U.S. Infrastructure Gets “D+”; 24% of MD Roads In Poor Condition

The American Society of Civil Engineers (ASCE) has graded the U.S.’s infrastructure with a D+, estimating that it would take an additional $2 trillion by 2025 to bring that grade to a B. The Infrastructure Report Card is one of the most frequently cited reports on the condition of infrastructure in the country. The U.S. has either received a D or D+ in every Report Card issued since 1998.

Information on Infrastructure in Maryland is available here. Key facts include:

  • 5.80% (308) of the bridges are structurally deficient
  • 82 high hazard dams
  • $6.9 billion in drinking water infrastructure needs over the next 20 years
  • $9.92 billion in wastewater infrastructure needs over the next 20 years
  • 154,507,328 annual unlinked passenger trips via transit systems including bus, transit, and commuter trains
  • 32,037 miles of public roads, with 24% in poor condition
  • $550 per motorist per year in costs from driving on roads in need of repair

The ASCE Maryland Chapter also issues a Report Card for Maryland’s Infrastructure, last updated in 2011.

From Governing: 

But it’s not all bad news: Some types of infrastructure have somewhat improved.

Rail, for example, went from a “C+” to a “B,” the highest grade for any type of infrastructure. That largely reflects the health of private freight railroads, which spent $27.1 billion to improve their infrastructure in 2015 alone, according to ASCE.

Other areas that showed progress in the report were hazardous waste, inland waterways, levees, ports, schools and wastewater.

Meanwhile, transit systems earned the lowest mark in the report card, falling to a “D-” from its previous “D” grade. “Despite increasing demand, the nation’s transit systems have been chronically underfunded, resulting in aging infrastructure and a $90 billion rehabilitation backlog,” the group noted. Several systems — particularly those in New York, Washington, D.C., and San Francisco — are struggling with increased rider demand, long-neglected infrastructure and uncertain funding.

Solid waste infrastructure, along with parks and other recreational facilities, also got worse. …

“In many parts of the country,” the group wrote, “recycling and composting are not occurring due to a lack of market need for recyclable materials, many Americans’ lack of desire to sort and separate waste, and the cost associated with sorting out recyclables at collection facilities.”

MACo has prioritized investment in local infrastructure as one of its core initiatives this session. Learn more about the initiative here and on Conduit Street at Local Infrastructure Fast Track (LIFT4MD).

To support local infrastructure investment in Maryland, Let your senators know you support SB 586 – Local Infrastructure Fast Track for Maryland Act, and
let your delegates know you support HB 1322 – Local Infrastructure Fast Track for Maryland Act!

Hogan Proposes Supplemental Budget: Funds Included For Police, Colleges

Today Governor Hogan will provide more details about his first supplemental budget of the session, to be released later today. It reportedly includes additional funding for police, colleges and economic development. Two million will go to the Baltimore Police Department to support compliance with its consent decree with the U.S. Department of Justice. Ten million will go toward addressing opioid addiction – the first installment of his plan, announced about a month ago, to spend $50 million on the crisis. He intends to spread the $50 million over five years. The supplemental budget also includes extra money for higher education and economic development.

Disappointing some, it includes nothing for the Baltimore City School System. From The Baltimore Sun

“There are funds available in the budget for other priorities,” Hogan spokesman Doug Mayer said Thursday.

Nevertheless, the head of the House of Delegates budget committee expressed surprise and disappointment that the new spending plan didn’t address the city’s plight or the budget woes in nine counties where student enrollment — and therefore state funding — also has declined in the past year.

“We’re talking about the quality of education we can be and should be committed to in 10 districts,” said Del. Maggie McIntosh, the Baltimore Democrat who heads the Appropriations Committee.

Supplemental budgets, which address spending needs that might not have been apparent at the time of the state budget’s release in January, are also a tool used by governors in their annual tug-of-war with lawmakers over budget priorities. By either including or withholding funds, a chief executive can bargain for funding priorities that the legislature may not share.

