Governor: “No Plans” To Take Homes for I-270

Governor Larry Hogan has assured protestors and concerned citizens that his plans to improve traffic conditions along I-270 and the Beltway will not result in any eminent domain affecting residents’ homes. WTOP reports:

At a news conference in Annapolis on Tuesday, the governor repeated what he told a group of concerned citizens at a Labor Day parade in Kensington: “The state has no plans that show anybody’s houses being taken,” he said.

Maryland’s State Highway Administrator Greg Slater elaborated that the State plans on “challenging our private sector partners to find a solution that fits within that right of way.”

The protests and assurances come after the Action Committee for Transit submitted a Public Information Act request for any and all relevant plans. The Maryland Department of Transportation (MDOT) responded denying the group’s request for a fee waiver and requesting payment.

The 15 alternatives proposed by MDOT in fact do not appear to expand existing right-of-way, but rather, implement express toll lanes, carpool lanes, and transit options. Read more about the alternatives here.

Relevant Links

MDOT’s Project Website

WTOP coverage

Maryland Transit Opportunities Coalition coverage

 

County Income Tax Distributions Down Nearly 50%

The Comptroller’s Office has released its August local income tax distributions – which have decreased from last year by 47.7 percent.

This is primarily because the number of relevant pay periods for significant withholders has differed in previous years, says Pharita (Jan) Akbhavasut of the Revenue Administration Division – indicating that this decrease is, effectually, “artificial.”

From her email:

The August local income tax distribution for counties totals $54.7 million, a decrease of 47.7%.  This distribution includes two reconciling distributions–the balance of second quarter 2018 withholding and estimated payments and the reconciling distribution for tax year 2017.  Year over year withholding growth in the second quarter, ignoring complexities related to this distribution, was 4.1%, consistent with recent trends.  Timing issues related to the number of pay periods in past quarters had caused volatility in the year over year withholding numbers.  However, those timing issues appear to have passed.   This is likely the cause of a significant portion of the decline in the distribution; last year’s reported withholding growth for the August distribution was artificially elevated by the aforementioned timing issues.

The second quarterly distribution is based on withholding and estimated tax collections attributable to the second quarter of 2018 less amounts already distributed (projected April/May withholding and estimated payments distributed in June and projected June withholding distributed in July).  This component of the distribution is effectively one-third of projected estimated payments for the second quarter, and a reconciliation of actual withholding and actual estimated payments for the entire quarter to projections from May and June.  This means the size the component depends on the variance of actuals from the estimate, and the amounts already distributed.  While this component decreased 49.4%, to $44.2 million from last year (Table 2), the cumulative distribution so far for tax year 2018 grew 2.3%, to $2.111 billion, from the same point in time last year (Table 3).

If you have any questions about the distribution, please contact Debora Gorman of the Revenue Administration Division at (410) 260-7451 or Pharita (Jan) Akbhavasut at (410) 260-7501.

Here is her email from last year:

The August local income tax distribution for counties totals $104.6 million, an increase of 40.9%.  This distribution includes two reconciling distributions–the balance of second quarter 2017 withholding and estimated payments and the reconciling distribution for tax year 2016.  Year over year withholding growth in the second quarter, ignoring complexities related to this distribution, was a relatively strong 5.7%.  This is likely due to timing issues related to the number of pay periods in a quarter for some large withholding payers.  The number of pay days in a given quarter can change from year to year.  This is likely the cause of the high growth rate for 2017Q2. While we cannot be certain, we believe that pay period timing has served to distort quarterly growth rates relative to true underlying growth for all quarters from 2015Q4 to 2016Q3.  As a result of those anomalous periods, each subsequent year-over-year comparative period is impacted. Withholding growth in 2016 Q2 was weak, at 1.7%, and has served to boost the growth figure for 2017 Q2 by comparison.

The second quarterly distribution is based on withholding and estimated tax collections attributable to the second quarter of 2017 less amounts already distributed (projected April/May withholding and estimated payments distributed in June and projected June withholding distributed in July).  This component of the distribution is effectively one-third of projected estimated payments for the second quarter, and a reconciliation of actual withholding and actual estimated payments for the entire quarter to projections from May and June.  This means the size the component depends on the variance of actuals from the estimate, and the amounts already distributed.  While this component increased 55.2%, to $87.5 million from last year (Table 2), the cumulative distribution so far for tax year 2017 grew 5.0%, to $2.063 billion, from the same point in time last year (Table 3).

Links to Income Tax Distribution Tables for Counties

August 2018 Counties Tables

August 2017 Counties Tables

August 2016 Counties Tables

State Enjoys $339M Windfall, Leaders Advised to Save

Attendees at the MACo Summer Conference session, Navigating Murky Waters: Predicting Unpredictable Revenue Streams heard the State’s top revenue estimator Andrew Schaufele discuss how difficult estimating revenues has become – and how much of that has to do with the top 1 percent having most of the money, and earning much of it through capital gains.

