Governor’s Fiscal 2014 Proposed Budget – County Outlook

As previously reported on Conduit Street, Governor O’Malley released his proposed $37.3 billion Fiscal Year 2014 budget on January 16, which did not contain any new tax increases or significant spending reductions. Upon review, MACo was very pleased to find that the budget and accompanying budget reconciliation bill do not include any newly proposed reductions in aid to county governments or jointly state/county funded programs. Further, consistent with actions from last session, previous reductions to formula funding for local police departments and health departments have been restored. The cost shifting of assessment functions of the State Department of Assessments and Taxation will abate to a 50/50 split, down from a 90% county burden for each of the last two years. The net effect of these incremental changes over the FY 2013 budget total almost $40 million. In addition, the Teacher Retirement Supplemental Grant has been continued to assist some counties with covering teacher pension costs. This represents a greatly improved fiscal outlook and we hope the resulting FY 2014 budget is at least this good, if not better.

The table below summarizes the Governor’s Fiscal 2014 Budget for Local Government.

Operating Budget – Direct Aid

Pension Offsets Local Police Aid – Funding is being restored to historic formula levels, after being reduced by 1/3 as a midyear (Board of Public Works) cut in fiscal 2010 and flat funded each year  ever since.Local Health Departments – Inflationary increases are being restored after funding was reduced to base level in fiscal 2010 and flat funded each year ever since. Future growth will be from a far lower base than prior year funding levels.Teacher Retirement Supplemental Grant – This targeted additional funding provided to certain counties is continuing as an offset to teacher pensions.
Property Assessment Office Costs As specified in 2011 legislation, this state-shifted cost will drop to 50% from the 90% invoiced to counties the last two years. County costs should drop from $36 million to $20 million.
Education Direct aid increases by a total of $108.7 million (to almost $5.2 billion) and includes full funding of the geographic cost index ($138.2 million) and $8.3 million in hold-harmless grants to begin a 5-year phased-in change in the calculation county net taxable income for wealth-adjustment purposes.
Community Colleges Formula-driven aid increases by $8.1 million to $243.2 million, which had been modified downward in prior years’ budgets.
Libraries Formula-driven aid increases by almost $500,000
Transportation Funding increases by $22.5 million, $15.4 million of which is for one time grants to municipalities, with the remainder through the statutory Highway User Revenue mechanism
Local Management Boards Additional General Funds provided to maintain funding at Fiscal 2013 level – $16 million
Disparity Grant Funding increases by $1.5 million, to $121.4 million

Capital Budget

School Construction Budget continues to fund school construction above the Kopp Commission recommended threshold by providing $335.7 million to build and renovate schools. This includes $25 million for school safety improvements (General Fund), $25 million to install air conditioning in schools, $6.1 million for the Aging Schools Program, and $4.5 million in Qualified Zone Academy Bonds(QZABs).
Local Watershed Implementation Plans Over $25 million in general obligation bonds is being provided for targeted local watershed implementation plan projects.  This allocation will also make grants available on a competitive basis for additional stormwater projects in watersheds heavily impacted by prior development.

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