DLS 90 Day Report: Capital Budget

The Department of Legislative Services (DLS) has released its annual summary of the legislative session, The 90 Day Report – A Review of the 2017 Legislative SessionThe report is divided into 12 parts, each dealing with a major policy area. It also includes information relating to the final operating and capital budgets, including aid to local governments. 

Links to sections on the Capital Budget and relevant portions impacting local governments are provided below.

Capital Budget

From page A-63 on Revenue Bonds for the Biological Nutrient Removal (BNR) Program:

A significant feature of the fiscal 2018 capital budget is a change in the funding mechanism for the Biological Nutrient Removal (BNR) Program. In prior years, grants to local governments for upgrades of wastewater treatment plants to the BNR standard were funded with general obligation bonds. A provision in the BRFA of 2017 authorizes the use of up to $60 million of tax-supported revenue bonds from the Bay Restoration Fund (BRF) to fund BNR projects, while House Bill 384 (passed) permanently expands the allowable uses of the BRF to include BNR projects.

The fiscal 2018 capital budget bill de-authorizes $11 million of GO bonds authorized at the 2016 session for BNR projects and funds these projects and $49 million of new BNR projects from the revenue bond issuance.

The fiscal 2018 capital budget also includes $300 million of planned non-tax supported revenue bond issuances by MDE to further capitalize the Water Quality Revolving-Loan Fund and the Drinking Water Revolving Loan Fund to fund loans to local governments for various water quality and drinking water infrastructure projects. MDE will issue the debt over the next several years as project funding proposals from local governments dictate.

From page A-68:

Community colleges receive $59.6 million in fiscal 2018 GO bonds, or 14.9% of higher education funding. This includes $2.0 million of recycled GO bond funds leftover from prior local community college projects. Community college funding is also matched by $54.3 million in local support in fiscal 2018.

Exhibit L-2, Fiscal 2018 Public School Construction Funding (by Local Education Agency)

From page A-70 on School Construction:

The fiscal 2018 capital budget includes $347.5 million in GO bonds for public school construction. … The General Assembly also added language to the school construction authorization that, for fiscal 2018, IAC shall allocate 100% of the funds available for public school construction projects, including available contingency funds. Under the language, the IAC allocations are not subject to BPW approval and are deemed approved pursuant to State law. IAC made recommendations for 75% of the preliminary school construction allocation for fiscal 2018 in December 2016, which were approved by BPW on January 25, 2017. By March 1, 2017, IAC made recommendations for the allocation of 90% of the school construction allocation in the capital budget (which included the initial 75% approved by BPW). Following enactment of the capital budget bill, IAC will make recommendations for 100% of the funding available for fiscal 2018 school construction projects, and pursuant to this language, the IAC recommendations will be the final allocations not subject to BPW approval.

An additional $62.5 million is funded through the Capital Grant Program for Local School Systems with Significant Enrollment Growth or Relocatable Classrooms established by Chapter 355 of 2015. … In the 2017 session the General Assembly increased the amount authorized for the program by $22.5 million for a total of $62.5 million. … While § 5-313 of the Education Article establishes a funding formula for the eligible counties, the additional $22.5 million is allocated outside of the statutory formula with specific allocations to the participating jurisdictions set forth in the MCCBL of 2017. Significant enrollment growth is defined as having full-time equivalent enrollment growth that exceeds 150% of the statewide average over the past five years, and significant relocatable classrooms means an average of at least 300 relocatable classrooms over the past five years. Currently, Anne Arundel, Baltimore, Howard, Montgomery, and Prince George’s counties are eligible.

Click here for information on school construction funding in Part L, Education.

From page A-70 on Aging Schools and Qualified Zone Academy Bond (QZAB) Programs

The capital budget bill provides $6.1 million in GO bonds for the Aging Schools Program allocated as grants to county boards of education as specified in § 5-206 of the Education Article. …

Public school construction funding is further supplemented with $4.823 million of QZABs authorized in House Bill 153. QZABs may be used in schools located in federal Enterprise or Empowerment Zones, or in schools in which 35% of the student population qualifies for FRPM. QZAB funds are distributed to local school systems through competitive grants including grants to the Breakthrough Center and public charter schools.