Advertising Mandate on Counties is Too Broad

A broad requirement that entities that receive State aid would have to advertise to different target audiences that represent the racial diversity of the State was introduced in Senate Bill 737. MACo Associate Director Barbara Zektick submitted testimony in opposition to SB 737 before the Senate Education & Health & Environmental Affairs Committee on February 20, 2018.

MACo’s concerns address the broad language and implementation of the bill. SB 737 does not speak to what media sources accurately represent the diversity of State, and also does not take into account the broad racial disparities across counties located in different geographic regions of the State. The silence on these topics could create concern for county contract procurement and the concurrent requirement to adhere to these standards.

From MACo Testimony:

While no doubt noble in its intent, this bill is too broad to implement effectively without exposing innumerable county procurements to countless bid protests. It is unclear what media sources, if any, accurately reflect the “racial diversity of the State.” It also fails to account for the differing racial diversity in various regions of the state; a county in Western Maryland may advertise in different media outlets than a county in central Maryland, for example. Under this bill, all counties would be obligated to advertise in the same way, regardless of targeted need, geographical region or type of procurement. Finally, it is unclear whether a specific target audience, or ratio thereof, is necessary for compliance with this bill.

MACo supports the implicit goal of this legislation to ensure that State-funded business opportunities reach a diverse audience, but fears that SB 737 falls short of accomplishing that objective, and instead, puts county procurements in jeopardy of constant challenges.”

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

Counties: Interest Payments on Refund Claims Should Continue to be Paid by the State

MACo Associate Director Barbara Zektick testified before the Senate Budget and Taxation Committee with a proposed amendment to Senate Bill 428. The bill would require the Comptroller to pay interest on tax refund claims at the end of a 45-day grace period, or from the date of an overpayment if there was an error on the part of the State.

The fiscal note for this bill indicated that local revenues would decrease significantly despite the fact that the State is responsible for administering income taxes. Therefore, MACo offered an amendment that the bill should continue to exclude counties and county revenues from this process.

From MACo Testimony:

MACo had not previously taken positions on prior introductions of this legislation because it was not believed to have any fiscal effect on counties. Counties understandably believed that any obligation for interest payments would come from state money, as the State is fully responsible for administering income taxes.

However, the fiscal note for SB 428 states, “local income tax revenues may decrease significantly beginning in FY 2019 due to additional interest payments paid on individual income tax refunds.” To the extent that the law allows the Comptroller to pay this interest from local income tax revenues or otherwise hold counties accountable for these costs, MACo respectfully requests an amendment clarifying interest arising from such a circumstance should be paid using state funds. As the Comptroller administers all income taxes and has control for when and how refunds are paid, the State should similarly be the party responsible for paying interest on late and corrective payments.”

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

MACo Exploring Landfill Closure Investment Trust

Multiple Maryland counties have funds set aside for the scheduled closure costs of public landfills. State law authorizes these funds to be invested like long-term assets — similar to pension funds or retiree health care obligations.

MACo contacted county leaders today, beginning the process to form a pooled investment trust for counties, or other entities, managing landfills and seeking such a vehicle. Overall, the concept is to share overhead, legal, and advisory costs among multiple participants, and at the same time use the pooled resources to attract top-level advisors for the group.

From MACo’s memo, sent to each county today:

Currently the vast majority, if not all, of the reserves set aside for post-closure landfill care are being invested as regular public funds, subject to the typical safeguards and limitations of the investment of such assets, prioritizing safety and liquidity over investment return. The enactment of Chapter 568 allows political subdivisions significant ability to better match the investment of Landfill Post-Closure Reserves to the expected timeframe of their usage; a longer time horizon for use of these funds is consistent with funds set aside for other long-term obligations such as pensions and OPEB. This allows for reserves to be invested in a diversified portfolio of equities and fixed income with an expected longterm investment return in excess of a shorter duration public funds portfolio.

MACo already supports an OPEB Investment Trust, and the new Landfill Closure Trust may be able to build upon those successes, and even share some of the related infrastructure.

Read the full MACo letter, with more details about the proposal.

Counties with an interest are invited to contact Michael Sanderson, MACo Executive Director, to express interest in a formative meeting in the weeks ahead.