This week, the State announced that as it closes out fiscal 2018, it has received 2 percent in revenues above estimates – a total of $339 million in unanticipated dollars for public services. A large chunk of that – $218.7 million – came from the personal income tax, which came in at 2.4 percent above revenue estimates. The latter matters for counties, which receive their own “piggy back” local personal income tax.

The windfall, Schaufele states, largely results from capital gains realizations – a revenue source which is basically unestimatable:

In this era of extraordinary volatility, we have estimated no growth in capital gains to deter large negative variances, opting for the lesser of two evils.

Comptroller Peter Franchot urges State leaders to pocket the extra cash:

I urge our state’s leaders to regard this year-end boost like an unexpected bonus to be saved for future use, not to be spent immediately.

Sure enough, in his closeout report, Schaufele provides a foreboding prediction:

….surely in the future there will be an unpredictable correction that will reverse these good fortunes.

Of course, that future period will most certainly take place after the November election.

IRS: A SALT Payment’s Still a SALT Payment

The Internal Revenue Service (IRS) has proposed regulations for implementing the Tax Cuts and Jobs Act – and they specifically target state attempts to reclassify state and local tax (SALT) payments as charitable contributions.

Tax reform capped the amount of SALT deductions taxpayers can take to $10,000 – a move of particular import in States like Maryland. Some states have considered workarounds which allow taxpayers to classify payments for state and local government services as charitable contributions, which remain deductible, with no cap.

The IRS says that’s a no-go in its new proposed regulations. From the IRS news release:

Under the proposed regulations, a taxpayer who makes payments or transfers property to an entity eligible to receive tax deductible contributions must reduce their charitable deduction by the amount of any state or local tax credit the taxpayer receives or expects to receive.

For example, if a state grants a 70 percent state tax credit and the taxpayer pays $1,000 to an eligible entity, the taxpayer receives a $700 state tax credit. The taxpayer must reduce the $1,000 contribution by the $700 state tax credit, leaving an allowable contribution deduction of $300 on the taxpayer’s federal income tax return.

The proposed regulations are available here. The IRS is accepting public comment on the proposed changes through October 11, 2018. Comments can be sent electronically, via the Federal eRulemaking Portal at www.regulations.gov (indicate IRS and REG-112176-18).  Alternatively, they can be sent by mail to:

Internal Revenue Service
CC:PA:LPD:PR (REG-112176-18)
Room 5203
P.O. Box 7604
Ben Franklin Station
Washington, DC 20044

Read the Tax Foundation’s coverage here.

See prior Conduit Street coverage on this issue here.

Maryland’s Water Wealth Overwhelms at #MACoCon

Maryland’s cup runneth over with water-related riches. At the MACo Summer Conference general session, “The Wealth in our Water,” attendees learned about how Maryland’s waterfront keeps our economy flowing – from tiny oysters to supersized ships.

Dominic Scurti, Manager, Market Planning, Maryland Port Administration demonstrated how port activities ranging from cruises to dredging stimulate all of Maryland’s counties’ local economies. Marylanders from Baltimore City to Somerset and Garrett counties from freight carried in and out of the port.

Andrea Vernot, President & Managing Partner, Choptank Communications engaged the audience by encouraging them to tap into their water-based memories – and showed how counties have drawn upon those positive feels to market their waterfronts to tourists and residents alike. She emphasized how strongly water shapes Maryland’s identity.

When I got engaged, instead of a ring, I got a used sailboat. – Andrea Vernot, President & Managing Partner, Choptank Communications

Ward Slacum, Director of Program Operations, Oyster Recovery Partnership dove into the pearls of wisdom that Marylanders can gather from oyster restoration practices at work around our state – and how those oysters give back to all of us. They can be surprisingly, extraordinarily helpful in assisting counties with their TMDL goals, for example.

The MACo Summer Conference session took place on Thursday, August 16, 2018, at 12:45 pm in the Ocean City Convention Center’s Performing Arts Center. The Honorable Stephen Hershey of the Maryland State Senate moderated the session.

#MACoCon Sheds Light on “Dark” Data

It is a capital mistake to theorize before one has data. Insensibly one begins to twist facts to suit theories, instead of theories to suit facts. – Sherlock Holmes

“Big data” receives a lot of attention among policy wonks and elected officials for its power to make government operations more efficient. While big data and analytics play an increasingly important role in developing strategies and informing decision making in the private, public, and nonprofit sectors, local governments face barriers in acquiring and using such data.

That’s where “dark data” comes in.

