MACo Urges Against Permanent Cost Shifts

On Wednesday, March 1, MACo testified on Senate Bill 172, the Budget Reconciliation and Financing Act of 2017 (BRFA), in support with amendments. This bill affects multiple statutory changes needed to balance the FY 2018 budget plan, and in some cases, future year spending as well. MACo indicated that counties are willing to endure their fair share of cuts this fiscal year – but requested that the Senate reject permanent cost shifts that could have severe detrimental effects on local governments.

MACo’s panel included MACo Associate Director Barbara Zektick, Howard County Finance Department Assistant Director Linda Watts, Allegany County Commissioner William Valentine, and Anne Arundel County Councilmember and MACo Legislative Committee Chair Jerry Walker.

MACo urged the committee members and representatives from all Senate standing committees to reconsider the proposal to shift costs for the State Department of Assessments and Taxation (SDAT) almost entirely on the counties. Linda Watts testified that the cost shift:

…puts at risk the objective, unbiased nature of the Department’s assessment functions. With a state agency overseeing the assessment of property, rather than the counties which directly benefit from higher assessments, taxpayers are assured that the assessment authority has no motive to provide anything other than an objective, fair analysis. …

Additionally, this cost shift requires counties to fund, almost in their entirely, functions over which they have no managerial control. So long as the state does not bear the burden of costs resulting from managerial decisions, the Administration will have no incentive to contain those costs, or ensure management choices are generally fiscally prudent.

Commissioner Valentine and Councilmember Walker testified to the importance of rejecting staff recommendations to flat fund highway user revenues to counties. Commissioner Valentine shared the realities of maintaining a road budget on less than 10% of historic funding levels, noting “our highway user funds could only blacktop three miles of roads a year.” Councilmember Walker informed the senators that in his county, the “total roads budget in fiscal 16 was $61.6 million. Highway user revenues covered 5% of that budget.”

MACo also urged the senators to amend out Section 9 of the BRFA, which proposes dramatic long-term reductions by permanently capping formula increases. From MACo’s written testimony:

In effect, this section could have some of the deepest and longest-lasting effects of any fiscal policy, as formulas and spending priorities would be dramatically abrogated over time. … MACo would urge the Committee to reject this section of the BRFA, and to retain the year-by-year public hearings and evaluations of any cuts and changes needed to effect that year’s budget plan.