Local Governments Warming to Green Bonds

Sustainable City Network article (2017-02-17) discussed the increasing use of “green bonds” by states and local governments to build more environmentally friendly and more efficient infrastructure. The article noted that as many states impose green infrastructure mandates or implement Renewable Portfolio Standards (RPS) for renewable energy, there has been increased pressure on local governments to find alternative forms of financing to fund these types of projects. From the article:

This is where green bonds enter the picture. These debt instruments, constructed precisely to bring capital to sustainable projects – whether that is renewable power, battery storage or climate change adaptation projects – can provide an alternative means for cities to invest in the infrastructure they need to remain economically competitive in a manner that is both environmentally and ecologically sound. …

Even for those municipalities without an immediate, acute focus on climate change, green bonds are seen as a viable financing option. Because green bond investors are spread around the world but the primary beneficiaries of green financings are more concentrated by region (or even by country), some municipalities could appeal to a broader base of investors by issuing green bonds. What’s more, issuers and investors alike could stand to benefit from certain municipal bond tax-exemptions.

The article stated that in the first half of 2017, United States municipalities accounted for a majority of the 101 green bonds issued globally by local governments and states, with a value of roughly $18 billion.

The article also noted that green bonding in the United States lags behind China and Europe due to the lack of a cohesive policy for carbon mitigation and adaptation and clear regulations for green bond practices. However, the article believed green bonding will continue to play an increasingly important role over the next few years at the local government level:

So, with a stricter federal policy on climate change unlikely to materialize any time soon, it will be down to states, cities and corporations to drive future green bond growth – with much of the investment for green projects coming from investor-owned and public utilities to meet new standards.

Presidential Advisor: No New Infrastructure Revenues

On Thursday, DJ Gribbin, a special advisor to President Donald Trump on infrastructure, told a group of mayors that the President’s infrastructure plan would not identify new revenues to pay for infrastructure costs or cut any mainstay programs, reports Route Fifty.  Details on the plan are expected a couple of weeks after the President delivers his State of the Union address next week. From that coverage:

“Our infrastructure proposal, when we introduce it, will not include new revenue,” Gribbin said during a panel at the U.S. Conference of Mayors winter meeting.

He noted that the administration does not support, or oppose, an increase to the federal gas tax, and that the White House  believes decisions about direct federal funding for the plan need to be made collectively with the House and the Senate.

The plan is anticipated to center around shortening federal permitting processes and incentivizing greater private sector investment.

Your County’s Retiree Health Care Costs – And What To Do About Them

On January 30, Governing magazine is hosting a webinar on the latest rulings from the Governmental Accounting Standards Board (GASB), and what options might help your jurisdiction. Learn best practices and new approaches that might help your county’s bottom line.

From their event description:

Join us January 30 at 11 AM Pacific/2 PM Eastern to learn more about GASB 75, the effect it will have on reporting and how some state and local government programs have already taken steps to mitigate the impact of this new GASB statement.

Our expert panel will discuss:
• What GASB Statement 75 means for state and local governments
• The actuarial treatment of Medicare-eligible benefit programs
• How a private individual marketplace can provide retirees with benefits equal to or better than a traditional group plan while reducing OPEB liabilities

Register for the free webinar online or read more from the Governing website.

If your county has already set aside funds toward its OPEB liabilities — are you investing them wisely? MACo has a service with your county, library, or community college in mind — the MACo OPEB Investment Trust. Skip the costs and process of doing this yourself – and set up a plug-and-play account right away. You’ll benefit from an “A list” of financial advisors, and from the economies of scale from working jointly with other governments. Find out more from the MACo website.

More Answers Needed in Gender Wage Gap Reporting Bill

MACo Legislative Director, Natasha Mehu, provided testimony in support (with amendments) of House Bill 62- Procurement Contracts- Gender Wage Gap Reporting before the House Health & Government Operations Committee on January 18, 2018.

This legislation would require any entity bidding for a contract with a state or local entity to report the mean and median wages of all male and female employees in the organization, as well as, how many people are employed in total. There are many considerations that still need to be taken into account in this bill. Including, but not limited to:

  • Does this apply to all procurements, or just those over a certain dollar threshold?
  • What happens if a bidder or offeror adds or changes staff after receiving a public contract – are they required to provide updated information?
  • Do local governments have the ability or obligation to reject the bid in light of wage data provided?

