CDAC / credit-rating insert — for the “The bond market is watching, too” section
Paste-ready section for the fiscal-cliff paid back end. All facts below are confirmed from the signed October 9, 2026 CDAC recommendation letter from Treasurer Dereck E. Davis.
On October 9, the Capital Debt Affordability Committee — chaired by Treasurer Dereck Davis — voted unanimously to recommend $1.75 billion as the maximum general-obligation bond authorization for fiscal 2028, and to maintain that level through fiscal 2032 for planning purposes. It also voted unanimously for a $50.0 million limit on new academic revenue bonds for the University System of Maryland. The vote itself was the least interesting part. The briefing book was the story.
S&P has Maryland on negative outlook. Moody's downgraded the state last year. That is two agencies with their hands on Maryland's credit rating, and Treasury staff told the committee exactly what S&P expects to see: “a sustainable plan that brings multi-year structural balance back to the state in order to avoid future lowering of our credit rating.” S&P wants a “consensus budget framework” ahead of the January 2027 budget — one that “meaningfully address[es] these gaps through structural adjustments.”
Translation: the rating agencies are no longer grading Maryland's math. They are grading its politics — whether Annapolis can agree on a plan.
The numbers behind the warning: Maryland's state debt and other long-term liabilities are more than double the median for other states. Reserves are high but below peer states. Underlying general-fund revenues are projected to decline 0.9 percent even after the September forecast added $320 million to fiscal 2027 expectations — slow growth, federal employment losses, elevated inflation.
Then there is the gap nobody talks about. The state keeps authorizing $1.75 billion in bonds but spending well below it. Treasury debt chief Rebecca Ruff laid out an issuance growth plan of 3 percent a year, climbing only to $1.3 billion by 2031 — but issuing more of what is already authorized means more debt service hitting the general fund, which “need[s] to be taken into account as lawmakers and state leadership address the billion dollar deficits projected over the next five years.” Read that twice: even the money already authorized is a fiscal-cliff problem.
The market is already charging for the uncertainty. The all-in true interest cost on Maryland's bond sales rose from 3.3 percent in June to 3.8 percent in September. Treasury attributes that to market conditions, not the credit rating — but every downgrade threat makes the next sale more expensive, and more expensive debt is just the fiscal cliff with interest.
And the need is not theoretical. Alex Donahue of the Interagency Commission on School Construction told the committee that school construction is the biggest unmet capital need in the state — and the Department of Budget and Management confirmed the shortfall runs across every category of capital project.
So the committee that decides how much Maryland may borrow just heard, on the record, that two rating agencies are watching, the debt load is double the peer median, and the state cannot spend what it already authorizes. The fiscal cliff is not just a budget story anymore. It is a credit-rating story. And credit-rating stories end with higher borrowing costs for every school, road, and hospital in Maryland.