On Wednesday, August 15, 2018, from 3:15 pm to 4:15 pm, data experts presented on exactly how counties can best access dark data: big data that is collected but not fully utilized.  During the MACo Summer Conference special session, “Still Waters Run Deep: Dive Into Your Dark Data Potential,” attendees learned about data resources available from various state and federal agencies – and how to make use of that data to inform economic development and government operations decisions.

Cory Stottlemyer, Senior Policy Analyst, Maryland Department of Transportation Office of Planning & Capital Programming, provided an overview of growth trends in population, labor force, and employment, and applied them to current commuting patterns within Maryland. Nearly 80 percent of residents in Charles County commute out of the county for work every day, for example – and some go as far as Frederick County every day! It is important for economic development experts and the private sector, as well as transportation planners, to understand where people live and work, and how that is changing, before incentivizing and developing where people live and work.

Benjamin Birge, CountyStat Manager, Office of the County Executive, Prince George’s County showed how counties use data to make their decisions currently. While data sets may be less plentiful to some local government jurisdictions than, say, the federal government, local leaders can still use data in daily decision-making if exercising an ounce of creativity. Birge demonstrated how his team used Census data to try to understand drivers behind grocery store chain site selection. Want a Trader Joe’s? Don’t bother asking them what they are looking for – instead, ask Ben Birge.

Gary V. Hodge, President, Regional Policy Advisors, and former Executive Director, Tri-County Council for Southern Maryland, and Charles County Commissioner led a discussion on how data can drive policy decisions – and, policy decisions can drive data-mining. At the end of the day, data can entirely, 100 percent, prove the viability and necessity of a transportation project – like the proposed Charles County Light Rail. However, without political will, data does nothing.

The session was moderated by the Honorable Jeff Ghrist of the Maryland House of Delegates.

The 2018 MACo Summer Conference was held August 15-18 at the Roland Powell Convention Center in Ocean City, Maryland. This year’s theme was “Water, Water Everywhere.”

Counties Chart the Next Course for Saving the Bay at #MACoCon

On Thursday, August 16 at 1 pm, many MACo Summer Conference attendees got updated on the future of the Chesapeake Bay Total Maximum Daily Load (TMDL) and what it means for county governments at the session, Charting the Next Course for the Bay TMDL.

The journey of the Chesapeake Bay Total Maximum Daily Load (TMDL) is entering its third and final phase for reaching water pollution reduction goals for nitrogen, phosphorus, and sediment by 2025. With a new Bay Model and new Watershed Implementation Plans (WIPs) come revised state loads and incorporation of issues, such as accounting for growth, climate change, and the Conowingo Dam. Panelists discussed the current and future path of the Bay TMDL and how it will affect both Maryland and its counties.

D. Lee Currey, Water and Science Administration Director, Maryland Department of the Environment provided an excellent, detailed overview on how the state is implementing federal requirements while also partnering with local governments to accommodate rapidly changing technology.

Charles MacLeod, Attorney, MacLeod Law Group, LLC and Representative, Clean Chesapeake Coalition provided a very informative perspective on the roles played by various entities in cleaning the Bay. While instructive, the TMDL, created and enforced by the federal Environmental Protection Agency (EPA), has been acknowledged by the court system as an informational document, rather than binding law. EPA can withhold its federal funding from the State and others if there is poor or no compliance, but the agency can do little else to enforce its TMDL. Meanwhile, Exelon, in pushing back on requirements by the State, argues that Maryland cannot require more than the TMDL requires. Finally, many counties are in a unique position in having to strike a balance between accommodating new innovation in stormwater management and sanitary system practices, and meeting state and federal requirements – and, fortunately, the state and EPA have become more receptive to those concerns than they may have been in previous iterations.

Kimberly Grove, Office of Compliance and Laboratories Chief, Baltimore City, focused on her work trying to make a unique jurisdiction compliant with more wastewater treatment plants than most, and less available land for stormwater management facility installation than any other jurisdiction. She echoed MacLeod’s appreciation that local governments were invited to the table sooner rather than later to weigh in on possible solutions – and stressed that the City certainly took advantage of that opportunity. She also emphasized that, as local governments enter Phase 3 of the TMDL, they will still be hard at work maintaining infrastructure and processes developed to meet Phase 2 – a challenge which should not go unnoticed.

The session was moderated by the Honorable Charles Otto of the Maryland House of Delegates.

Troubled Waters? Talented Attorneys Talk Water Law at #MACoCon

Maryland counties are rich with water, both in terms of waterfront access and in sustainable water and wastewater infrastructure. Counties benefit from this — but along with these assets come great responsibilities and risks.

At the MACo Summer Conference session, Like a Bridge Over Troubled Water: Know Your Water Law, attendees learned about how conflicts that arise over responsibilities for water-related assets cannot often be shrugged off as “water under the bridge,” but require proactive planning and protection.

