Finance and Procurement

State Proposes Spending $70M from Transportation Fund on P3

Barbara Zektick Finance and Procurement, State Budget and Fiscal Issues, Transportation and Public Works

Tomorrow, Wednesday, April 18, the Board of Public Works considers granting an award of $68.5 million from the Transportation Trust Fund for the Maryland Department of Transportation (MDOT)’s Traffic Relief Plan, its massively-scaled public private partnership (P3). MDOT has selected a contractor team made up of Parsons, JMT, and HNTB to:

provide fully integrated support, guidance and oversight to the Maryland Department of Transportation State Highway Administration (MDOT SHA) Public-Private Partnership (P3) Office in delivering the I-495 and I-270 P3 “Traffic Relief Plan”.

Last September, Governor Hogan announced his Traffic Relief Plan to add four new lanes to I-270, the Capital Beltway (I-495), and the Baltimore-Washington Parkway (MD 295). The anticipated $9 billion plan for these three major state highways is touted to reduce congestion for millions of drivers.

At the time, MDOT indicated that it intended not to use the Transportation Trust Fund to pay for the ground-breaking public-private partnership (P3). In fact, the original Request for Information states:

The desire of MDOT would be that any private agreement not require a financial
contribution directly from the Maryland Transportation Trust Fund and that the
agreement would provide a concession payment to MDOT upon financial close.

However, the item on tomorrow’s Board agenda calls for 100 percent of the $68.5 million award to come from the Transportation Trust Fund. The Agenda Item suggests that the sum will, at some point, be paid back to the Trust Fund:

The scope of services will include developing and implementing a new and innovative P3 project delivery strategy driven by continuous market collaboration and feedback to ensure best value and that the I-495 and I-270 “Traffic Relief Plan” is delivered at a “net-zero” cost to the Transportation Trust Fund.

The winning team includes HNTB. Notably, MDOT Secretary Pete Rahn served as Senior Vice President of HNTB for five years before joining the Hogan Administration as Secretary of Transportation in 2015, according to The Daily Record (story behind firewall). According to that article, the Maryland State Ethics Commission has advised Secretary Rahn that no conflicts of interest exist with his active involvement in the P3 procurement and management.

Round-up of the 2018 Session for Counties

Robin Clark Eilenberg Agriculture, Business Affairs, County Budgets, County News, Economic Development, Education, Elections, Employee Benefits and Relations, Environment, Finance and Procurement, General Assembly News, Government Liability and Courts, Health and Human Services, Housing and Community Development, Human Resources, Information Technology, Intergovernmental Relations, Parks and Recreation, Pensions & Public Funds, Planning and Zoning, Public Information and Ethics, Public Safety and Corrections, School Construction and Capital Budgets, State Budget and Fiscal Issues, Taxes and Revenues, Transportation and Public Works

MACo’s legislative efforts earned an 80% success rate – and as usual, the counties’ voice makes a difference in Annapolis. Bills we support are more likely to pass, and bills we oppose are more likely to fail.

2018 Legislative Results Infographic

MACo’s legislative initiatives, priorities, and positions are directed by its Legislative Committee. This body comprises elected representatives from all of MACo’s members – the 24 county jurisdictions (including Baltimore City).

The “one county, one vote” system of deciding the Association’s legislative strategies, ensures that all counties have an equal voice. All 24 jurisdictions participated regularly in the weekly meetings throughout the session – where they also engaged with policy leaders and advocates who joined the meeting to address county leadership.

Our policy staff have compiled updates and results on all of the bills the Legislative Committee decided to take action on this year.

