Howard County Council Approves FY 14 Budget with Minor Changes

May 24, 2013

The Howard County Council approved the county’s fiscal year 2014 budget incorporating only minor changes to the budget proposed by County Executive Ulman. As reported by the Baltimore Sun (limited free views available):

The Howard County Council adopted a $923.5 million general fund spending plan Thursday that increases allocations for schools and police while not raising income or property taxes.

…The spending plan totals $1.4 billion when counting all money sources, including fire taxes and water and sewer fees. It is the seventh and next-to-last for Ulman, who is limited by law to two four-year terms. After weeks of public hearings and work sessions, the council passed his original $920.8 million proposal with only minor changes.

County Executive Ulman’s press release provides some funding specifics.

The spending plan provides record funding for the Howard County Public School System, including the ability to hire more than 130 new educators. It also contains funding for 12 additional sworn police officers. Howard County will exceed the state-required education “maintenance of effort” and teacher pension minimum contributions by more than 100 percent.

The operating budget contains funding for the first general cost-of-living increase for Howard County employees since 2008, as well as $250,000 for the County’s new plan to combat bullying. Other notable funding commitments include a $725,000 installment toward fulfilling the obligations of the Howard County Plan to End Homelessness, as well as additional positions in the Sheriff’s Office to combat domestic violence.

The budget also provides $5 million for arts and culture projects in Downtown Columbia, including funding to begin design and construction of an amphitheater in Symphony Woods. Economic development efforts will receive a boost through a $2.5 million package of investments that includes a new Center for Conscious Entrepreneurship, a Next-generation Manufacturing Center and an academy to train “angel investors.”

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Posted by Andrea Mansfield

Communication Tax Reform Commission in Home Stretch – Looking More Closely at State Revenues

May 22, 2013

The Maryland Communications Tax Reform Commission, which began meeting last fall, held its first meeting of the interim to discuss revenue data collected from the industry and local governments, and provide an analysis of the two proposals offered by the wireless community during its December 2012 meeting.

Although the Commission has been charged with assessing the “feasibility and fiscal implications for the State and local governments of a modernized, competitively neutral communications tax and fee system,” following a presentation by the Comptroller’s Office describing the revenue implications of the wireless industry proposals, discussion focused on proposing State reforms and deferring action at the local level. The Commission plans to hold its final meeting on June 12, 2013 to vote on such a proposal.

A separate information analysis provided by the Comptroller’s Office during the May 16, 2013 meeting indicated that annual communications tax and fee revenue totaled, $555 million in Fiscal Year 2012 – $283.5 million in State revenues and $271 million in local revenues. Of the ten State revenue sources, the largest was the sales tax on wireless communications, $132.8 million, followed by the Public Service Company Franchise Tax, $34.2 million, and the Corporate Income Tax, $32.4 million. Of the five revenue sources at the local level, the largest was the local sales/excise tax levied on telecommunications in five jurisdictions, $136.3 million, followed by franchise fees levied by all but six jurisdictions, $71.2 million, and the local 9-1-1 fee which benefits all jurisdictions, $41.3 million.

The information analysis further analyzed how these revenues would be affected by each of the proposals offered by the wireless community for communications tax reform: 1) Comprehensive state-local communications tax reform – replace most taxes a fees with a 6% sales tax on all communications; and 2) Reform of discriminatory telecommunications taxes – replace most taxes and fees with a 6% sales tax on telecommunications.  Both proposals would have negative fiscal consequences for the State and local governments. Conclusions from the information analysis are below.

The enactment of the tax and fee structure in the first proposal would decrease aggregate State and local government revenue by approximately $73.6 million. In order to hold fiscal year 2012 revenue constant, a communications tax rate of 7.2% is required rather than the 6.0% rate proposed. Instituting the second proposal’s tax and fee structure would diminish revenue to a greater extent, decreasing collections by $106.3 million in fiscal year 2012 and requiring a tax rate on telecommunications services of approximately 8.7% in order to retain the current level of communications revenue.

Representatives from MACo and MML raised concerns with the proposals stating that they did not meet the principles for communications tax reform provided by the organizations in the fall.

In response to the Comptroller’s analysis, the wireless representatives acknowledged the challenges associated with both proposals due to the variance in local taxes and revenues, and suggested that an alternative proposal be provided that would only focus on State reform and defer local government reforms.  Once developed, this proposal will be distributed to Commission members for review prior to the next meeting.  The Commission plans to discuss and vote on this proposal on June 12.