McIntosh said she made concessions to the administration on several issues and thought the funds would be coming.

 

 

House Passes Bills Altering Property Assessments Processes

The House has passed the following bills which impact the property assessments process. These bills will cross over to the Senate Budget and Taxation Committee for hearings.

HB 1402 – Property Tax Appeals – Payment of Refunds – Deadline requires counties to pay refunds resulting from property tax assessment appeals within an established time frame. MACo supported with amendments to make the requirement more feasible. MACo’s amendments sought to extend the amount of time from 21 days to 30 days, and begin counting the days after the county receives notice of the decision from the appeal authority. The bill sponsor, Delegate Herb McMillan, introduced the amendments on MACo’s behalf, and the House adopted them.

MACo did not take a position on the following bills:

HB 592 – Real Property Tax – Assessment Appeals Process requires the supervisor of assessments and the Property Tax Assessment Appeals Boards (PTAAB) to hold hearings on specified appeals no later than 90 days after receiving the appeal. The bill passed the House with amendments.

HB 1394 – Property Tax – Reassessment After Appeal prohibits the State Department of Assessments and Taxation (SDAT), when conducting a real property reassessment after an appeal, from automatically resetting the assessment of the property to its value before the appeal. SDAT may only increase the assessment of the property above the level determined during the appeal if circumstances arising after the appeal justify an increase in the assessment.

Follow MACo’s advocacy on these and other tax bills by clicking here.

 

 

 

Both Chambers Passing Myriad Of Optional Property Tax Credits

The General Assembly is moving on a number of bills which give counties more flexibility to provide property tax breaks. None of the bills listed below set any mandates on counties, but rather, provide broader leeway to provide tax breaks as appropriate for their jurisdictions.

Bills MACo Supported

The House has passed HB 1323 – Property Tax – Credit for Revitalization Districts, a bill MACo supported with would authorize local governments to grant optional property tax credits to homeowners who make improvements to their homes in specified “revitalization districts.” Local governments have authority to define what a “revitalization district” is and where to designate them.

The House has also passed House Bill 351, Property Tax – Homestead Property Tax Credit Percentage and Constant Yield Tax Rate – Deadlines. This bill extends the deadline for local governments to set or change their homestead property tax credit percentage, moving it from November to March. MACo supported the bill.

Other Bills Passed Out of The House

MACo did not take a position on the following bills, which have passed the House and will be heard by the Senate Budget & Taxation Committee:

HB 231 Property Tax Credit – Disabled or Fallen Law Enforcement Officers and Rescue
Workers – Alteration authorizes counties to extend an existing property tax credit for dwellings owned by the surviving spouse of a fallen law enforcement officer or rescue worker to include the fallen officer’s cohabitant.

HB 979 – Property Tax Credit – Public Safety Officers authorizes county governments to grant, by local law, a property tax credit for a dwelling owned by a firefighter, an emergency medical technician, a correctional officer, a police officer, or a deputy sheriff employed full time by a public safety agency in the county where the individual resides. County governments may establish, by law, the amount of the property tax credit, the duration of the property tax credit, and additional eligibility requirements for public safety officers to qualify for the property tax credit.

HB 1234 – Property Tax – Credit for Retired Military Service Members – Eligibility alters the eligibility criteria of a local option property tax credit for specified members of the U.S. Armed Forces by specifying that eligible individuals must be members of the uniformed services of the United States as defined by 10 U.S.C. Section 101, the military reserves, or the National Guard.

Bills Passed By The Senate

The Senate has passed a few property tax credit bills as well. These bills will cross over to the House Ways & Means Committees for hearings. MACo did not take positions on these bills.

SB 108 – Property Tax Credit – Erosion Control Measures – Nonstructural and Structural Shoreline Stabilization alters the requirements for a local option property tax credit for specified erosion control structures.