For the 2018 End of Session Wrap-up for each subject MACo covers, click below:

2018 End of Session Wrap-Up: Assessments and Taxation

2018 End of Session Wrap-Up: Business Affairs

2018 End of Session Wrap-Up: Disparity Grants

2018 End of Session Wrap-up: Economic Development Tax Credits

2018 End of Session Wrap-Up: Education

2018 End of Session Wrap-Up: Elections

2018 End of Session Wrap-Up: Employee Benefits & Relations

2018 End of Session Wrap-Up: Environmental Legislation

2018 End of Session Wrap-Up: Finance and Procurement

2018 End of Session Wrap-Up: Government Liability & Courts

2018 End of Session Wrap-Up: Health & Human Services

2018 End of Session Wrap-Up: Housing & Community Development

2018 End of Session Wrap-Up: Intergovernmental Relations *MACo Initiative Area*

2018 End of Session Wrap-Up: Parks & Recreation

2018 End of Session Wrap-Up: Pensions

2018 End of Session Wrap-Up: Planning & Zoning

2018 End of Session Wrap-Up: Property Taxes

2018 End of Session Wrap-Up: Public Information & Ethics * MACo Initiative Area *

2018 End of Session Wrap-Up: Public Safety and Corrections

2018 End of Session Wrap-Up: Road Funding * MACo Initiative Area *

2018 End of Session Wrap-Up: School Construction * MACo Initiative Area *

2018 End of Session Wrap-Up: State Budget & Fiscal Affairs

2018 End of Session Wrap-Up: Tax Sale Bills

2018 End of Session Wrap-Up: Transportation and Public Works

2018 End of Session Wrap-up: Wynne Tax Bills

2018 End of Session Wrap-Up: County Tax Revenues

2018 End of Session Wrap-Up: Other Tax Bills

2018 End of Session Wrap-Up: Finance and Procurement

Zach Hands County News, Finance and Procurement, General Assembly News

The segments below provide a brief overview of MACo’s work in the area of finance and procurement policy in the 2018 General Assembly. 

Follow links for more coverage on Conduit Street and MACo’s Legislative Database.

More Jobs for Marylanders

Push Icons-NOT IDEALMACo supported legislation that expands access to State economic development benefits under the More Jobs for Marylanders Program to geographical areas sharing a zip code with areas that currently qualify. Senate Bill 1104 and House Bill 1594 both offer a reasonable recognition that a “distressed area” may not strictly be confined within political boundaries, and creates some flexibility in targeting them in distressed areas spilling across county lines. HB1594 passed through the House, but did not advance beyond that. SB1104 did not move after being recommitted to the Senate Finance Committee. Bill Information | MACo Coverage

Procurement Contracts

Push Icons-MORE WORKHouse Bill 62 would require bidders and offerors for state and local contracts to provide specified information on the mean and median wages of its male and female employees when responding to a state or local procurement. Counties appreciate the intent to expose any gender wage gaps that exist among vendors receiving public dollars. However, there were a significant number of concerns in the vague language of the bill that could have unintended consequences for county procurement efforts. The bill did not advance out of committee. Bill Information | MACo Coverage

Push Icons-DEFEATEDMACo submitted amendments to maintain county autonomy in the payment security process for contracts with county and local entities. Senate Bill 778 would mandate all public bodies, including the State and county governments, to require certain contractors on construction contracts exceeding $100,000 to provide payment security in the amount of 100 percent of the total amount of the construction contract. Counties expressed concerns that this may increase costs for jurisdictions that do not currently require that threshold. The concerns were put to rest when the Senate Education and Health and Environmental Affairs Committee gave the bill an unfavorable report. Bill Information | MACo Coverage

Push Icons-MORE WORKSenate Bill 1155 establishes a process and timeline for the payment of retention proceeds in excess of the estimated cost of completing the work remaining on a project after an owner takes possession of a project or otherwise puts a project into use. MACo had concerns with some aspects of the bill. However, the hearing for the bill was canceled, and it did not advance out of committee. Bill Information

Push Icons-DEFEATEDMACo opposed a bill that broadly requires “an entity … that receives State aid,” including counties, to “advertise using a range of media sources with target audiences that reflect the racial diversity of the State.” While the bill is noble with its intent, this bill was too broad to implement effectively without exposing innumerable county procurements to countless bid protests. Upon notice of MACo’s concerns, the sponsor withdrew the bill. Bill Information | MACo Coverage