Additional information on the Communications Tax Reform Commission can be found on Conduit Street.

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Posted by Andrea Mansfield

Health Officers Discuss Local Health Funding and Health Care Reform

May 10, 2013

MACo’s Legislative Director, Andrea Mansfield, recently met with the Maryland Association of County Health Officers, an affiliate organization of MACo, to discuss local health funding and the health department’s role in health care reform.  These discussions are intended to frame discussions that will take place during the interim.

The Department of Legislative Services(DLS) released a report at the end of the 2012 interim titled “Survey of Local Health Departments in Maryland” which examined the funding of local health departments in the State.  The report focused specifically on: (1) how local health departments (LHD) finance public health services; (2) the impact of federal health care reform on LHDs; and (3) the regionalization of public health services in the State.  The findings of this study were posted in a previous blog on Conduit Street.  To address the findings, DLS has recommended that additional research be performed to determine whether the current distribution of funds under the Core Funding Program is effective and whether LHDs could benefit from the regionalization of public health services.

The General Assembly also agreed to a study on local health outcomes in the 2013 Joint Chairmen’s Report, a document that accompanies the State budget and summarizes additional actions and recommendations.

Report on Local Health Outcomes and Funding for Local Public Health Services: The committees direct the Department of Health and Mental Hygiene (DHMH), in conjunction with the local health departments (LHD), to monitor and report on its efforts to address the challenges that LHDs are currently facing with regard to the significant funding reductions experienced since 2010 due to the rebasing of the targeted local health formula. Other State budget cuts to local health services should also be addressed. The report shall provide quantitative data from local jurisdictions on negative health outcomes due to State budget cuts to the seven core funding areas, with particular attention to family planning, maternal and child health services, and chronic disease prevention and treatment programs. The impact of reductions in direct care services for low-income populations that do not qualify for access to health insurance under federal health care reform should also be discussed.

These studies provide an opportunity for the LHDs to raise specific funding concerns and comment on their role in health care reform.  Funding for LHDs has been cut significantly since Fiscal Year 2010.  Cost containment actions of the Board of Public Works in August 2010 and further action during the 2010 General Assembly session, reduced funding from a high of almost $70 million to the base funding level to $37.3 million. In addition,  a new interpretation of the statute which once provided for cumulative inflationary growth, is now being interpreted as only one year’s growth in inflation and population, permanently reducing and restructuring LHD funding.

More information on LHD funding and structure can be found in MACo’s blog series, which highlights the many budgetary challenges resulting from reductions over the past few years and describes the expanding pressures placed on these agencies through health care reform and the economic downturn.

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Posted by Andrea Mansfield

Comptroller Accepting Nominations for the William Donald Schaefer Helping People Award

April 26, 2013

On April 11, Comptroller Peter Franchot announced that his office is accepting nominations for the William Donald Schaefer Helping People Award.

As announced in the press release:

The Comptroller created the award, to recognize individuals and organizations in each county and Baltimore City best exemplifying Schaefer’s lifelong commitment to helping people.

Winners will be selected based on their demonstration of improving the community, swiftly solving a citizen problem through effective government intervention, directly aiding the most vulnerable in society or creating a public/private partnership to improve the lives of Marylanders.

“We received many nominations during the inaugural season so picking just one winner in each jurisdiction proved difficult.  There are countless deserving organizations and individuals, who embody Schaefer’s lifelong drive to help people.  It just made sense to accept nominations for a second year,” said Comptroller Franchot.

The Comptroller will personally present the award to each winner starting in May.

The nomination form, additional information and a list of past winners can be found on the Comptroller’s website, by clicking here. All nominations must be received by May 10, 2013.

William Donald Schaefer was a Past President of MACo and a former Governor of Maryland.

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Posted by Leslie Velasco

Comptroller Accepting Nominations for the William Donald Schaefer Helping People Award

April 12, 2013

On April 11, Comptroller Peter Franchot announced that his office is accepting nominations for the William Donald Schaefer Helping People Award.

As announced in the press release:

The Comptroller created the award, to recognize individuals and organizations in each county and Baltimore City best exemplifying Schaefer’s lifelong commitment to helping people.

