Senate Committee Rejects SDAT Cost Shift, Restores Funding for Community Colleges and Local Roads

During its operating budget decision meeting on March 5th, the Senate Budget and Taxation Committee rejected three proposals in SB 187, the Budget Reconciliation and Financing Act of 2020 (“BRFA”) that would have compromised county finances. The full Senate is expected to take up these budget decisions early next week.

As introduced, the BRFA would have increased counties’ reimbursement of SDAT functions, including costs of real property valuation, business personal property valuation, and information technology. Since 2013, counties have reimbursed the state for 50 percent of the costs for these functions, but the BRFA proposes increasing this share to 60 percent, permanently. The cost shift would have placed millions of dollars on the backs of county budgets. The Committee voted to reject the cost shift.

In addition, the BRFA proposed dramatic, long-term reductions to community college funding by limiting formula increases to the level of projected general fund growth. Beginning in FY 2022, funding for community colleges would have been restricted to the fiscal 2021 appropriation plus the annual percentage increase in General Fund revenues above the estimated annual increase in General Fund revenues. The Department of Legislative Services estimated that this proposal would cut overall funding for community colleges by approximately $121 million by FY 2025. The Committee voted to reject this proposal.

Finally, the BRFA proposed diverting $5 million per year of Baltimore City’s share of highway user revenues to the Maryland Department of Transportation for four years beginning in fiscal 2021 to support the Howard Street Tunnel project. Diverting local highway user revenues to fund state capital improvement projects sets an alarming precedent, jeopardizing these desperately needed funds. The Committee voted to reject this proposal.

The House Appropriations Committee will take action on these items, with final determinations made by the Conference Committee, which will be appointed by both chambers.

Useful Links

Previous Conduit Street Coverage: It’s Back! Governor Revives SDAT Cost Shift To Counties

Previous Conduit Street Coverage: Budget Analysts: Reject Proposal to Permanently Cut Community College Funding

MACo Testimony on Senate Bill 192 – Budget Reconciliation and Financing Act of 2020