From MACo Testimony:

Gathering data to address wage equity issues is a laudable objective. However, MACo believes the lack of clarity in this bill could result in unintended consequences, such as discouraging potential vendors from bidding, or in findings that vendors are nonresponsive to solicitations when they otherwise would serve as able government partners.

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

MACo Supports Revising the Maryland Economic Development Assistance Authority and Fund

MACo Associate Director, Barbara Zektick, provided written testimony in support of Senate Bill 67, which would rename the Maryland Economic Development Assistance Authority and Fund as the Advantage Maryland Fund Authority and Advantage Maryland Fund.

In addition to the name change, this bill revises the fiscal abilities of the fund. It increases the amount of grant money that can be provided to fund projects for individuals, local governments, and others seeking to expand economic and employment opportunities. It also repeals most restrictions on providing funding for capital costs.

From MACo Testimony:

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.”

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

State of the Economy: “It Depends,” Of Course

Dan White of Moody’s Analytics briefed the Senate Budget and Taxation Committee on state of the economy on Tuesday afternoon.


The bottom line: the economy is still good, and even has room to grow – but don’t expect that growth to last very long.

The next two years are going to be as good as they are going to get.

White said to expect 2.8 percent growth in 2018, and less growth in 2019 – though still above 2.5 percent. He advised the Committee to ensure that the State has a healthy Rainy Day fund balance to get through the decrease in economic activity anticipated for 2019-2020.

Economic growth is anticipated to result as early as this year in response to federal tax reform. However, many provisions of the tax reform bill expire after five years, after which point, further economic growth is uncertain. Ten years from now, economic growth is not anticipated to be significantly higher than it is today if tax reform provisions remain untouched. Higher inflation and interest rates could undo any growth experienced within the next few years.

The economy has room to grow. We can still increase employment, and today’s housing market is incredibly undersupplied. This in part results from the aftershocks of the housing bubble bursting, which has led to very cautious homebuilders. It can also result from the applicable labor supply diminishing.

Durable goods have been deflating for a few years in large part because of the decrease in costs for oil and gas. This not only affects transportation costs, but costs for plastics and other materials which include petroleum as an ingredient. This may be part of the reason that 31 states missed their sales tax projections by more than 1 percent last year.

The good news is that there is nothing to indicate that a bubble is forming today. The bad news is that bad things happen when there are no indications of bubbles. We have gone about a decade without anything bad happening yet, and that is a long time. Economists expect the economy to turn significantly around 2020.

Delegate Morhaim: More Locals Should Pool for Health Insurance

Delegate Dan Morhaim, a member of the state’s Procurement Modernization Commission and practicing physician, wants governments to pool health insurance purchasing – and explains why in an opinion piece for The Baltimore Sun:

Maryland’s various levels of government do not currently coordinate purchasing for health insurance. If they did, our analysis indicates that the average per employee cost decrease would be over $2,100 per year, amounting to tens of millions of dollars saved per year overall. These savings could be applied to reducing overall expenses as well as to provide improved coverage and lower co-pays and deductibles for employees.

Was there a legislative barrier that was holding back such a coordinated approach? Actually, there is not. In fact, Maryland law in Section 2-513 allows pooled insurance purchasing, and Section 2-512 even allows Maryland’s non-profits (also stretched financially) to join in. …

Experts predict that health insurance costs will continue to rise. That being the case, it’s imperative that those who have the fiduciary responsibility for these issues take a long-term view. I plan to introduce legislation this session to jump-start this process. There will be controversy, and it’s a daunting task, but the first key steps should be started now.

County procurement officers met with Delegate Morhaim at MACo’s offices about two months ago. They discussed interest in the concept, but provided examples of potential roadblocks. For example, one size may not fit all; some entities elect to provide their employees with greater coverage, while others are more limited as to what insurance offerings are available. However, some county governments do pool purchasing with their municipalities, school systems, community colleges, and libraries. In addition, Caroline County piggybacks off of the State of Maryland insurance plan.