SB 261 – Property Tax Credit – Residential Property Damaged by Natural Disaster alters a local option property tax credit for property that has suffered flood or sewage damage by including damage caused by a natural disaster.

SB 282 – Property Tax Credit – Disabled or Fallen Law Enforcement Officers and Rescue Workers – Alterations increases the number of years, from 2 to 10, within which a disabled law enforcement officer or rescue worker or the surviving spouse of a fallen law enforcement officer or rescue worker must have acquired specified residential property in order to qualify for a specified local option property tax credit.

SB 601 – Property Tax Credit – Elderly Individuals and Veterans – Eligibility broadly alters the eligibility criteria for a local option property tax credit for elderly individuals by removing the requirement that the individual must have lived in the same dwelling for at least the preceding 40 years. In lieu of this existing requirement, the bill provides that the individual must have lived in the county for the preceding 25 years and the dwelling for which the tax credit is claimed must be located in that county.

Follow MACo’s advocacy on these and other tax bills by clicking here. 

Prevailing Wages For TIFs Bill Dies In Committee

The House Economic Matters Committee has killed a bill which would have made it more difficult for counties to use tax increment financing (TIFs). HB 466 – Prevailing Wage – Tax Increment Financing Developments – Application would have required payment of prevailing wages on construction contracts receiving any funds from TIF bond proceeds.

Counties had concerns that the bill would drive up costs of public infrastructure projects, stifle use of a demonstrably successful economic development tool, and squeeze out small businesses from participating in infrastructure construction projects. In addition, it unfairly applies prevailing wage requirements to certain projects receiving TIF bond proceeds when those projects would not otherwise have to comply even if financed with other public funds.

MACo testified on the Senate crossfile, SB 870, on March 16 in the the Senate Finance Committee. From MACo’s testimony:

TIFs are a demonstrably successful economic development tool that enables counties to finance public infrastructure improvements using future property tax revenues associated with the new development. These are revenues which the county would not receive at all unless the development came to fruition. Creating a viable TIF district and development plan requires careful financial planning and forecasting to ensure that the future tax revenues received from the project more than cover expenditures on the infrastructure required to support that development. In general, counties will only use this tool if the development is not financially viable without the benefit of the TIF; in other words, if the numbers do not add up, the county does not issue the TIF bond, and the development never happens.

….This bill will significantly raise costs for development projects funded with TIF bonds. If costs are raised over and above what the development will return in future tax revenues, the county will not issue the TIF because it is not economically viable. This generally prevents the development from occurring, sacrificing blight elimination, job creation, targeted economic development, and growth to the taxable base.

 

Both Chambers Move To Streamline County Procurement Requirement

Both chambers of the Maryland General Assembly have passed SB 632/HB 118 – Election Law – Persons Doing Public Business – Reporting by Governmental Entities, a bill that simplifies a campaign finance/procurement law mandate on counties. MACo testified in support of the bill with Kathleen Boucher of Montgomery County’s Intergovernmental Relations Office on February 7 in the House Ways and Means Committee and again on February 23 in the Senate Education, Health, and Environmental Affairs Committee. Both committee passed their respective bills with technical amendments.

The bill repeals the requirement that state and local procurement officials notify the State Board of Elections if awardees of contracts worth $200,000 or more fail to file requisite campaign finance disclosures with that State Board. Instead, it requires those government entities to provide the Board with a list of all individuals and entities receiving contracts worth $200,000 or more who are required to file the subject disclosures.

From MACo testimony:

The Campaign Finance Reform Act of 2013 sought to reduce the risk of “pay to play” activities influencing government contracting – and by streamlining enforcement procedures, this bill helps to further those goals. This bill removes the “middle man” from an enforcement role it is unable to effectively accomplish. Recipients of government contracts worth $200,000 or more are currently required to file statements of political contributions with the State Board. The provision of existing law addressed in this bill holds state and local procurement officers responsible for (1) requiring that the applicable contract awardees certify that they have made their requisite disclosure filings with the State Board, and (2) notifying the State Board if those awardees actually fail to make the requisite filings.