Interest Payments on Tax Collection Errors

Push Icons-NOT IDEALMACo supported legislation that would require the Comptroller to pay interest on tax refund claims after a 45-day grace period, unless the refund is owed due to an error or mistake of the State, in which case the Comptroller must pay interest from the date of the overpayment. An amendment was submitted by county governments to clarify that the State, which administers income taxes, bears responsibility for the errors and therefore should cover the costs. However, the bill did not advance past the initial hearing in the Senate. Bill Information | MACo Coverage

Funding Priorities in the State Budget Workgroup

Push Icons-NOT IDEALMACo supported a bill to establish a workgroup to examine prioritization systems that could apply to the State’s budgeting process. The workgroup is made up of and staffed by representatives from the Department of Budget and Management (DBM), the Comptroller’s Office, and the Department of Legislative Services (DLS). MACo offered an amendment to add county representation on the workgroup. The bill did not advance out of committee. Bill Information 

Mandating County Participation in State Health Plans

Push Icons-DEFEATEDMACo opposed legislation that would have required all counties to participate in the State’s health care plan. Requiring counties to simply use the State’s health care plan removes their ability to procure health care benefits for their unique employee groups at the best value available. For some counties, opting into the State’s health care plan could be the best option. However, this mandate removes local authority to purchase plans that make sense to them, in the appropriate purchasing pools that provide the best value. The Senate version of the bill passed the Senate after being heavily amended to alleviate MACo’s concerns, and the bill in the House was withdrawn by the sponsor. Bill Information | MACo Coverage

For more information on finance and procurement-related legislation tracked by MACo during the 2018 legislative session, click here.

Baltimore City Tests the (Storm)waters With Environmental Impact Bonds

Les Knapp Environment, Finance and Procurement

A Bay Journal article (2018-03-28) reported that Baltimore City plans to issue up to $6.2 million in environmental impact bonds for “green infrastructure” stormwater projects. The bond deal was created with the assistance of the Chesapeake Bay Foundation. The article noted that the bond issuance is expected to help pay for green stormwater projects, such as vegetated swales, rain gardens, and reducing impervious surfaces, in more than three dozen neighborhoods. The article stated that Quantified Ventures will help the City manage the issuance. The City considered the issuance after DC Water, the District of Columbia’s water and sewer authority, conducted a $25 million bond issuance in 2016.

Interest in environmental impact bonds is growing throughout the United States. As with conventional bonds, the bond issuer makes regular interest payments to the bond investor and pays the investor the full face amount of the bond at the bond’s maturity date. However, the interest payments for environmental impact bond are contingent on the success of the project that the bond is funding. If the project meets expectations, the investor receives the baseline interest rate specified for the bond. If the project performs more poorly, the interest payments are reduced or eliminated. If the project exceeds the expected performance, the investor receives an additional premium over the baseline interest rate.

 

From the article:

“Baltimore can and, we predict, will be a model for innovation in pollution reduction,” declared Bay Foundation President Will Baker at a news conference announcing the deal in West Baltimore by the site of one of the planned projects. “It’s a partnership with nature to save dollars and reduce pollution.” …

Rudy Chow, the city’s public works director, said officials were looking to diversify the city’s borrowing as it attempts to curtail polluted runoff at the source. Baltimore is required by federal and state regulators to reduce and treat polluted runoff from more than 4,000 acres of pavement and buildings across the city by 2019. …

“We really think that we’re starting a movement here in the watershed and across the country,’’ said Carolyn duPont, director of Quantified Ventures. “We believe that environmental impact bonds will be a key part of public finance in the future. Budgets are always squeezed for cities, and there’s also an ever-growing group of impact investors who are really excited to put their money and capital to work into projects like these that have both a financial return as well as environmental and social benefits.”

