Cecil Acquires New Park Land

Cecil County is using Program Open Space funding to get a new park.

On Thursday, the County announced that it has signed a settlement agreement to take possession of the former Bittersweet Golf Course, located on Route 213, south of Elkton. The property was acquired through Maryland’s Program Open Space, which allocated $933,000 to Cecil County to take ownership and develop the land into a recreational park.

In the coming months, the Cecil County Department of Parks and Recreation will work to solicit public input and develop a portion of the 121-acre property into a walking park, along with other amenities.

County Executive Alan McCarthy stated:

We are very grateful and pleased to able to settle on this property through Program Open Space funding. The park will provide leisure and recreational activities for Cecil County residents and visitors. I am confident that our staff will maintain it and it will be a wonderful amenity for the community.

Read the full release here.

Know Your Roads: They’re Likely Maintained By Locals

MACo has continuously testified that local governments own and maintain 77 percent of the lane miles in Maryland – and 83 percent of the miles. The State, in comparison, maintains 23 percent of the lane miles in Maryland.

So, if a constituent has a complaint about a pothole or snow plowing, it more than likely should be directed to the county or municipality.

In order to help people determine who maintains their roads, the Maryland Department of Transportation has released a new tool to guide them:  and they call it “Know Your Roads.” On the new website, residents can search by address, legislative district number or local government name to figure who is responsible for which paths of pavement.

The site puts it as clear as it can be. If you do not see a sign with a number on the road:

You probably do NOT live on a state-maintained road … please contact your county or municipality directly to get your road plowed, a pothole fixed or another road issued addressed.

Senate Passes County-friendly Budget

The Senate passed SB 185, the Budget Bill, and SB 187, the Budget Reconciliation and Financing Act of 2018 (“BRFA”) – both with good news for Maryland counties.

As proposed by the Governor, the budget included shifting nearly all costs of the State Department of Assessments and Taxation (SDAT)’s assessment and directorial functions to counties, forevermore. The Senate struck this language from the BRFA.

The Governor’s original proposal also included flat funding local health departments at the previous year’s levels. The Senate cut that language, too– instead increasing the funding according to the formula in existing law.

The Senate has also approved all funds included in the original budget for local roads funding: $178.1 million in highway user revenues, in addition to $53.7 million in additional local transportation grants. This includes a full $27.8 million to 23 counties, which is $15 million more than the Senate approved last year.

The applicable House Appropriations subcommittees have also recommended retaining all local roads funding in the budget, scrapping any language to shift additional SDAT costs to counties, and increasing local health department funding. The full committee considers the budget bills on Friday.

The Road Ahead Looks Clear For County Transportation Funding

The Senate Budget & Taxation Committee has voted to pass Senate Bill 516 with amendments to reflect its cross file, House Bill 807 – paving the way for counties to receive twice as much in highway user revenues as they did in fiscal 2018, for the next six years. The bill now goes to the full Senate for a vote.

The House passed HB 807 with amendments which ensure that counties receive 3.2 percent of highway user revenues for fiscal years 2020 through 2024 – about twice as much as the 1.5 percent they received in fiscal 2018 (independently of the capital grants).

The full Senate passed the budget bill on Thursday morning, without cutting any funds to counties for highway user revenues and capital grants. The budget includes $178.1 million in highway user revenues, in addition to $53.7 million in additional local transportation grants. This is approximately 8 percent more than last year, which included $175.5 million in highway user revenues and $38.4 million in additional grants.

Last year, 23 counties ultimately received $12.8 million in grant money, after the legislature cut counties’ portion from the Governor’s proposed $27.4 million. This year, the Governor is proposing $27.8 million to those counties – and the full Senate has approved all of those funds.

In addition, the House Appropriations Transportation Subcommittee decided to recommend full funding of the grants – a good sign. The full committee will make decisions on the budget on Friday. Then, the budget will go to the Conference Committee, which makes final decisions on fiscal 2019 funding.

Standard & Poor’s Elevates Queen Anne’s Rating to AAA

Queen Anne’s County (QAC) has now received the highly coveted AAA bond rating from two of the three major ratings agencies. Standard and Poor’s (S&P) has granted the county the highest possible rating, following FitchRating’s lead, which elevated its bonding rating to AAA last year.

The third rating agency, Moody’s, has upgraded the county from Aa2 to Aa1 – just one step below AAA.

