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State Budget Secretary Addresses the Legislative Committee

Department of Budget and Management Secretary T. Eloise Foster provided an overview of the Governor’s FY 2011 proposed budget at the February 3 meeting of the Legislative Committee. 

Secretary Foster began by stating that “this budget restores fiscal responsibility and reaffirms Maryland’s AAA bond rating.”  She noted that “what we have is a revenue problem, not a spending problem.”  In December 2007, the FY 2011 revenue forecast was $16.4 billion.  With the economic downturn over the past two years, the revenue forecast for December 2009 has declined to $12.7 billion.  Secretary Foster emphasized that, “We have lived within our means, we have just seen our revenues decline significantly.”

As introduced, the Governor’s FY 2011 budget declines by $249 million from the prior year and includes more than $1 billion of reductions from the baseline budget.  The baseline budget is an estimate of what the budget would be if all statutory formulas were funded, increases were provided for inflationary factors, and employees were given raises.  According to documentation provided, reductions during the O’Malley-Brown Administration total $5.6 billion. 

To balance the FY 2011 budget, reductions made in FY 2010 have been carried through to FY 2011, a series of General Fund (PAYGO) transfers are taking place, additional Medicaid Stimulus funds are being counted, and other adjustments through cost recoveries and slots revenue are being factored.  Fund transfers, include capital projects typically paid for through PAYGO, are being transferred to the capital budget to be paid for through bonds, funds being borrowed from a local income tax reserve fund to be paid back by the State, and some of the fund balance of the University System of Maryland and Morgan State University being transferred to the General Fund.  Budget solutions total $2,224 billion.  With a projected shortfall of $1,950 billion, and if all of these assumptions come to fruition, Secretary Foster said, “we’ll have an ending fund balance of $274 million for FY 2011.”  She added, “They tried to put together a sufficient fund balance so they would not need to make further cuts in FY 2011.”

Secretary Foster emphasized that, “the FY 2011 budget preserves critical priorities and avoids deeper cuts to local aid.”  She said, “The Governor is very sensitive to local governments. That has been exhibited by the fact that other reductions before the Board of Public Works took place five times before local governments were cut.”

Secretary Foster then provided some budget highlights.  These include K-12 education being funded at $5.7 billion and school construction being funded at $250 million in the Capital Budget.  Also highlighted was Local Police Aid funded at $45.4 million and Program Open Space fully funded with $15.3 million for local projects. 

Overall, total Aid to Local Jurisdictions increases by 2.9% to $6.4 billion in FY 2011.  This increase is being driven by K-12 Education, which comprises about 89% of State Aid to Local Jurisdictions.  Direct Aid to Education is increasing by $99 million and teacher and librarian pensions are being fully funded. 

Direct aid to county and municipal governments is declining by approximately $20 million. 

Contact:  Andrea Mansfield

Maintenance of Effort Legislation Introduced

Several bills addressing Maintenance of Effort (MOE) have been introduced this Session.  Reforming the MOE waiver process is a MACo legislative initiative.  MACo is seeking an MOE waiver for all counties for FY 2011 and retroactive relief for Montgomery and Prince George’s Counties, who were deemed to have failed to meet MOE for FY 2010.  MACo is also advocating a series of permanent process changes, including the right to appeal a waiver decision to the Office of Administrative Hearings, the automatic granting of a waiver where a county government and local school board agree, and waiving MOE up to 5% if a county meets certain objective economic criteria indicating a significant economic downturn.

House Bill 304 and Senate Bill 310 are identical bills that seek to codify the MOE recommendations of the Joint Legislative Workgroup to Study State, County, and Municipal Fiscal Relationships.  The bills are emergency bills that would extend the deadline to May 1 for when a county may request a waiver and require the State Board of Education (SBE) to decide whether to grant a waiver no later than 45 days after a county makes a request or June 1, whichever is earlier.  The bills also require SBE to consider a variety of factors when determining whether to grant a waiver, including:    (1) external environmental factors, such as the loss of a major employer or industry; (2) the county’s tax base; (3) the rate of inflation relative to the growth of student population; (4) the county’s statutory ability to raise revenues; (5) the county’s history of exceeding MOE;  (6) agreement between the county government and school board on the waiver; (7) if there is a broad economic downturn; and (8) if there is significant reduction in State Aid to the county.

House Bill 410 is an emergency bill that would grant counties a “blanket” waiver from meeting MOE for  FY 2011, similar to the waiver granted back in the early 1990s.

House Bill 223 is an emergency bill that would retroactively exempt Montgomery County from meeting MOE for FY 2010.  House Bill 632 and Senate Bill 476 are similar bills that would waive the MOE penalty provision for all counties for FY 2010.