Useful Links

Chesapeake Bay Foundation Website

Quantifed Ventures Website

Prior Conduit Street Coverage of Environmental Impact Bonds

 

Senate Bill Allows More Wiggle Room For Giving Businesses a Boost

Zach Hands Bill Hearing, County News, Economic Development, Finance and Procurement, MACo Testimony

Senate Bill 67 provides the Department of Commerce more flexibility in providing economic development assistance to local governments and businesses. It renames the economic development assistance fund as the, “Advantage Maryland Fund Authority and Advantage Maryland Fund.” Along with the name change, the legislation allows for more grant and loan funding for enterprises that seek to expand employment in the State.

The bill is now being considered in the House, and has already passed the Senate 45-0. MACo submitted written testimony in support of SB 67 to the House Economic Matters Committee on March 21, 2018.

From MACo Testimony:

Counties and local economic development leaders appreciate the economic development benefits that this program provides. This program funds grants, loans, and investments to support economic development initiatives, including business attraction and retention, infrastructure support, brownfield redevelopment, and local strategic planning.

Last year, the program provided a $1.2 million loan for a new Amazon distribution center in Cecil County. Harford County partnered with the Department of Commerce to provide a package to Maines Paper & Food Service Inc. This program also contributed to the incentive package which led to Marriott International’s decision to remain in Maryland – which Montgomery County anticipates will produce $1.8 billion in economic activity over 20 years.

Economic development projects such as these promote vibrant business communities within counties. This in turn creates jobs, contributes to enhancing quality of life, and expands the local tax base – enabling counties to better provide core services for Maryland families and businesses.”

For more on this and other legislation, follow MACo’s advocacy efforts during the 2018 legislative session here.

Economic Distress Transcends County Borders

Zach Hands Bill Hearing, County News, Economic Development, Finance and Procurement, MACo Testimony

Senate Bill 1104 would expand State economic development benefits to communities that share a zip code with distressed  economic areas that are currently eligible for the benefits. Local governments have a vested interest in ensuring that “distressed” areas receive aid in achieving long-term economic growth. Counties understand that these economically distressed areas are not limited by county lines, and this legislation takes that into account.

MACo submitted written testimony in support of SB 1104, “Economic Development – More Jobs for Marylanders – Tier I Eligibility”, to the Senate Finance Committee on March 20, 2018.

From MACo Testimony:

Local governments, just as the State, have a vested interest in economic development. Local economic growth creates jobs and increases salaries, expanding the tax base both locally and statewide. Counties promote economic development through their own programs and coordinate with the State to attract and retain businesses where most beneficial to our economy.

SB 1104 offers a reasonable recognition that a “distressed area” may not strictly be confined within political boundaries, and creates some flexibility in targeting them in distressed areas spilling across county lines.”

For more on this and other legislation, follow MACo’s advocacy efforts during the 2018 legislative session here.

Forcing County Participation in Health Care Plans is Not the Right Prescription

Zach Hands Bill Hearing, County News, Finance and Procurement, MACo Testimony

MACo Associate Director Barbara Zektick testified in opposition to Senate Bill 1016, “State Employee and Retiree Health and Welfare Benefits Program – Expansion of Participating Units”, before the Senate Budget and Taxation Committee on March 15, 2018.

The bill would force counties to enter into the State’s health care plan. While it is possible for counties to currently opt-in to the State health care program (Caroline County currently does), mandating all counties to do it removes local authorities’ ability to procure health benefits for the population that is unique to them. Counties should still be afforded the ability to purchase health care plans according to need, and be able to pool different groups of county employees into different groups. For some counties, it is optimal to opt-in to the State program, but for many it is not.

From MACo Testimony:

MACo supports efforts to enable cooperative purchasing models to save taxpayers money while ensuring the greatest value of employee benefits. Under existing law, counties may already opt into the State’s health care program, and Caroline County in fact does this now. Other counties pool with one another, their municipalities, and their school boards to provide health insurance benefit options at high value while minimizing and combining administrative costs.

