Campaign Trail Tax Plans – What About Your County?

A Governing magazine column discusses the major party presidential candidates’ proposed changes to tax systems, and what they might mean to state and local governments:

So when a new president comes into office in January, how might campaign tax reform promises affect the ability of states and local governments to make critical investments?

Apart from the muni tax exemption — which helps states and localities to borrow money for infrastructure — eliminating the deduction for state and local taxes is one campaign promise that could most directly impact those governments. It would mean that Americans pay federal taxes on their state and local taxes. So it is that presidential candidate Hillary Clinton proposed limits on high earners’ deductions, and candidate Donald Trump said he would cap the value of individual deductions. He also promised to “reduce or eliminate some corporate loopholes” and cap the deductibility of business interest expense.

The target of their proposed changes involve deductions that currently serve to ensure the federal government does not, in effect, impose federal taxes on state property and sales and use taxes. If implemented, they would undo and reverse important provisions in our federal tax code.

For earlier coverage of the long-standing municipal bonds issue, see Conduit Street coverage.

City Council Considers Lobbying & Procurement Transparency Bill

A Baltimore Sun article (2016-10-29) reported that the Baltimore City Council is considering legislation to require the City’s finance department and ethics board to post searchable lists of all entities that have done business with the City during the last calendar year and all registered lobbyists. According to the article, the lists already exist but residents must request them. From the article:

“These are things I feel the public should have access to,” [bill sponsor and City County President Bernard “Jack”] Young said. “People can see the big picture of what’s going on.” …

The bill gained the unanimous approval of the council’s Judiciary and Legislative Investigations committee this week. It will go to the full City Council for a vote next month. …

The city finance department testified in favor of the legislation.

In the article, Young asserted that there was widespread support on the Council for the bill.

Commission Holds Hearings on Proposed Delmarva Power Rate Increase

The Public Service Commission (PSC) held three public hearings last week on Delmarva Power & Light Company’s proposal to raise electricity rates on its Eastern Shore customers by 12.5 percent.  The utility initially made the request to the Commission in July. If approved, the increase will provide Delmarva Power with an additional $57 million, reports Delmarvanow – needed to recoup $330 million in upgrades made from 2012 to 2015, according to the utility.

Delmarva Power & Light Company delivers electricity to about 203,000 customers in Caroline, Cecil, Dorchester, Harford, Kent, Queen Anne’s, Somerset, Talbot, Wicomico and Worcester counties in Maryland, according to the PSC.

Reports Delmarvnow: 

The increase would raise the typical customer’s bill monthly by $18.38, assuming a consumption of 1,000 kilowatt hours. The new total bill would be about $165, according to Delmarva Power’s estimates.

Tammy Truitt said Thursday that electricity accounts for about 21 percent of the expenses at her Somerset County chicken farm …

The company’s current price of power — 8.38 cents per kilowatt hour — ranks third highest among the state’s four electricity providers. If the 12.5 percent boost is applied, the rate rises to 9.42 cents per hour, 43 cents more than what’s charged by the most expensive supplier, the Baltimore Gas and Electric Co.

The PSC plans to make a final ruling on the request by February 17, 2017.

Attention Counties: The Maryland Smart Energy Communities Program Now Accepting Funding Applications

A total of $1.6 million is available for the FY 17 Maryland Smart Energy Communities (MSEC) program. This funding is to be divided between new and existing Maryland Smart Energy Communities with $725K for eligible energy efficiency projects, and $855K for eligible renewable energy and transportation projects. New and Existing Community applications are due by February 16, 2017.

What’s new?

MSECBeginning in FY17, the MSEC Grant Program will no longer consider Low-to-Moderate Income Projects. Communities with eligible projects must submit a separate application to the Clean Energy Communities Low-to-Moderate Income Grant Program. For more information, visit the LMI Grant Program website.

Is my community eligible to apply?

All Maryland counties and incorporated municipalities are eligible and encouraged to apply. See more eligibility details and ranking criteria here.

How do I apply?

Has your community received funding from the MSEC program before? Existing communities can download the Existing Communities application here.

Is your community new to the MSEC program? New communities can download the New Community application here.

Where can I print a one-pager to share?

A one-page overview PDF document is available online here.

Want guidance on the application or a project idea?

Existing Community Webinar: Ask questions, discuss projects and ranking criteria, and address other items related to the program with the MSEC Program Team and peer communities. Thursday, December 1 @ 1pm. Sign-up here to join the discussion.

New Community Webinar: Receive a brief program overview, ask questions, discuss projects, and get comfortable with the program. Join the MSEC Program Team and peer communities for this event. Wednesday, November 30 @ 10am. Sign-up here to join the discussion.

If you can’t make the webinar, don’t hesitate to contact Caitlin Madera or Sean Williamson with questions. Learn more about the program online at: http://energy.maryland.gov/govt/Pages/smartenergycommunities.aspx.