County Commissioner Jack Wilson said,

This is great news for the county taxpayers as it will reduce the debt service on existing county debt and allow for a lower lending rate in the future for any Capital needs that may arise. I am very happy to be a part of a commission that was able to achieve this stature for the first time in county history. We will continue to exercise fiscal policy that will maintain this rating.

Commissioner Mark Anderson said:

The efforts of the QAC Commissioners, who have collectively employed a consistent and conservative fiscal policy over three plus years, has been rewarded by all three bond rating agencies, each of which recognized the management of the county’s finances with Fitch renewing the AAA, with S & P upgrading us to AAA, and Moody’s upgrading us to Aa1 – a step below AAA. The S&P AAA rating follows the same rating from Fitch (two years in a row) will save many thousands of dollars because our county will be viewed as the safest investment for bond purchasers. These interest savings will take pressure off the operating budget and the necessity to raise real property taxes.

Commissioner Robert C. Buckey stated,

S&P based their decision on the county’s very strong economic profile, and strong budgetary flexibility. … This was a team win. The AAA ratings will help lower the cost of borrowing for Queen Anne’s County’s government in the future and that is great news for the county, and the taxpayers and residents.

Tax Reform: What’s the State To Do?

The General Assembly has entertained a long list of bills dealing with the impacts of federal tax reform on State and county coffers. The question still remains, however, which – if any – the two chambers will choose to move.

One bill has advanced through both the House and Senate: HB 365SB 184, “Income Tax – Personal Exemptions – Alteration.” The bill clarifies that state taxpayers can still take personal exemptions in Maryland, even if these exemptions are zeroed out at the federal level. According to the analysis by the Department of Legislative Services,  the bill is simply clarifying in nature, and does not have a meaningful fiscal impact on counties.

In addition,  SB 0318 – “Income Tax – Standard Deduction – Alteration” has moved out of the Senate Budget and Taxation Committee and onto the floor. As drafted, this would have increased the standard deductions in Maryland to an extent that would have essentially wiped out the entire windfall from tax reform for both the state and local governments. However, it was amended to simply cap the standard deductions at $2,500 instead of $2,000 for individual filers, and $5,000 instead of $4,000 for joint filers – a relatively small fiscal impact.

All of the other bills – which are listed below – have either been killed, or have received no action thus far.

Of course, there is still time – the crossover deadline isn’t until next Monday.

HB 99 / SB 134 – Small Business Relief Tax Credit
HB 587 / SB 194 – Calculation of Taxable Income – Itemized Deductions – Property Taxes
HB 588 – Income Tax – Rate Brackets, Personal Exemptions, and Standard Deduction – Cost-of-Living Adjustments
HB 589 / SB 191 – Income Tax – Itemized Deductions
HB 644 – State Income Tax – Subtraction Modification – Elementary and Secondary
Education Expenses
HB 697 – Individual Income Tax – Itemized Deductions on State Income Tax Return
HB 875 / SB 733 – Protecting Maryland Taxpayers Act of 2018
HB 906 – Income Tax – Itemized Deductions and Personal Exemptions
HB 1039 – Income Tax – Itemized Deductions on State Income Tax Return
HB 1146 – Income Tax – Rates and Itemized Deductions
HB 1190 – Income Tax – Standard Deduction – Alteration
HB 1336 – Income Tax – Calculation of Maryland Taxable Income – Itemized Deductions
HB 1710 – Income Tax — Addition and Subtraction Modifications — Alimony or Separate Maintenance Payments
SB 567 – Income Tax Rates – Reductions
SB 828 – Income Tax – Personal Exemptions – Inflation Adjustment
SB 830 – Income Tax – Standard Deduction – Inflation Adjustment


Comptroller: Aging Taxpayers Means Two More Slow Decades

In his ample spare time, Bureau of Revenue Estimates Director Andrew Schaufele of the Comptroller’s Office managed to put together The Impact of Age Demographics on Maryland’s Economic and Tax Revenue Outlook – complete with county-level demographics data.

The report examines the age structure of Maryland’s tax paying population in order to attempt to get to the bottom of the cause of the State’s – and counties’ – slowing economic growth. The changing age composition of our labor force has generally been blamed as one of the contributors, and this report evaluates the theory.

It not only found it reliable, it also found that the effects are not going away any time soon.

This assessment finds that the changing age structure has and will continue to restrain Maryland’s tax revenue growth throughout the existing six year budgetary planning window. It helps explain why income tax revenue growth has not returned to historical levels. Furthermore, while a host of assumptions apply, it is possible to estimate the level of its impact through 2040. Three findings in particular demonstrate Maryland’s vulnerability:

1. In the time period for which the Bureau has reliable data, from 2001 forward, changes in age structure between tax years 2010 and 2014 account for a reduction of $109.3 million in 2014 revenue.