Attorney General Brian Frosh kicked off the session by discussing the myriad of moves he has taken, both as an attorney general and as a legislator, to protect Maryland’s environment, and specifically, the Chesapeake Bay. One of his proudest achievements on the Senate, he stressed, was championing legislation to prohibit offshore drilling.

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Attorney General Brian Frosh moderates MACo’s session on water law

Lisa Ochsenhirt, Esquire, Attorney, AquaLaw PLC provided a deeply informative overview on the legal challenges facing Maryland’s 100 or so water and sewer systems – and how meeting those challenges is only getting harder.

Dana Cooper, Esquire, Attorney, Cooper Moores LLC discussed what happens when counties get flushed down into issues concerning those systems, and how she worked with the U.S. Environmental Protection Agency to revise the Baltimore City sewer system’s consent decree.

Finally, John Mattingly, Esquire, County Attorney’s Office for Calvert County brought us back from the bowels of troubled waters by teaching county officials about how they can use riparian rights as a tool to protect their waterfronts’ aesthetic.

The presentation took place on Thursday, August 16, 2018 at 3:30 pm. The Honorable Brian Frosh, Maryland Attorney General moderated the session.

The 2018 MACo Summer Conference, “Water, Water Everywhere,” was held August 15-18 at the Rowland Powell Convention Center in Ocean City, Maryland.

#MACoCon Shows When Water + Power Works Out

Maryland’s rich water wealth helps drive our renewable energy advancements – both by providing resources necessary for offshore wind, and also by providing an opportunity to use energy generation to keep that water clean.

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Jeff Grybowski, Deepwater Wind CEO

MACo Summer Conference attendees plugged into the latest in offshore wind and animal waste-to-energy at the session, Earth, Wind, Fire, WATER: Powering Your County’s Future, on Thursday, August 16, 2018, from 2:00 pm – 3:00 pm.

Over the past three years, the State of Maryland has funded nearly $5 million to encourage technology that provides alternative strategies for managing animal manure on Maryland farms. Maryland Energy Administration, Division Director of Programs Chris Rice presented on how Animal Waste-to-Energy specific technologies generate energy from animal manure – and keep that, um…stuff…out of the Chesapeake Bay.

Then big fans of renewable energy went offshore with Jeffrey Grybowski, Chief Executive Officer of Deepwater Wind, to learn about the latest going on in offshore wind energy generation technology. Grybowski answered numerous questions from a very engaged audience about the financing, aesthetics, and generation capabilities of offshore wind.

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Wind turbines provide underwater homes for oysters.

The Honorable Shane Robinson of the Maryland House of Delegates moderated the session.

The 2018 MACo Summer Conference, “Water, Water Everywhere,” was held August 15-18 at the Rowland Powell Convention Center in Ocean City, Maryland.

Revenue Forecasters Share Tricks to Their Trade at #MACoCon

County revenues generally come from property and income taxes – but how much should an administrator, elected official or budget officer expect to receive each year? This question has become increasingly difficult as counties still recover from the Great Recession, tax reform leads to uncertainty, and growth trends shift with an aging population and changing income sources. Even the State has modified its revenue projection processes, accounting for increased volatility. What’s a county to do?

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Andrew Schaufele, Director of Bureau of the Revenue Estimates: when more tax revenue comes from the top 1%, as it has, revenues become harder to estimate
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MACo Summer Conference attendees learned how state revenue estimators and county budget officers predict the future in unpredictable environments at the session, “Navigating Murky Waters: Predicting Unpredictable Revenue Streams,” on Friday, August 17, 2018 at 2:15 pm.

The session began with Andrew Schaufele, Director of Bureau of the Revenue Estimates from the State Comptroller’s Office showing how his office anticipates state revenues during volatile times, and how he provides counties valuable information about county income tax revenues.

He spoke at length about the structural change that occurred to our economy after the Great Recession – and how his office quickly had to adjust its revenue estimating models to accommodate for this permanent change.

John Hammond, longtime Budget Officer for Anne Arundel County showed how he uses his magical crystal ball to inform county officials about how much revenue they can expect to receive in future years. He stressed the importance of maintaining a reserve fund balance to guard against volatility, and applying one-time revenue sources to capital expenditures, rather than operating.

Finally, Jonathan R. Seeman, Director, Budget, Finance & Information Technology, Queen Anne’s County provided perspective on how smaller counties must provide revenue projections with limited resources. He demonstrated how Eastern Shore counties experience some of the most volatile income tax receipts in the state- and why the November distribution of local income taxes is so important.

The session was moderated by The Honorable Kevin Hornberger of Maryland House of Delegates.

MACo’s 2018 Summer Conference was held August 15-18 at the Roland Powell Convention Center, in Ocean City, MD.