Lower Than Expected Revenues May Indicate Montgomery County Budget Troubles

Lower than expected revenues may indicate budget troubles for fiscal 2017 according to Montgomery County budget officials.  As reported by the Washington Post,

Every November the county gets its largest chunk of income tax payments from the state. This year’s distribution was expected to increase by 16 percent over November 2014. Instead it grew just 2 percent, said management and budget director Jennifer Hughes. As a result, the county has lowered estimated revenues by $37 million in the current fiscal year and $98 million for FY 2017, which begins July 1.

If trends continue, Hughes said, county agencies will have to reduce spending by 11.5 percent to balance the 2017 budget, according to a memo she sent to the County Council on Wednesday.

This trend is troubling however, as state and local economic conditions are improving.

Unemployment and inflation are down; home sales are up. Officials estimate that 523,400 Montgomery residents are working, an all-time high. Hughes said the disconnect is puzzling.

“Based on the apparent disparity between the county’s distribution and the State’s receipts, the Department of Finance is requesting more information from the state,” Hughes said in her memo.

Regulatory Reform Commission Recommends Restructuring and Improving Customer Service

The Regulatory Reform Commission, appointed earlier this year by Governor Hogan, issued its first report this week calling for a restructuring of state government and major improvements in customer service.

As reported by the Baltimore Sun,

The report suggested Hogan take on tasks both complex — the government reorganization — and as simple as writing new regulations for food trucks.

The panel suggested the state cede regulatory authority on approving wetland permits to local governments, a proposal that would make life easier for developers but likely would spark concern among environmentalists.

And it concluded, after receiving more than 400 public comments, that regulators put “an emphasis on punitive enforcement instead of assisting compliance,” which created a “gotcha environment.”

An article in MarylandReporter summarizes some of the recommendations.

The commission found agencies and departments with overlapping authority, creating duplicative review of plans and permits. The report recommends:

  • Enforcement of new customer service standards — such as responding to all phone calls, emails and letters within 24 hours;
  • A centralized one-stop shop and call-center for inquiries and referrals;
  • Maximizing the use of electronic filings;
  • Updating “antiquated” technology that makes it difficult for agencies to share information with each other or businesses.
  • Quicker and more definitive responses to all plans, applications and forms.
  • Review of all professional license standards and continuing education requirements to make sure they are up-to-date and actually protect citizens. But the report concedes, “Changing or updating professional licensing takes a herculean legislative effort.”
  • Joint work groups to speed up review of major development projects.

Regulatory Reform Commission 2015 Report

Previous coverage of the Commission can be found on Conduit Street.

Congress Reaches Agreement on 5-Year, $305 Billion Transportation Bill

The U.S. House of Representatives and Senate reached agreement on a five-year $305 billion transportation funding package this week, the first long-term transportation funding bill that has moved forward in several years. The legislation is titled “Fixing America’s Surface Transportation Act,” or “FAST Act” for short.

As reported by Better Roads,

The bill is set to be paid for through the 18.4 cent gas tax as well as changes in custom fees and passport rules for those with delinquent taxes. The bill also will offset some costs by contracting out some tax collection services to private companies.

According to the summary of the bill from the House Transportation and Infrastructure Committee, the FAST Act would do the following to help roads and bridges:

  • Facilitates commerce and the movement of goods by refocusing existing funding for a National Highway Freight Program and a Nationally Significant Freight and Highway Projects Program
  • Expands funding available for bridges off the National Highway System
  • Streamlines the environmental review and permitting process to accelerate project approvals, without sacrificing environmental protections
  • Eliminates or consolidates at least six separate offices within the Department of Transportation and establishes a National Surface Transportation and Innovative Finance Bureau to help states, local governments, and the private sector with project delivery
  • Increases transparency by requiring the Department of Transportation to provide project-level information to Congress and the public
  • Promotes private investment in our surface transportation system
  • Promotes the deployment of transportation technologies and congestion management tools
  • Encourages installation of vehicle-to-infrastructure equipment to improve congestion and safety
  • Updates research and transportation standards development to reflect the growth of technology

Prince George’s Studies Implementing a Bike Share Network

With the growth of bike share programs in a number of metropolitan jurisdictions, Prince George’s County is studying whether a bike share network would benefit its communities. The study will also determine whether Capital Bikeshare, which has a number of bike stations in the Washington D.C. area, will best fit the county’s needs.

From the article,

Some Prince George’s biking advocates and riders say they are hopeful the feasibility study, which is expected to deliver recommendations early next year, will lead to putting the distinctive red Bikeshare bikes on county streets.