Finally, Senate Bill 403 does not address the MOE waiver issue, but would alter the withholding of State Aid that occurs when a county fails to meet MOE.  The bill would require the State Comptroller to withhold an amount of State Aid to the counties equal to the increase in Aid that would go to county school board.  The school board’s funding would be held harmless.

Contact:  Leslie Knapp Jr.

Scrap Metal Bill Voted Favorable with Amendments

The Senate Finance Committee voted SB 99, scrap metal legislation, favorable with amendments in committee on January 28.  The amendments respond to some of the issues raised in MACo’s testimony and expand the reporting requirements. 

MACo Associate Director Andrea Mansfield joined Baltimore County Executive Jim Smith, and local law enforcement officials Jim Green (Baltimore City), and Jim Johnson (Baltimore County) to testify in support of SB 99 - Junk Dealers and Scrap Metal Processors – Required Records, with amendments.   The bill is designed to target the rampant theft and vandalism occurring in many Maryland jurisdictions, motivated by the ability to turn in recovered metal items for cash payments.   However, the reporting requirements in the legislation are not as strict as the reporting requirements enacted through local legislation in Baltimore City and Baltimore County.  These stricter requirements are essential for law enforcement to effectively investigate crimes involving junk and scrap metal. 

With the amendments approved by the Senate Finance Committee, junk and scrap metal dealers will need to report to law enforcement the name and address, license tag number, date of birth, driver’s license number, and other physical characteristics of the individual that sold the scrap metal item in addition to the date and time of purchase, a description of the item, and whether the amount paid exceeds $500.  The amendments also require business to business transactions to be reported unless the entities have a written contract.

MACo also requested that a non-preemption clause replace the local pre-emption language in the bill.  In written testimony, MACo agreed that effective statewide legislation remains the preferable means to regulate the industry and ensure information is shared on a timely basis to assist with law enforcement efforts.  However, a statewide law should not supersede local efforts, especially when the local legislation is stricter than the State legislation being considered.  These efforts should work in tandem with the State law providing a floor not a ceiling.  The committee did not accept this amendment.

Contact:  Andrea Mansfield

Snowstorms Greatly Impact Local Road Budgets

After suffering a 95% cut in funds from Highway User Revenues, the funds that counties use to clear roads during snowstorms, the weekend’s 20 or more inches of snow will have a devastating effect on county road budgets.

According to the February 5 Washington Post, many local governments say they were counting on that money to help cover plowing costs, which have already obliterated many municipal spending plans.  In Southern Maryland, Charles County budgeted $350,000 for the year and spent more than $1.2 million by the end of December. As a rule of thumb, every inch of precipitation over the weekend will cost the county an additional $60,000. In La Plata the same story: the town budgeted $10,000 for the year; spent nearly $50,000 in December, and is still spending.

 Contact:  Michele Dinkel

MACo Supports Open Meetings Bill

MACo Associate Director Les Knapp testified in support of HB 211 before the House Government and Operations Committee on February 3.  The bill alters the state’s Open Meetings Act by requiring public bodies to post notice either via a website or in a publicly accessible place and repealing a requirement that the notice be in writing whenever possible.  The bill also places a 1-year time limit on when a person can bring a complaint before the Open Meetings Law Compliance Board (Board).

Mr. Knapp testified that the bill modernizes the notice requirements to reflect that the Internet has become the primary means of information and news distribution.  He also stated the 1-year limit protects counties and the Board from defending or adjudicating spurious claims, while still allowing ample time for an aggrieved party to file a valid complaint with the Board.

The Board also supported the bill.

Contact:  Leslie Knapp Jr.

MACo Testifies on Aging Schools Program Funding

MACo Associate Director Les Knapp testified in support of HB 171 with amendments before the House Appropriations Committee on February 2.  The bill would authorize the use of $4.5 million in federal qualified zone academy bonds (QZABs) for the Aging School Program.  QZAB funding is restricted to certain schools serving lower income children and requires a 10% matching contribution from a private entity or business.

Mr. Knapp noted MACo’s support of the Program, which traditionally has provided State general fund monies for school maintenance and repairs not eligible for capital bond funding because the projects do not have a 15-year life span.  However, Mr. Knapp expressed concern that the Program’s flexibility would be eliminated if the Program were to be permanently funded through general obligation bonds or QZABs.

Mr. Knapp suggested amendment language stating it would be the intent of the General Assembly that the Aging Schools Program be funded through general funds whenever practicable.  He noted such language was not legally binding and did not restrict the State from making adjustments to the Program during difficult fiscal times.