Winners will be selected based on their demonstration of improving the community, swiftly solving a citizen problem through effective government intervention, directly aiding the most vulnerable in society or creating a public/private partnership to improve the lives of Marylanders.

“We received many nominations during the inaugural season so picking just one winner in each jurisdiction proved difficult.  There are countless deserving organizations and individuals, who embody Schaefer’s lifelong drive to help people.  It just made sense to accept nominations for a second year,” said Comptroller Franchot.

The Comptroller will personally present the award to each winner starting in May.

The nomination form, additional information and a list of past winners can be found on the Comptroller’s website, by clicking here. All nominations must be received by May 10, 2013.

William Donald Schaefer was a Past President of MACo and a former Governor of Maryland.

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Posted by Virginia White

Invitation to Attend the Maryland Watermen’s Symposium

April 12, 2013

Comptroller Peter Franchot and the Chesapeake Bay Commercial Fisherman’s Association have issued an open invitaiton for all interested parties to attend the Maryland Watermen’s Symposium on April 18, 2013 at 1:00 pm at the Rufus M. and Loraine Hall Todd Performing Arts Center at the Wye Mills Campus of Chesapeake College. The Comptroller, commercial fishing industry representatives, and stakeholders will discuss the importance of the industry to Maryland’s economy and way of life.

Please view the invitation for more information and RSVP details.

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Posted by Virginia White

2013 End of Session Wrap Up: Tax and Revenue – Personal Property Tax Legislation

April 9, 2013

This post summarizes the status of tax and revenue bills related to personal property taxes that MACo either considered or took a position on.

Personal Property Tax Liens: As introduced,  HB 419 would require a county to record a lien on personal property for unpaid taxes with the clerk of the court and make a personal property lien secondary to other non-tax liens.  MACo opposed the bill stating that it would significantly undermine a county’s ability to effectively pursue the collection of delinquent taxes. Under current law, both personal and real property taxes are given first lien priority for priority for payment, ahead of private lenders and other entities.  With assistance from county attorney and finance staff, MACo worked with the industry to develop a process to aid counties with the collection of personal property taxes.  This process authorizes a secured party to send notice to a county when personal property is repossessed with an estimate of the personal property taxes owed, and then forward on payment after a reasonable time of sending notice.

Final Status:  HB 419 passed the General Assembly with MACo’s amendments. MACo changed its position to support the bill as amended.

Decoupling of the Personal Property Tax: HB 1190/ SB 573 would authorize a county to set its personal property tax rate at no more than 2.5 times the rate for real property. One of MACo’s 2013 legislative initiatives, MACo supported the bills stating that decoupling the personal property tax rate from the real property tax rate would allow counties to incentivize business investment using a deliberate approach rather than one that is lock-step with the more general real property tax rate.

Final Status:  The General Assembly passed both bills without amendments. 

Depreciation Schedule Changes: SB 251 would establish a 10-year depreciation schedule for personal property. The personal property would depreciate at 10 percent per year until the property has an assessed value of $0 in the eleventh year. Under current statute and regulations, personal property depreciates over an 8 year cycle. Following the 8th year, the property remains at 25% of value and is assessed on this percentage of value until the property is no longer in use.  MACo opposed this bill stating that there is no justification to change the depreciation schedule and that the bill would have a significant fiscal effect on local governments.

Final Status: No action was taken on SB 251 by the Senate Budget and Taxation Committee.

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Posted by Andrea Mansfield

2013 End of Session Wrap Up: Finance and Procurement Legislation

April 9, 2013

This post summarizes the status of finance and procurement bills that MACo either considered or took a position on.

Sustainable Communities: HB 613 would expand the financing options available to local governments with designated sustainable communities to include those employed in Transit Orientated Developments and the use of tax increment financing (TIF). MACo supported this bill as it provided one more tool in the tool box for local governments to carry out important projects in these designated areas.

Final Status:  The General Assembly passed HB 613.

Disparity Grant: HB 914, as introduced, would have eliminated the cap placed on the disparity grant program effective fiscal 2010 and phased in the additional funding for eligible counties over 5 years, 20% per year, beginning in fiscal 2015. As amended, the bill would keep the cap in place, but provide a minimum grant for other counties that may be eligible based on a county’s level of tax effort. MACo supported the legislation stating that it addresses inequities in the program and allows all jurisdictions meeting the eligibility criteria to fully benefit from the program. The Senate Budget and Taxation Committee took similar action through HB 102, the Budget Reconciliation and Financing Act (BRFA). Under the modified program in the BRFA, eligible counties would continue to receive the amount of funding provided in Fiscal Year 2010, but a minimum grant was added to the program based on local tax effort. The local income tax rate to be eligible to receive a grant is also being increased from 2.4% to 2.6%.