“Everybody is ready for it. The communities are ready for it,” said Aaron Marcavitch, executive director of Maryland Milestones/Anacostia Trails Heritage Area, a nonprofit group that has been involved in finding ways to increase bicycle tourism in Prince George’s. “We are a suburban area, and it takes a little bit of legwork to get the pieces in place, but there is very much an enthusiasm to get it done.”

To grow the biking infrastructure, the county has hired a bike and pedestrian coordinator.

There already are more county residents biking, particularly in the densely populated communities inside the Beltway. But the county’s transportation department has lacked a cohesive bike plan. Director Darrell B. Mobley said the new bike coordinator will help develop measurable goals and targets for improving infrastructure and safety.

Mobley said the county has been incorporating bike lanes into most major road projects, but funding cuts for resurfacing have limited the county from making progress on that front.

A bike-share program is key to the county becoming more bike-friendly, Mobley said. The feasibility study should provide “better direction on how we want to move forward with the bike-share program,” he said, declining to provide a timetable for when such a program could launch.

Article Highlights the Complexity of Business Tax Reforms

There has been much discussion about providing tax relief to businesses since the gubernatorial election. Governor Hogan ran on providing tax relief and the presiding officers in the House and Senate have appointed a commission to examine the State’s business climate and recommend tax changes.

Now that the 2016 session is around the corner and the commission is formulating its recommendations, an article in the Washington Post highlights the complexity of providing tax relief for Maryland businesses.

Tax analysts have indicated that property tax and personal income taxes should be the focus of reforms.

The tax rates for personal property vary by jurisdiction, ranging from zero in Frederick County to 5.62 percent in the city of Baltimore. Baltimore’s tax rate on personal property is 50 times higher than the state rate on land.

Many experts say high rates on tangible personal property disproportionately affect start-ups and manufacturers, which are most in need of new machines, furniture and supplies. They say the rates can discourage companies from moving to or expanding within the state.

Maryland’s personal income tax rates also are among the highest in the country, which is a problem for the many small business owners who choose to count their business income as personal earnings, rather than filing a more complicated corporate tax return.

Maryland’s combined state and local taxes on personal income, which range from 2 percent to 6.07 percent, “are by far the most burdensome” compared with neighboring states, according to a recent Moody’s Analytics report for the state panel.

However, the fiscal ramifications in the short and long-term  make this difficult.

…reducing personal income taxes, which account for 38 percent of all revenue from Maryland’s local and state collections, would have little chance of advancing in either the Senate or the House of Delegates, both of which have strong Democratic majorities.

Some Republican lawmakers said they doubt Hogan will fight hard for tax cuts next year because he is negotiating ways to resolve the state’s looming structural deficit, which, according to the Department of Legislative Services, could reach $1 billion over the next four years.

Hogan’s office declined to discuss specifics about the governor’s legislative proposals for the next session, but spokesman Matt Clark said the administration will focus on holding the line on spending and standing firm against any tax increases.

The full Washington Post article, which includes the differing views of legislators and Maryland businesses, can be found here.

Local Government Contracting Opportunities Begin to Grow

As reported by the online publication Route Fifty, local government contracting opportunities are rebounding. The article references a new report by Onvia, a Seattle-based government business intelligence company, that found that state, local and education (SLED) contracting activity increased by .3 percent after a noticeable decline.

From the article,

…third quarter growth was spurred by local governments, up 1.3 percent, and education agencies, up 3.1 percent,

Also factoring into the uptick was a 4.5 percent spike in IT/telecom purchases, up 388 bids and RFPs to 8,990 since this time last year, driven by state agencies. Consulting and software made up the majority of those purchases.

The article indicates that state agencies continued to see a 3.3 percent decline in purchasing activity.

Montgomery County to Move Forward With Modified Bus Rapid Transit Plan

Montgomery County Executive Isiah “Ike” Leggett announced yesterday his plan to move forward with bus rapid transit without the creation of an independent authority to develop and oversee its operation. Leggett announced earlier this month that he decided not to introduce legislation to create a County Transit Authority that would raise funds, build and operate a countywide bus rapid transit system. The county will instead focus on a community education and outreach effort on the benefits of bus rapid transit.

As reported in the Washington Post,

Leggett said he has asked Montgomery’s Department of Transportation to develop less costly alternatives to existing plans for bus-only express lanes, focusing one or two routes in a projected 98-mile system.

“I am committed to serving the rapid transit needs of our county,” Leggett said. The county would finance the routes in its own capital budget, which Leggett will introduce early next year.

Leggett said he hopes that if opponents see the bus lanes in limited operation, they might be more inclined to support a transit authority.

The routes and costs were not specified in the announcement. However, the article mentions three routes that have county interest.