2. The data revealed a post-Great Recession decline of 3-5% in the Taxpayer Participation Rate (TPR) of the most productive segment of its labor force, the 45-64 age cohort.

3. All else equal, the age structure will depress revenue through at least 2040, with the most intense pressure on revenues occurring around 2030, at which point it may be subtracting up to 3% of the year’s income tax revenue, or about $330 million in 2015 dollars per year.

The report and data is available here.

MACo Leadership Rallies For Unified Roads Funding Deal

At the hearing for SB 516, Transportation – Highway User Revenues – Distribution on Wednesday, MACo leadership testified to support the bill restoring highway user revenues to municipalities, requesting amendment to make the bill reflect the compromise reflected in its cross file, HB 807.

HB 807 was amended to provide 5 years of enhanced funding for local roads and bridges. For FY 2020 through 2024, the bill would increase the county share of highway user revenues from 1.5% to 3.2%, with additional funding also supporting Baltimore City and municipal government.

See previous Conduit Street coverage for further information.

At the hearing, MACo President and Anne Arundel Council Member Jerry Walker joined Frederick County Executive Jan Gardner; MACo Secretary; Harford County Executive Barry Glassman, MACo Second Vice President; Talbot Council Member Laura Price, MACo Board Member; and Michael Sanderson, Executive Director, MACo to support local roads funding.

Council Member Walker testified:

For the first time in many years, the House has taken an important step towards restoring roads funding to local governments. …. We are here today to request that you do the same – and pass that bill, as amended, when it crosses over, or amend this bill to reflect that compromise.

The average Marylander does not know, or care, which government jurisdiction is responsible for the roads, pipes, bike lanes and cables that serve them. They just want them to work. They need us, together, to make them work, because they can’t do that without us.

Together, we need to stop kicking the can down the road on our infrastructure needs. We hope that, together, this year, we can all buy into a way to begin addressing this.

County Executive Gardner told the Committee:

MACo is here today in unified support of the agreement reached in the House to begin providing highway user revenues back to local governments.

My county contains 1,950 miles of roads, or 4,194 lane miles. Eighteen percent of those miles are maintained by the State. Sixteen percent are maintained by municipalities.

Frederick County maintains all of the rest of the roads. That’s 1,300 miles of roads. We maintain 67 percent of the road miles within our borders, and 62 percent of the lane miles.

County Executive Glassman stressed the importance of taking a meaningful step forward on this important issue now. Council Member Price provided perspective from a smaller county, which has been unable to back fill lost funding with other revenues.

HB 807 has passed Third Reader in the House and is anticipated to be heard by the Budget & Taxation Committee in the Senate.

Congressional Dems Announce $1 Trillion Federal Infrastructure Plan

Congressional Democrats are proposing their own federal infrastructure plan – and it varies significantly from what the Trump Administration and Republican leadership have put forward so far.

Democrats are proposing investing just over $1 trillion into a wide range of infrastructure needs, including $140 billion for roads and bridges, $115 billion for water and sewer infrastructure and $50 billion to rebuild schools. To fund this, they propose rolling back the recently passed tax reform: reinstating the top income tax rate of 39.6 percent, restoring the individual alternative minimum tax, reversing cuts to the estate tax, and raising the corporate income tax from 21 percent to 25 percent.

From the Washington Post:

Senate Minority Leader Charles E. Schumer (D-N.Y.) said in an interview Tuesday that the plan sets up a stark contrast for voters ahead of the midterm elections.

“We believe overwhelmingly the American people will prefer building infrastructure and creating close to 15 million middle-class jobs than giving tax breaks for the wealthy,” he said.

Comptroller Releases County-level Tax Reform Data

The Comptroller’s Office has updated its analysis of the impacts of federal tax reform on the state and local governments. The new “optimized model” used permits analysis by county.

The updated report indicates that Howard and Montgomery counties have the greatest percentages of adversely impacted taxpayers (26 and 25 percent, respectively). Ironically, Montgomery also has the greatest percentage of taxpayers who are most favorably impacted by the changes, along with Talbot and Worcester (8 percent). Baltimore City, Dorchester and Somerset have the greatest percentages of taxpayers who will experience no change to their tax bills.

The updated memo is available here.