October 27 Webinar: Take Control Of Your County Investments

 

MBS endorsement image

Introducing the Public Funds Investor Guide, a free online resource for treasurers and financial officers of all experience levels to help fulfill their investment responsibilities. The Maryland Association of Counties (MACo) and Multi-Bank Securities, Inc. (MBS) will present a special, free webinar to unveil this new educational guide and review new features of eConnectDirect®, including a new online investment policy tool that can help make your investing decisions easier and more efficient. MACo members and any other Maryland local government investment officers who have previously attended an eConnectDirect webinar are urged to attend.

MACo is pleased to have endorsed eConnectDirect as an essential online investment solution designed to help Maryland county treasurers manage their investment needs. This proprietary platform, developed by MBS, provides treasurers access to thousands of fixed-income offerings and the ability to invest county funds in a more effective and transparent way.

MBS has enhanced this offering with its Multi-Bank Securities Institute, Public Funds Investor Guide and new features that will help you keep your portfolio in compliance with statutes and policies. They are delighted to host this 30-minute session to demonstrate how this unique resource can help you maximize your investment portfolio at no cost.*

Who should attend the webinar to learn more about this free tool? This webinar is open to any local government Treasurers and Officers with investment responsibility including:

Finance Directors
Treasurers
Investment Officers
Comptrollers
Deputy Treasurers & Staff
Investment Committee Members

Click the date below to register!

Thursday, October 27, 2016 at 1:00 p.m. EDT

For a link to MACo’s endorsement of eConnectDirect, click here.

 

About MBS
MBS is an independent, fixed-income securities broker-dealer that has been serving institutional investors across the U.S. for more than 28 years. The company’s customers include counties, municipalities, credit unions, banks, money managers and other institutional investors. MBS also underwrites U.S. agency bonds and distributes FDIC-insured CDs for thousands of community and national banks. Member of FINRA & SIPC; MSRB Registered.
*There may be costs associated with other products/services offered by MBS.

Latest Employment Data Delivers Mixed Messages

The U.S. Department of Labor’s latest data indicates that Maryland gained 3,400 jobs and its unemployment rate dropped to 4.2 percent, reports The Baltimore SunThe number of jobs in Maryland in September 2016 is 1.7 percent higher than it was one year earlier.

However, the Department revised earlier numbers for August – rather than gain 700 jobs, the state lost 4,400 jobs that month. Reports The Sun: 

Economists said the end-of-summer fluctuation may be a statistical fluke, traced to the difficulties of estimating hiring at the start of the school year.

But the bigger picture remains unclear. ….

Economist Daraius Irani said the summer slowdown may be the first hint of even more moderate growth in the coming months, perhaps slipping the economy into a recession.

“We’re probably starting to see the beginning edges of it,” Irani said.

Economist Anirban Basu, CEO of Sage Policy Group, opined that a recession could occur in the next two years, for national and global rather than state-specific reasons.

The public sector drove much of the recent employment gains in Maryland, adding 4,900 jobs. The financial sector added 1,500 jobs, and business services firms added 700 positions.  Education and health services employment fell by 1,800, while jobs in the leisure and hospitality sector dropped by 1,600. Payrolls in the trade, transportation and utilities sector fell by 1,300.

When Low Bids Fail: Incumbent Awarded Do-Over Contract

Yesterday, the Maryland Board of Public Works approved a short term contract with former incumbent vendor Behavioral Interventions Inc. to provide electronic home monitoring services for the state Department of Juvenile Services. The emergency agreement comes after the Board terminated the contract which was originally awarded to Sentinel Offender Services, the lowest bidder at the time, who failed to perform.

Sentinel’s bid originally came in 40 percent lower than Behavioral Interventions’. Comptroller Franchot questioned the extremely low bid when it came in last April. Upon executing the contract with Sentinel six months ago, Sentinel rolled out untested, new technology, testified Department of Juvenile Services Secretary Sam Abed – in what Governor Larry Hogan referred to as “kind of a bait and switch.” The state cancelled the contract only 17 days later. Secretary Abed described the situation as “fairly unique.” The Daily Record reports that Comptroller Franchot praised the Secretary for “taking quick action and accepting responsibility for it;” stated Abed:

It’s a tough situation because we do want to save money and get low bids and we certainly want to look into those. In some cases they work. In this case, it did not. In terms of moving forward, I think we want to put a little more scrutiny on those providers and try to balance that with trying to encourage smaller businesses to come in and compete. I think it’s been a bit of a mixed bag for us, but we have had. some success by stimulating competition and getting more bids.