…along Route 355 from the Rockville Metro station to the Bethesda Metro station, with a current estimated cost of $422 million; along U.S. 29 from Burtonsville to downtown Silver Spring ($200 million); and along the Viers Mill Road corridor ($285 million).

Sparrows Point Transformation – State and Local Role

In a Center Maryland Exclusive, Sparrows Point CEO talks about the site’s transformation and how the State and local governments have come together to make it happen.

Over the next several months, we’re working to finalize our vision for the site, with input from potential future leaseholders, government and local leaders, and our neighbors right here in Baltimore. And as we transform the future of the site, we’re building connections between the rest of the country and the world through Baltimore. In the not too distant future, the Star of Bethlehem will overlook thousands of men and women going to work every day. Maryland is open for business and we are proud to be part of this state and region as we move this project forward.

To learn more about the factors businesses consider when looking to expand or locate in an area and a local governments role in attracting these companies, attend the MACo Winter Conference session, Bringing Business to Your Backyard. 

Description: Businesses decide to locate in certain areas for many reasons. It could be the highly educated workforce, the sense of community, or the cost of doing business – just to name a few. During this session, a site selection consultant will discuss the most important factors a company considers when looking to expand or relocate a business and how attendees can better market their jurisdictions to be more attractive to business.


  • Tim Nitti, GeoAnalytics Consulting
  • Judy Lee, Director, Development Counsellors International (DCI)

Date/Time: Thursday, December 10, 2015; 2:15 pm – 3:15 pm

The MACo Winter Conference will be held December 9-11, 2015 at the Hyatt Regency Chesapeake Bay Hotel in Cambridge.

Learn more about MACo’s Winter Conference:

Questions? Contact Meetings & Events Director Virginia White.

Temporary Transportation Funding Measure Provides Time to Sort Out Multi-Year Bill

The U.S. House of Representatives passed a measure this week to extend federal highway funding to December 4 to prevent a federal highway shutdown; but also give more time for Congress to pass a multiple-year transportation measure. The U.S. Senate is expected to approve the measure.

As reported by The Hill,

Lawmakers are hoping the latest temporary highway funding patch will provide time for them to finish work on a long-sought multiyear infrastructure bill.

“The House and Senate are making good progress in resolving differences between their respective multi-year surface transportation reauthorization proposals,” said House Transportation and Infrastructure Committee Chairman Rep. Bill Shuster (R-Pa.), who sponsored the temporary patch.

“The conference committee needs the time necessary to meet in public, complete negotiations, and produce a final measure that helps improve America’s infrastructure,” Shuster continued. “This clean extension provides time for that process to occur and for the House and Senate to vote on the final legislation, without shutting down transportation programs and projects in the meantime.”

Congress has not passed a federal transportation funding bill that has lasted for more than two-years since 2005.

Spending Affordability Committee Discusses State Fiscal Outlook, Transportation Trust Fund

The Spending Affordability Committee, composed of members of the General Assembly and three public members, meets annually beginning in the fall to recommend a target for budget growth for each fiscal year based on the current and prospective condition of the state’s economy.  The Committee held its first meeting this week with members of the other fiscal committees of the General Assembly to be briefed by the Department of Legislative Services (DLS) on a broad range of economic and fiscal matters affecting the State’s budget.

As reported by The Daily Record (subscription required to view full article), Warren Deschenaux, Executive Director of DLS, informed the Committee the state budget is balanced.

“I can tell you, with respect to the budget, the news for the short term is good,” said Warren Deschenaux. “Our budget will be in a state of balance in the current fiscal year and probably into the next fiscal year as well.”

The positive budget outlook is due to the State closing out fiscal 2015 with a greater than expected surplus and revenue estimates increasing for the current and upcoming fiscal years.

The Committee will use information from this briefing to make final recommendations to the governor regarding the state budget and use of any surplus money in December.

Other fiscal issues of interest to counties in the briefing document include an overview of State Aid to Local Governments and the Transportation Trust Fund. Funding to local governments is estimated to increase by $231.8 million or 3.3%.  Of this amount, $181.7 million, would be allocated to public schools.  DLS also reported that the draft Consolidated Transportation Program (CTP) allocates $743 million from fiscal 2017 – 2021 to increase the local share of Highway User Revenues.by 2.5 percentage points each year to bring the local share back to 30% by fiscal 2024. Transportation Secretary Pete Rahn, when speaking before MACo’s legislative committee, stated that the phase-in plan would not disrupt other projects currently in the CTP. Only a phase-in at a faster rate would require projects currently included in the CTP to be removed, altered or deferred. The DLS analysis disputes the Maryland Department of Transportation’s Transportation Trust Fund projections.

An overview of the issues discussed can be found in the bulleted list below.