The Maryland Senate this week passed a county-friendly budget that relieves counties of proposed cost shifts and restores needed funding for community colleges. The nearly $51 billion budget plan leaves enough cash on hand to erase the projected fiscal 2023 budget shortfall. In addition, a general fund surplus is forecast through fiscal 2024.
While the Senate made several amendments to the House version of the budget bill and Budget Reconciliation and Financing Act of 2021 (BRFA), the changes are relatively minor and should be easily resolved in a conference committee in the coming days. The Senate approved all of the House’s county-friendly moves made earlier this month through the BRFA.
SDAT Cost Shift Dead
As introduced, the BRFA proposed to increase counties’ reimbursement of State Department of Assessments and Taxation (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 proposed to incrementally increase this share to 90 percent by fiscal 2025 and each year thereafter. The cost shift would have placed millions of dollars on the backs of county budgets. Both the House and Senate rejected this shift.
Community College Funding Restored
The BRFA contemplated dramatic, long-term reductions to community college funding by limiting formula increases to the level of projected general fund growth. Beginning in FY 2023, funding for community colleges would have been restricted to the fiscal 2022 appropriation plus the annual percentage increase in General Fund revenues above the estimated annual increase in General Fund revenues. The Department of Legislative Services estimates that this proposal would cut overall funding for community colleges by approximately $147.5 million by fiscal 2026. Both the House and Senate rejected this proposal.
Further, as previously reported on Conduit Street, legislation that was originally introduced for the purpose of appropriating funds to be used for State-mandated tuition and residency waivers for community colleges has evolved to fulfill the original intent of the Cade funding formula. SB 538 passed the Senate and is now in the possession of the House Appropriations Committee, along with its crossfile, HB 1067. The amended bill requires the State’s funding percentage to increase from 27% in fiscal 2022, to 29% in fiscal 2023, and 30% in fiscal 2024 and each fiscal year thereafter. House Appropriations Committee Chair, Delegate Maggie McIntosh, has signaled that her Committee will recommend that the State fully fund its share of the Cade formula.
Erroneous Convictions Cost Shift Dead
Finally, the BRFA proposed that for all settlements entered into beginning in fiscal 2021, a local government would be responsible for 50% of any payments owed by the Board of Public Works (BPW) to an erroneously convicted individual. According to DLS, recent changes to state law may considerably increase the number of grants awarded by BPW. For instance, in fiscal 2020, BPW approved ten grants totaling $22 million. Because county governments have no authority or oversight concerning the prosecution of criminal cases, these grants are properly supported by the State’s General Fund.
The Constitution of the State of Maryland provides that each county and the City of Baltimore shall have a State’s Attorney whose primary responsibility is the investigation and prosecution of all criminal defendants. State’s Attorneys are independently elected state officials and do not come under the authority or supervision of county governing bodies. The decision to prosecute a criminal case or not lies within the sound discretion of the State’s Attorney. Because the ultimate disposition of a petition for compensation is wholly outside of the county government’s control, Both the House and Senate rejected this proposal.
Stay tuned to Conduit Street for more information.
Useful Links
Previous Conduit Street Coverage: Here We Go Again: Governor Revives SDAT Cost Shift to Counties
MACo Testimony on House Bill 589 – Budget Reconciliation and Financing Act of 2021