Work Group Investigates Residential Clean Energy Loan Program

MACo participated in what is likely the final meeting of the House Bill 387 Residential PACE Study Work Group Meeting last Thursday, October 13 in Annapolis. The work group, convened and chaired by the Maryland Clean Energy Center, consults with the Center as it fulfills its obligation to “conduct a study to determine optimal design and implementation strategies for a residential clean energy program in the State” under House Bill 387 (Chapter 593), Clean Energy Loan Program – Residential Property – Study.

What is PACE?

Property Assessed Clean Energy Finance (PACE) is a loan program used to finance property improvements that facilitate clean energy and conservation measures, and counties can collect the repayments for these loans through a surcharge on the property owner’s tax bill. The unpaid surcharge is treated as a lien on the owner’s property and is given first priority for repayment in the same manner as the local property tax. Maryland law has enabled counties to establish PACE programs for commercial properties since 2009, and currently Montgomery County has an active commercial PACE program. Under the above-mentioned Act, enacted last session, The Maryland General Assembly tasked The Maryland Clean Energy Center with investigating the potential for extending this program to residential properties.

Residential PACE Concerns

Many mortgage lenders and the Maryland Bankers Association object to the concept of allowing Residential PACE loans super-priority over a home’s mortgage, meaning that the mortgage lender would recover less in the event of foreclosure because the residential PACE lender would recover first. In fact, the Federal Housing Finance Agency, which regulates Fannie Mae, Freddie Mac and the Federal Home Loan banks, bars Fannie Mae and Freddie Mac from acquiring mortgages on a property with a residential PACE lien. Since Fannie Mae and Freddie Mac purchase, guarantee or securitize such a large percentage of single family mortgages, this severely limits the ability of a property owner to sell or refinance a home carrying a residential PACE lien. For this reason, the Maryland Realtors Association also expressed concerns with the program.

As part of the Obama Administration’s Clean Energy Savings for All Initiative, the U.S. Department of Energy (DOE) released best practice guidelines for Residential PACE programs on July 19, 2016. The guidelines suggest:

In states where non-acceleration of the assessment is standard for other special assessments, it should also be standard for PACE assessments. After a foreclosure, the successor owners are responsible for future assessment payments. Non-acceleration is an important mortgage holder protection because liability for the assessment in foreclosure is limited to any amount in arrears at the time; the total outstanding assessed amount is not due in full. In cases of foreclosure, priority collection of delinquent payments for the PACE assessment may be waived or relinquished.

For Maryland counties, non-acceleration of the assessment may be difficult or wholly infeasible.

Next Steps

The Maryland Clean Energy Center is due to release its report to the Maryland General Assembly on November 15, 2016.

 

Save on Athletic Supplies & Physical Education Equipment Through U.S. Communities

uscomm_7-2016_horiz-cmykU.S. Communities has announced that Gopher has been awarded a multi-year contract for athletic supplies and physical education equipment. This contract was awarded through a competitive solicitation process and detailed evaluation conducted by lead public agency, Harford County Public Schools, Maryland. The contract term is for three years with a start date of October 1, 2016, with the option to extend the contract for two additional two year periods.

From athletics to fitness to physical education, Gopher offers over 7,000 products from 75 product categories, including 3,500 products that are unique to Gopher and you won’t find anywhere else. Gopher’s passion is to help professionals achieve better results in the gym, on the playground, and on the field by providing them the equipment they need and the service and support they deserve.

Join U.S. Communities for a 30-minute webinar to learn more about Gopher and this new contract. If you are unable to attend one of the webinar dates, click here for additional information.

Maryland Secures Federal Disaster Declaration for Ellicott City

A federal disaster declaration has been approved to assist with the response and recovery efforts after flooding in Ellicott City. Maryland and Howard County will now be eligible for federal assistance to help pay costs associated with the response to and recovery from the July 30 flooding event that damaged much of Main Street in Ellicott City as well as surrounding areas.

From a Howard County Press Release,

By granting the declaration, federal assistance will be made available for expenses related to infrastructure repair and replacement, hazard mitigation projects, debris removal, and other costs associated with the storm. Kittleman said a FEMA declaration means that Howard County will be able to recover 75 percent of FEMA eligible costs.

“This is welcome news for the people of Ellicott City,” said Kittleman.“This Declaration will help us coordinate and take advantage of the many Federal resources available to us. These resources will help us implement long-term flood mitigation projects to rebuild Ellicott City to become a model resilient community. I am thankful to Governor Hogan and our Federal delegation for their continued support throughout this process.”

Kittleman, along with Senators Barbara Mikulski and Ben Cardin and representatives from Hogan’s and Congressman Elijah Cumming’s offices, met with FEMA on Wednesday where Kittleman stressed the urgency of receiving the disaster declaration.

Kittleman also noted that Howard County already had a head start on recovery efforts, with former State Senator and County Executive Jim Robey serving as a special advisor, a Community Advisory Group in place, and a list of possible mitigation projects put together by the Historic Ellicott City Flood Work Group that Kittleman established in 2015.

Read the full press release for more information.