On February 6, 2024, MACo Executive Director Michael Sanderson testified before the House Environment and Transportation Committee in opposition to HB 165- Local Government- Annual Audit Reporting Requirements- Alterations. This bill requires states to withhold 20% of their aid to local governments if they fail to submit a certain audit report within 1 calendar year of the deadline.
Mr. Sanderson noted that the concerns raised at the hearing from law enforcement departments (noting that state-funded police aid is included among the funds potentially withheld from a violation) illustrates the potential effect of the legislation. “If police take note of this and are worried about its effect, you know that the bond rating agencies would also take note,” he said. Both MACo and MML argued that current law offers multiple means to promote local compliance, and to target ongoing concerns. Mr. Sanderson also noted that “…what’s missing here is… a finding of ‘bad faith’ as part of the penalty process.”
Legislation in recent sessions regarding municipal tax rates, and their potentially imbalanced application, seems to have evolved into this broader enforcement mechanism.
One municipal governments’ potentially concerning tax rate actions in recent years may justify some State action or oversight. Still, HB 165 represents a broad and sweeping new process that potentially jeopardizes county and municipal revenues in the hundreds of millions of dollars annually. The potential for concerning effects on local bond ratings by creating such uncertainty is hard to overstate.
HB 165’s cross-file, SB 747, was heard on February 14, 2024 in the Senate Budget and Taxation Committee. Kevin Kinnally testified in opposition to this bill.
HB 165 was heard in the opposite chamber, the Senate Budget and Taxation Committee, on March 26. MACo submitted written testimony in opposition to this bill.
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