Final Status: HB 914 died on the House floor.  However, HB 102 passed the General Assembly after differences were resolved by a House and Senate budget conference committee. Funding was provided in the supplemental budget for the disparity grant enhancement. More detail on the disparity grant program and a funding breakdown can be found in a previous blog on Conduit Street.

Foreclosure Protections: HB 1008 would require the purchaser at a foreclosure sale to close on the transaction and record a deed transferring title within 60 days after the entry of the final order of ratification. If the transaction has not closed, the purchaser must record among the land records contact information of the purchaser, who can accept legal service for the purchaser, and who is responsible for property maintenance. MACo supported this legislation as it would provide appropriate notification to the State Department of Assessments and Taxation to remove Homestead Tax Credits and assist local officials with identifying parties responsible for the maintenance of a foreclosed property.

Final Status:  HB 1008 was given an unfavorable report by the House Environmental Matters Committee.

Transportation Infrastructure Banks: HB 1322 would expand the financing options available to local governments for transportation projects by establishing a Transportation Infrastructure Bank. MACo supported the bill as it would provide another effective tool for funding transportation projects.

Final Status:  No action was taken on HB 1322 by the House Ways and Means Committee.

Capital Budget – Matching Funds:  SB 569 would authorize a county who is the grantee of a local capital project requiring a county match to include the salaries or wages the county pays to employees as part of its in-kind contribution. MACo supported this legislation stating that it would give counties greater flexibility in meeting project matching requirements.

Final Status:  No action was taken on SB 569 by the Senate Budget and Taxation Committee.

Prepaid Phone Services – 9-1-1 Fee: SB 745 would extend Maryland’s current 9-1-1 charge to prepaid wireless services and ensure Maryland’s 9-1-1 system is appropriately supported. MACo supported the legislation stating that it provides a reasonable approach for extending this surcharge to all individuals who benefit from these important services and it would provide additional revenue to support the most important functions of our emergency call centers.

Final Status:  The General Assembly passed SB 745 without amendments. 

Maintenance of Everything: SB 1055 would require counties to maintain funding levels year to year across a wide variety of services labeled in the bill as “critical.” MACo opposed the legislation expressing concern with the precedent the legislation would set and the severe limits it would place on a county’s autonomy to manage its budget.

Final Status:  No action was taken on SB 1055 by the Senate Budget and Taxation Committee.

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Posted by Andrea Mansfield

General Assembly Approves Fiscal Year 2014 Budget, Including Disparity Grant Enhancement

April 9, 2013

After several years of budgets with spending reductions and tax increases, the House and Senate approved a $36.9 billion Fiscal Year 2014 budget which contained neither.  As reported by MarylandReporter.com:

The budget, HB 100,  raises overall spending 3% and is $500 million less than Gov. Martin O’Malley originally proposed, largely by setting aside funds in case federal budget cuts impact state revenues.

There was none of the contention that led to an impasse last year and eventually a special session to resolve the budget in May. The major difference between the House and Senate budgeters was $100 million senators cut in pension contribution.

The approved budget continues to close the structural deficit and constrains spending.  The budget also increases fund balances and sets aside $100 million to address possible reductions due to federal sequestration. All budget actions are summarized in the Conference Committee Report.

The Fiscal 2014 budget also includes funding for enhancements to the Disparity Grant Program. Under the modified program, eligible counties will continue to receive the amount of funding provided in Fiscal Year 2010, but a minimum grant has been added to the program based on local tax effort. The local income tax rate to be eligible to receive a grant is also being increased from 2.4% to 2.6%.

See county funding breakdown

See prior Conduit Street coverage of the Senate action on disparity grants.

See DLS analysis and recommendations on disparity grant issues.

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Posted by Andrea Mansfield

Neuman Evaluates Her First Month as Anne Arundel County Executive

April 4, 2013

Anne Arundel County Executive Laura Neuman discusses the progress and changes that have been made since she took office one month ago.  To see Eye on Annapolis’ full story on County Executive Neuman, click here.

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Posted by Kaley Walker

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