Fitch Assigns Montgomery’s General Obligation Bonds a AAA Rating

October 23, 2014

Fitch Ratings has assigned Montgomery County a AAA bond rating as the county prepares to sell $821.87 million in general obligation bonds in a competitive bond sale on November 6. The article in Market Watch identified the following key factors as rating drivers:

HEALTHY FINANCIAL FUNDAMENTALS: Montgomery County has a sophisticated management team that uses conservative budgeting and has established debt and reserve policies that have resulted in healthy reserve and liquidity levels.

SOLID OPERATING PERFORMANCE: Strong operating results in fiscals 2011 through 2013 have materially enhanced the county’s reserve position. Fitch believes operations will remain positive and in line with the county’s plans.

BALANCED FISCAL PLAN: The county has adopted a multi-year fiscal plan that balances current resources against spending and continues to address other critical operating priorities relating to fund balance replenishment, pay-as-you-go capital, and other post-employment benefits (OPEB).

STRONG ECONOMIC CORE: The stable regional economy is anchored by the extensive presence of the federal government and related contracting employment, marked by consistently low rates of unemployment, a highly skilled labor force, and very high income metrics.

DEBT REMAINS MODERATE: Debt ratios are expected to remain at a moderate level despite some pressure from future bond issuance plans to fund the county’s capital improvement program (CIP). The county has prudently managed its exposure to other long-term liabilities related to pension and OPEB.

The article also addresses other factors that were considered:

  • Continued strong financial performance
  • Economic performance remains very strong
  • Sharp improvement in reserves
  • Fiscal plan addresses key priorities
  • Debt to remain affordable despite sizable annual issuances

Garrett County to Celebrate its Manufacturing Success

October 17, 2014

As reported by the Cumberland Times-News, Garrett County is reinventing its rural manufacturing base and plans to celebrate its successes.

The county will celebrate its thriving manufacturing industry this month with a couple of events that will showcase the industry’s growth, as well as its historic talents and character as a community.

Kicking off the celebration is the first conference in the Power of Possibilities Series being hosted by The Greater Cumberland Committee and several other regional organizations at Garrett College in McHenry on Oct. 24. Designed with regional infrastructure and ecosystem entities in mind, this conference will offer an update on the region’s economic outlook, as well as advice from industry and government speakers and a toolkit of resources to assist education, government, and nonprofit community organizations for working with entrepreneurs.

Next up are the Maryland Economic Development Association’s 2014 Fall Conference and Showcase on “Advancing Manufacturing in Maryland” Oct. 26 and 27 at Rocky Gap Casino Resort. This two-day event will kick off MEDA’s fourth annual Economic Development Week, which emphasizes the importance of economic development for the state of Maryland to the general public with initiatives and events held throughout the state.

More than 30 specialty manufacturers are located in Garrett County.

New NACo Report – Partnering in Government Innovation: County Leadership in Action

October 16, 2014

The National Association of Counties (NACo), has recently released a new report, Partnering in Government Innovation: County Leadership in Action, which highlights how “America’s large urban counties are joining forces with private-sector firms to improve government operations, generate new solutions and reap valuable cost savings”.

counties_inactionFrom NACo’s website:

Large urban county governments provide essential services to more than 130 million residents each day, spanning from transportation and infrastructure to public safety and public health.  In an era of increasingly limited funding, an ever-growing demand for public services and a strong imperative for efficiency and transparency in government, counties are collaborating more than ever with the private sector to better deliver essential services to keep our communities healthy, safe and thriving.

The report features 11 case studies, reaching across sectors such as technology, health care and infrastructure development.  For example:

  • To engage residents in a two-way conversation and provide timely responses to pressing needs, the City and County of San Francisco worked with SalesForce to coordinate social media platforms, resulting in greater government transparency, better responsiveness to community issues and enhanced quality and efficiency of government services;
  • Broward County, Fla., contracted with a professional services firm, Parsons, to manage a complex runway expansion and terminal reconfiguration project at the county-owned Fort Lauderdale-Hollywood International Airport, enabling better process coordination and workflow procedures for this massive infrastructure project;
  • With support from PayPal, Cobb County, Ga., upgraded the county’s tax collection services to enable electronic payment, records keeping and mobile payment, thus improving processing speeds, streamlining operations and creating safer work environments for county employees;
  • Allegheny County, Pa., moved its civil commitment records from a paper-based to web-based system by adapting an application developed by Thomson Reuters, which has increased the accuracy and availability of time-sensitive information, saved money and reduced burdens on staff time; and
  • Salt Lake County, Utah, formed a collaborative partnership with Optum Health to redesign the county’s approach to behavioral health care delivery and improve care coordination and outcomes to promote and sustain wellness and reduce recidivism.

County leaders are faced with both challenges and opportunities to sustain responsive and effective solutions and services.  Together with private sector partners, county leaders are making important breakthroughs in advancing exemplary models of government innovation to create more agile, competitive and economically resilient counties and communities.

Click here to read NACo’s report – Partnering in Government Innovation: County Leadership in Action.

Queen Anne’s Latest County to Opt In To MACo OPEB Trust

October 15, 2014

The Queen Anne’s County Commissioners voted to include the in-development MACo OPEB Trust as an investment option for their long term contributions toward retiree health care. OPEB, meaning “other post employment benefits” beyond traditional pension obligations, are long term costs that show up on government books as liabilities. Under state law, counties may place current payments or reserves for these obligations in Trust as long term investments, allowing a wider and more favorable investment landscape than that available for traditional public funds.