Regarding that latter requirement, procurement officers do not actually have the means to verify whether their contractors have filed the requisite disclosures with the State Board – the State Board has that information. Instead, this bill requires state and local government entities to file a list of applicable contract awardees with the State Board, returning enforcement obligations to the Board which is supposed to receive the campaign finance disclosures in the first place.

 

Income Tax “Mixed Bag” – Some Bills Moving, Some Not

A number of bills are moving this session which will affect local income tax revenues to varying degrees. All of these bills are subtraction modification bills – meaning that they create additional deductions in the taxable income base. County’s local income tax is based on total income, after deductions are made at both the Federal and state levels. If all of these bills pass, local income tax revenues decrease by about $6 million in fiscal 2018.

Overall, MACo has urged the general Assembly not to enact tax changes that have substantial carryover effect on county revenues. State tax credits, for example, can effect much the same outcome as a subtraction modification, without implicitly mandating a loss in county revenues. Alternatively, a range of local option tax benefits against the property tax or other local revenues can reach a similar policy goal without the state decision trumping local input.

HB 100/SB 597 – Income Tax Subtraction Modification – Retirement Income of Law Enforcement, Fire, Rescue, and Emergency Services Personnel provides for a subtraction modification for the first $15,000 of retirement income for individuals at least 55 years of age who are retired law enforcement officers or fire, rescue, or emergency services personnel of the United States, the State of Maryland, or local government. MAC opposed this bill because it would cause local revenues to decrease by $2.5 million in FY 2018 and by $2.8 million in FY 2022. HB 100 passed out of the House unanimously and will be heard in the Senate Budget and Taxation Committee on March 21 at 1pm. The crossfile, SB 597, has passed second reading in the Senate.

MACo did not take positions on the following subtraction modification bills which have gained traction, generally for policy reasons or because the fiscal impacts on local income tax revenues are relatively negligible.

HB 3 – Income Tax – Subtraction Modification – Olympic, Paralympic, Special Olympic, and Deaflympic Games Medals and Prizes   exempts from the State and local income tax the value of specified medals and prize money or honoraria received by an individual who competes in the Olympic, Paralympic, Special Olympic, or the Deaflympic Games. The bill passed out of the House and will be heard in the Senate Budget & Taxation Committee on March 22 at 1pm.

HB 83 –   Income Tax – Subtraction Modification – Discharged Student Loan Debt expands the existing subtraction modification for income resulting from the discharge of student loan debt by eliminating the requirement that only student loans that are discharged due to total and permanent disability or death qualify for the exclusion. This subtraction modification only really applies to student loan debt which is canceled in a small number of situations, such as bankruptcy or compliance with certain student loan forgiveness programs.  This has passed second reading in the House.

HB 822 – Income Tax – Subtraction Modification – Police Auxiliaries and Reserve Volunteers increases to $5,000 the value of the income tax subtraction modification for
qualifying police auxiliaries or reserve volunteers. The bill passed out of the House unanimously and will cross over to the Senate Budget & Taxation Committee.

SB 295 – Income Tax – Subtraction Modification – Military Retirement Income – Individuals at Least 65 Years Old expands the existing military retirement income tax subtraction modification by increasing from $10,000 to $15,000 the maximum amount of retirement income that can be excluded from Maryland adjusted gross income for purposes of calculating Maryland income tax liability. In order to qualify for the increased subtraction modification, the individual must be at least 65 years old. The Senate has passed the bill on second reader.

SB 367 – Income Tax – Subtraction Modification – Mortgage Forgiveness Debt Relief continues an existing subtraction modification for forgiven mortgage debt resulting from certain foreclosure proceedings. The maximum amount of the subtraction may not exceed $100,000 ($200,000 if married filing jointly). The bill passed the Senate unanimously and will be heard in the House Ways & Means Committee on March 22 at 1pm.

