flexi-
bility for fiscal and financial heads of gov-
ernment to arrange better bond financing-.
Why? Why give this flexibility when they
came each and every one of them and told
us they were satisfied with the current 15-
year limitation? All who came before us
said they favored the 15-year limitation and
we were also told that if 25 years was au-
thorized the legislature would probably
under pressure be forced to g'o to the limit.
Herein lies the minority point. Is this
really flexibility or is this 15 years versus
25 years and we say it is a flat 25-year au-
thorization because this flag of three-fifths
vote the judge talks about will never
happen.
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