However, requiring counties to simply use the State’s health care plan removes their ability to procure health care benefits for their unique employee groups at the best value available. Forcing county employees into health care plans originally procured for an entirely different group of personnel would likely raise, rather than lower, costs to counties. It also removes their authority to purchase options according to their needs –including being sensitive to the provider network associated with a certain region.”

For more on this and other legislation, follow MACo’s advocacy efforts during the 2018 legislative session here.

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

Barbara Zektick County Budgets, Finance and Procurement

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.

Economic Difficulties Extend Beyond County Lines

Zach Hands Bill Hearing, County News, Finance and Procurement, MACo Testimony

MACo submitted written testimony to the House Ways and Means Committee in support of House Bill 1594, Economic Development – More Jobs for Marylanders – Tier I Eligibility”, on March 7, 2018.

This legislation would extend access to economic development benefits under the More Jobs for Marylanders programs to geographical areas that share a zip code with jurisdictions that currently qualify. Most counties do not register as a “qualified distressed” county, many have areas that do suffer from disinvestment. This bill adds some flexibility in observing that distressed areas are not always limited to political boundaries and could greatly benefit from this program.

From MACo Testimony:

Counties understand and respect that the State has a policy interest in designating certain areas as targets for economic incentives. That said, MACo generally supports legislative initiatives which promote greater access to economic development incentives, as well as access based upon designated geographical regions other than county boundaries. While most counties are not “qualified distressed” or “Tier 1” counties, most have at least some communities that suffer from disinvestment. While designating certain counties as targeted “qualified distressed counties” clearly has merit, it is imperfect in that it fails to account for distressed areas within other counties which could also significantly benefit from targeted programs.

SB 1594 offers a reasonable recognition that a “distressed area” may not strictly be confined within political boundaries, and creates some flexibility in targeting them in distressed areas spilling across county lines.”

For more information, follow MACo’s advocacy efforts during the 2018 legislative session here.

One Size Doesn’t Fit All: Counties Should Choose Their Own Health Care Plans

Zach Hands Bill Hearing, County News, Finance and Procurement, MACo Testimony

MACo Associate Director Barbara Zektick testified in opposition to House Bill 1131, “State Employee and Retiree Health and Welfare Benefits Program – Expansion of Participating Units”, before the House Appropriations Committee on March 1, 2018.

The bill would force counties to enter into the State’s health care plan. While it is possible for counties to currently opt-in to the State health care program (Caroline County currently does), mandating all counties to do it removes local authorities’ ability to procure health benefits for the population that is unique to them. Counties should still be afforded the ability to purchase health care plans according to need, and be able to pool different groups of county employees into different groups. For some counties, it is optimal to opt-in to the State program, but for many it is not.

From MACo Testimony:

MACo supports efforts to enable cooperative purchasing models to save taxpayers money while ensuring the greatest value of employee benefits. Under existing law, counties may already opt into the State’s health care program, and Caroline County in fact does this now. Other counties pool with one another, their municipalities, and their school boards to provide health insurance benefit options at high value while minimizing and combining administrative costs.

However, requiring counties to simply use the State’s health care plan removes their ability to procure health care benefits for their unique employee groups at the best value available. Forcing county employees into health care plans originally procured for an entirely different group of personnel would likely raise, rather than lower, costs to counties. It also removes their authority to purchase options according to their needs – including being sensitive to the provider network associated with a certain region.

Bringing local government employees into the State’s plan might well prove to be a preferred option in some cases – as is the case for Caroline County. However, it could also prove to be of better value to pool county employees with other county employees, or even all public safety employees with one other, while leaving clerical and administrative workers in another pool. It could prove to be the best value not to pool at all. Counties should retain broad authority to purchase plans that make sense to them, in the appropriate purchasing pools that provide the best value.”

Follow MACo’s advocacy efforts during the 2018 legislative session here.