MACo submitted written testimony but did not testify on HB 171’s cross-file, Senate Bill 202.

Contact:  Leslie Knapp Jr.

MACo Supports Bill to Switch to Digital Copies

of County Codes

MACo Associate Director Les Knapp testified with bill sponsor Delegate Addie Eckardt in support of HB 111 before the House Environmental Matters Committee on February 4.  As introduced, the bill allows a charter county to provide a digital copy of its compiled laws and any compilation of its public local laws rather than furnish paper copies to certain State agencies and the county’s legislative delegation. 

The bill also reduces the number of copies of its compiled laws that a charter county must provide to the Department of Legislative Services (DLS) from four to one and provides that the copy may either be in digital or printed form.

During testimony, Delegate Eckardt introduced amendments that would apply the bill to all counties, not just charter counties.  Mr. Knapp expressed support for the bill and her amendments, noting that the bill modernizes outdated provisions of the Maryland Code.  He noted that all counties, except Somerset, already have their codes available online.   The Somerset County code will be on line by the end of 2010.  He stated that some counties spend thousands of dollars annually to print copies to satisfy the current law.

Bill opponents raised potential copyright issues that may need to be addressed.  Senator Barry Glassman is the sponsor of an identical bill, SB 174, which is set to be heard before the Senate Education, Health, and Environmental Affairs Committee on February 9.

Contact:  Leslie Knapp Jr.

MACo Seeks Amendment to Minority Enterprise Bill

MACo Associate Director Les Knapp proposed amendments to HB 68 at its February 3 hearing before the House Environmental Matters Committee.  HB 68 is sponsored by the Department of the Environment (MDE) and would require that all grant recipients, who receive $500,000 or more from the Chesapeake and Atlantic Coastal Bays Nonpoint Source Fund for stormwater management or stream and wetland restoration projects, demonstrate to MDE that they have taken certain steps to include small businesses, minority business enterprises (MBEs), and women-owned business enterprises (WBEs).

MDE testified that the bill codified existing practice and was necessary to access federal funds.  Mr. Knapp responded that MACo had no issue with the proposed steps, but that MDE should have to consider the availability and geographic proximity to the grantee of small businesses, MBEs, and WBEs capable of completing all or part of the project.

Committee Chair Maggie McIntosh agreed to the amendment and asked MDE and MACo to work out exact language.

Contact:  Leslie Knapp Jr.

Counties Urged to Support Federal Medicaid Extension

The National Association of Counties (NACo) is urging quick action on new federal legislation to extend the federally-supported benefits under the Federal Medical Assistance Program (F-MAP). S. 3000, introduced by Senator Rockefeller of West Virginia, would provide a six month extension of this funding.

From the NACo email bulletin:

Include Six Month Extension of Enhanced Medicaid Assistance in Jobs Bill

The Senate is preparing to take up a package of measures designed to promote job growth as early as February 8-12. Call or email your senators TODAY and urge them to include a six month extension of the enhanced Medicaid federal medical assistance percentage (FMAP) that was included in the Recovery Act and is set to expire December 31, 2010.

NACo supports the provisions of a stand-alone bill (S. 3000) to extend FMAP assistance to June 3, 2011, introduced yesterday by Senator Rockefeller (D-W.V.). It also contains crucial language to reinforce the pass-through language for counties in states that require them to contribute to the non-federal share of Medicaid.

Ask both your senators to support including the FMAP extension (S. 3000) in the jobs bill. Remind them that states and counties will have to make job-killing cuts if their Medicaid shortfalls are not addressed NOW.

Even though Maryland counties do not directly fund the Medicaid program, failure of the federal government to extend this program would mean loss of nearly $400m of budgeted funds in the current FY 2011 state budget — likely leading to increased pressure for even deeper cuts to county programs and services.

To take action on this issue, visit the NACo website at www.naco.org.

Contact:  Michael Sanderson

FY 2011 Capital Budget Funding Distribution: Corrected

Secretary of Budget and Management Eloise Foster shared a document with the Legislative Committee, detailing the proposed FY 2011 capital budget, with a county-by-county allocation. However, according to the Department, the data on that distributed document was incorrect — and the corrected version is posted here.

From the Secretary’s follow-up memo:

It has come to my attention that there was a typo in the final slide of the PowerPoint presentation . . .  The slide incorrectly listed capital funding for Prince George’s County as $19,542,850,  when it should have read $119,542,850. The first digit of the number was inadvertently left off when the data transferred to the slide.

Contact:  Michael Sanderson