The following subtraction modification bills have not seen any movement at this time:

HB 0033 – Income Tax – Subtraction Modification – Retirement Account Withdrawals for Higher Education Tuition

SB 238/HB 0195 – Income Tax Subtraction Modification – Retirement Income (Fairness in Taxation for Retirees Act)

HB 0196 – Income Tax – Subtraction Modification – Interest Paid on Student Loans

HB 0230 – Income Tax – Subtraction Modification – First-Time Homebuyer Savings Accounts

SB 3/HB 544 – Income Tax – Subtraction Modification – Military Retirement Income

HB 550 – Income Tax – Subtraction Modification – Military Retirement Income

HB 1033 – Income Tax – Subtraction Modification – Discharged Student Loan Debt

SB 254/HB 1174 – Income Tax – Subtraction Modification – Perpetual Conservation Easements

HB 1235 -Income Tax – Subtraction Modification – Qualified Maryland Toll Expenses

HB 1244 – Income Tax – Subtraction Modification – Military Retirement Income – Individuals Under the Age of 65 Years

SB 0249 -Income Tax – Subtraction Modification – Donation of Rented Equipment

Governor’s Bills:

SB 320/HB 399 – Student Debt Relief Act of 2017

SB 321/HB 375 – Income Tax – Subtraction Modification – Military Retirement Income

Other Helpful Links

All 2017 bills impacting local tax revenues and status

Senate Committee Votes On Budget: Disparity Grants, Transportation Aid Affected

Today the Senate Budget and Taxation Committee made a number of decisions on the budget which affect counties. The Committee concurred with the House to reject proposals to shift additional costs for State Department of Assessment and Taxation (SDAT) operations and local health department contractual employees’ health care to the counties. The Committee adopted new language concerning disparity grants and local transportation aid.

Disparity Grants Back, But…

Like the House, the Committee voted against a  Budget Reconciliation and Financing Act of 2017 (BRFA) provision which would flat fund disparity grant aid, to levels set as of the November 2, 2016 Department of Public Works meeting. However, the Committee added budget language to restrict the disparity grants for each jurisdiction receiving an increase in fiscal 2018, requiring those jurisdictions to spend that money on public schools – over and above the amounts required to meet maintenance of effort. Language says:

Further provided that $6,028,886 of the appropriation made for the purpose of disparity grants shall not be expended until each of the following jurisdictions certify that it will spend the following amounts, equal to what that particular jurisdiction receives in excess of the fiscal 2017 grant, to increase local spending on public schools above the amount required to meet maintenance of effort for fiscal 2018.

Baltimore City                      $946,445

Cecil County                          $196,240

Prince George’s County     $4,245,462

Washington County            $52,938

Wicomico County                $587,801

Highway User Revenues Pared Back, DLS Concerns Addressed

The Committee voted to include BRFA language to address concerns expressed by the Department of Legislative Services (DLS) that the Governor’s “capital grants” are titled incorrectly and programmed inappropriately in out years. The Committee approved inclusion of the following language in existing statute:

Except as authorized by law, the Consolidated Transportation Program may not include capital transportation grants to counties or municipal corporations for any period beyond the budget request year ….

For the period beyond the budget request year, the financial forecast:

  1. Shall maximize the use of funds for the capital program; and
  2. Except as authorized by law, may not withhold or reserve funds for capital transportation grants to counties or municipal corporations.

The Committee approved the Public Safety, Transportation and Environment Subcommittee’s recommendation to provide 23 counties with $8.8 million in additional local transportation aid from last year. This is a reduction from the Governor’s proposal, which was adopted by the House, to provide transportation capital grants to counties and Baltimore City. Counties’ share was reduced from $27.4 million to $12.8 million, and Baltimore City’s share was reduced from $5.5 million to $3.7 million. These sums include the $4 million provided to counties and $2 million provided to Baltimore City for the last two years.