From coverage on

The county’s OPEB fund, close to $2 million this fiscal year, is currently being pooled with OPEB funds from Kent County, the Queen Anne’s County Public Library and the county’s Board of Education. According to Seeman, those funds are held in what essentially amounts to a checking account, earning very little interest.

By joining the trust fund that MACo is in the process of creating, the money from the county’s OPEB account can be invested in a variety of securities, allowing greater earning potential.

“When you have this type of investment, usually what’s projected is a 6 to 8 percent annual return,” Seeman said. “Ultimately, if we reach our goal after 10 years, we’d have about $8 million.”

The St. Mary’s County Commissioners have formally adopted the Trust document through formal action, while both Allegany and Talbot County have designated staff representatives to act on behalf of the county to help in the Trust’s development.

For more background on the MACo OPEB Trust, see previous Conduit Street coverage: MACo Developing OPEB Trust For Long-Term Investments

Opinion Piece Describes Effects of Project Labor Agreements on Workers and Costs

October 14, 2014

An opinion piece in Center Maryland written by representatives of the Baltimore Metro and Washington Metro Associated Builders and Contractors discusses the effect Project Labor Agreements have on local workers and project costs.

Officially, Union-Only Project Labor Agreements (or PLA’s) date back at least to the earliest days of the Clinton Administration. Unofficially, the concept of union-only dates back significantly further. Back in the day, organized labor represented the majority of construction workers in this country, and union bosses called the shots and controlled nearly every aspect of the project — from manpower and productivity to the availability of materials and supplies. They held sway. But “back in the day” is more than 60 years ago. Today, barely 10 percent of the construction workforce in Maryland belongs to a union.

The reasons today’s construction worker has rejected union membership are both broad and nuanced and would require more space to cover than what we have been allotted. Suffice to say, the political machinations of union rules, of who gets what job and gets paid what wage, frustrates all but the least enterprising employee.

The writers describe the effects as follows,

Union-only project labor agreements discriminate against local workers, minority and women-owned firms, and discourage competition, which in turn drives up the cost.

Washington County to Revitalize its Foreign Trade Zone

October 8, 2014

With companies not taking advantage of the federal Foreign Trade Zone (FTZ) that has been established in Washington County several years ago, County Commissioners are taking steps to revitalize these zones to attract business. As reported by the Hagerstown Herald-Mail,

FTZs are a class of special economic zones in which companies can import goods that might need to be manufactured or manipulated, then either sold on the U.S. market or re-exported to another country. Duty fees and tariffs are not charged on goods until a finished product goes to domestic sale, basically allowing companies to operate as if they are on “foreign soil” although they are geographically within the United States.

Operating in FTZs provides benefits, but it is also very expensive, potentially affecting a business’s interest in seeking the designation.

With federal and local fees, costs can add up to as much as $200,000 in some cases for larger operations, according to Bob Mandley, business development specialist in the county’s Department of Business Development.

Currently, a business would pay a one-time $5,000 application fee to the county, plus annual costs based on square footage of the building that it would be using for the operation, Mandley said, noting that additional application fees ranging from $15,000 to $50,000 are charged by the U.S. FTZ Board as well.

With businesses not being able to make the Washington County FTZ model work, county commissioners recently approved changes to the program.

The commissioners voted Sept. 23 to rescind its previous resolution and enact a new one that designates active controls over the zones, making the Washington County Economic Development Commission the governing advisory board to the program.

It also removes wording that calls for a zone administrator, a job that will now fall under the positions of Mandley and the business support specialist serving as administrator and co-administrator, respectively.

Commissioners Ruth Anne Callaham, Jeffrey A. Cline and John F. Barr hope these steps will improve economic development opportunities.

“We need every tool in the toolbox that we can get,” she said. “It does have value. … We just need to match the effort to the return.”

Other commissioners used the same phrase, calling FTZs another “tool in the toolbox” of economic development.

“We want to explore every avenue that’s possible for economic development,” Commissioner Jeffrey A. Cline said.

Barr said he would be in favor of seeing fees and regulations reduced on businesses that apply for FTZ designation, saying it might “be a magnet to draw international business” to the county.

Assessment Workgroup Discusses Exemptions, Physical Inspection and Accuracy

October 7, 2014

The State Department of Assessments and Taxation Property Assessment Workgroup held its fifth meeting on September 29th to brief the full workgroup on property tax exemptions and hold meetings of the physical inspection and timely property pickup subcommittees.

The property tax exemption presentation focused mainly on court decisions that have established the parameters for determining which properties are eligible for a charitable or educational property tax exemption. The presentation also reviewed SDAT’s property tax exemption procedures. Now that the full Workgroup has been briefed on this topic, the Tax Credits and Exemptions Subcommittee will hold its first meeting on October 17 at 10 am to begin examining discrepancies in the calculation of certain tax credits and exemptions and approaches for improving accuracy.

The physical inspections and timely property pickup subcommittees have blended their discussions and have focused on technological improvements to assist with the assessment process, better communication between the state and local offices, and greater accountability with the data that is provided to SDAT.

The fourth subcommittee on personal property and vendor services will hold its first meeting on October 20 at 10 am.

The next meeting of the full Workgroup will be held on October 17 from 1 pm to 4 pm.  All workgroup and subcommittee meetings are held at the Maryland Department of Transportation Headquarters at 7201 Corporate Center Drive, Hanover, MD 21076.

Additional information about the Property Assessment Workgroup can be found on SDAT’s website and on Conduit Street.


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