Senate Concurs With House Recommendation To Reject SDAT Cost Shift

The Committee concurred with the House and voted against the Governor’s proposal to shift costs for operating SDAT onto the counties. It voted to accept the DLS’s recommendation to  reject the proposal, which would increase counties’ reimbursement for SDAT functions including costs of real property valuation, business personal property valuation, and information technology. It also would have made counties responsible for a portion of costs of the Director’s Office.

Once the Senate adopts its proposed budget on the chamber floor, the budget committees will meet in conference committee to arrive at consensus decisions on these and all budgetary items.

Helpful Links:

House Looks Out For Counties In The Budget

Senate Subcommittee Pares Back Highway User Revenues

Senate Subcommittee Concurs on Rejecting Local Health Department Cost Shift

House Amends Tax Exemption Bill To Provide Local Control

The House has amended a local tax exemption bill to provide local governments with greater control. The House Ways and Means Committee heard House Bill 842 – Admissions and Amusement Tax – Exemption for School Field Trips on March 2. This bill, as drafted, would have established an exemption from the local admissions and amusement tax for admissions related to State public school field trips.

At the hearing, the Committee discussed giving local governments discretion over whether to enact this exemption for their respective jurisdictions. Yesterday, the Ways and Means Revenue Subcommittee voted to amend the bill to enable local governments to enact the exemption, rather than require the exemption in all counties and municipalities.

The House of Delegates approved the bill for second reading, with the amendments, today.

Senate Subcommittee Pares Back Highway User Revenues

The Senate Budget and Taxation Public Safety, Transportation and Environment Subcommittee voted to reduce the Governor’s proposal to provide transportation capital grants to counties and Baltimore City. Counties’ share was reduced from $27.4 million to $12.8 million.  This includes $4 million of capital grants which counties have received since fiscal 2016. Baltimore City’s share was reduced from $5.5 million to $3.7 million, and municipalities’ share remained at $20.1 million.

The Governor’s budget included $53 million in capital grants for counties, municipalities and Baltimore City, to be distributed above the formulaic appropriation of highway user revenues. This includes $5.5 million to Baltimore City and $27.4 million to counties, distributed according to the same formula used to distribute highway user revenues, based on road mileage and vehicle registrations. This in effect increases the highway user split by 0.3 percent for Baltimore City and 1.5 percent for all other counties.

The Department of Legislative Services (DLS), in its budget analysis, recommended that the Budget Committees flat-fund the capital grants which local governments received the prior two years, in the amounts of $4 million to counties, $2 million to Baltimore City and $19 million to municipalities. They further recommended using the Governor’s proposed additional capital grant money to backfill a proposed cut to traditional/statutory formulaic highway user revenues to counties, and diverting those funds to fill gaps in the General Fund supporting the Maryland State Police.

The House voted down the DLS recommendation and instead fully supported the Governor’s proposal to provide $53 million in capital grants to local governments.

The Senate subcommittee also voted down the DLS recommendation for the fund swap. However, they reduced the funds as proposed by the Governor and voted by the House, as indicated above and in the chart below.

hur fy17
Local transportation aid in the budget: capital grants and highway user revenues (HUR)

 

Once the full Senate votes on the budget, the Senate and House will both send members to Conference Committee to reconcile the terms of both chambers’ budgets which differ, include these provisions for local transportation aid. The Conference Committee will decide how much money to provide in capital grants – and they can decide to accept the Governor’s and House proposal, the Senate proposal, or determine their own portions.

Last year, both houses agreed to the Governor’s proposal to provide capital grants of $53.6 million to local governments over and above the traditional highway user formula, including an additional $23.7 million to counties above the $4 million received the prior year. In Conference Committee, however, the grants were reduced to flat fund the “hold harmless” amounts received the prior year.

Helpful Links:

Highway User Revenues – What’s On The Table?

Local Infrastructure Fast Track for Maryland (#LIFT4MD)

Counties Call For a Local Infrastructure Fast Track 

Infrastructure Matters. Call for a #LIFT4MD & Tweet Today!