The Summary of the FY 2019 Capital Budget as Enacted produced by the Department of Legislative Service provides accessibility to the details of the State’s capital funding.
State agencies receive funding though the State’s capital budget, and their funding is sometimes specifically allocated to projects or operations in particular counties. County governments also received capital funding from the State for specific projects.
The Summary of the FY 2019 Capital Budget as Enacted is easier to read than other documents associated with the capital budget, and may be searched for a particular county or type of project.
The need for school construction funding to keep pace with education requirements and the need for resources for local jails and detention centers struggling with the opioid epidemic are two focus areas for Maryland’s counties focus.
The FY 2019 capital budget provides line-by-line detail of $7.3 million capital funding for local jails and detention centers and $313.9 million in capital funding for the Public School Construction Program, in addition to other public school construction grants.
A veteran of the General Assembly and the only woman serving in a state constitutional office, Treasurer Nancy Kopp will address female county leaders at the Maryland Association of Counties Summer Conference Women of MACo Luncheon.
Nancy Kopp is Maryland’s 23rd State Treasurer, having been elected in 2002, and re-elected to successive full four-year terms in 2003, 2007, 2011, and 2015.
Treasurer Kopp will join the Summer MACo Conference as the special guest speaker at the Women of MACo luncheon, where she will offer remarks about her career to Maryland female county government officials.
Treasurer Kopp chairs many state finance committees, including the Capital Debt Affordability Committee and the Commission on State Debt, and provides leadership on fiscal issues facing the state. One of these more visible leadership roles includes Treasurer Kopp’s position on the Board of Public Works, which oversees a substantial portion of the procurement contracts of the State, with the Governor and the Comptroller of the State. The Treasurer is also the Chair of the Board of Trustees of the Maryland State Retirement and Pension Systems. Roughly half of Maryland’s counties participate in the State Pension System.
Treasurer Kopp represented the Bethesda, Maryland area in the Maryland House of Delegates for 27 years prior to her election as Treasurer. As a Delegate, Treasurer Kopp chaired the Joint Committee on Spending Affordability, as well as the Appropriations Subcommittee on Education and Economic Development. She also served on the Capital Budget Subcommittee, Subcommittee on Pensions, and Joint Committee on Budget and Audits, and, at various times, as Deputy Majority Leader and Speaker Pro Tem. During her legislative career, Treasurer Kopp was also an active member of the Women’s Legislative Caucus, serving as its President from 1996-1997, and was named by her colleagues as the most effective woman legislator and one of the ten most effective members of the House of Delegates.
The Women of MACo luncheon will be held on Friday, August 17, 2018 at noon. The luncheon is open to conference attendees.
The Maryland Department of Legislative Service’s 90 Day Report, a review of legislation passed during the General Assembly’s last term, includes an overview of the capital budget which is relevant to Maryland’s county governments.
The Department of Legislative Service’s annual review of legislation passed during the General Assembly’s most recent term is a handy tool for understanding policy changes. It is also a quick way to keep up-to-date on the State’s capital budget.
The State’s capital budget is relevant to county governments in at least two ways. First, county governments are the recipients of state capital funding. These include funds for local projects identified by the General Assembly, and school construction dollars.
A second reason for county interest in the State budget is that the State’s capital budget reveal the State’s ability and/or willingness to take on debt to invest in infrastructure projects. The State’s financial health and fiscal policies may be an indication of economic trends that have been or will be experienced also in Maryland’s counties. And, a sense of the State’s capital budget expenditures can help counties predict whether local capital funding may be increased in future years, or threatened.
School Construction Capital Funding
The General Assembly passed a fiscal 2019 capital program totaling $4.622 billion, according to the Department of Legislative Services. Less than $100 million of the capital budget is directed toward local projects, and about $440 million is provided for school construction.
The school construction capital funding includes the following:
For public schools:
Public School Construction Program $313,900,000 (where most state contributions to K-12 school construction come from)
Aging Schools Program: $6,109,000 (generally for smaller repair-type projects to keep older schools up-to-date)
Supplemental Capital Grant Program $68,200,000 (a special program to help school systems with high enrollment and a high number of relocatable classrooms)
Public School Safety Improvements $20,000,000
Heating, Ventilation and Air Conditioning Improvements $15,000,000
For Private Schools:
Nonpublic Aging Schools Program $3,500,000
Nonpublic Schools Safety Improvements $3,500,000
State Capital Budget Spending
The fiscal 2019 capital program totals $4.622 billion, slightly more than the fiscal 2018 capital program, which totaled $4.579 billion. In both years, the Capital Debt Affordability Committee (CDAC) recommended that no more than $995 million in new general obligation bonds be issued for each year in the five year planning cycle. As described by the Department of Legislative Services with regard to the CDAC’s 2017 report,
The recommendation, the same recommendation made by the committee in its previous two annual reports, is intended to slow the growth in debt service costs and provide additional debt capacity in the out-years. –Department of Legislative Services 90 Day Report
In both years, the General Assembly’s Spending Affordability Committee acknowledged this advisory recommendation, but instead of limiting new issuances to $995 million, the General Assembly implemented a 1% cap on new issuances, using the fiscal 2016 level of $1.045 billion as the starting point.
As described by the Department of Legislative Services, the Spending Affordability Committee (SAC) was concerned about limiting debt growth considering the increased cost of construction – something also experienced firsthand by county governments building schools.
While supporting the objective to slow the growth in debt service costs and reduce the debt service to revenue ratio, SAC was concerned that the CDAC recommendation to freeze the authorization level through the planning period would reduce the purchasing power of the capital program due to the impact of construction inflation. –Department of Legislative Services 90 Day Report
Department of Legislative Services
Department of Legislative Services
The Maryland Consolidated Capital Bond Loan program for fiscal 2019 implements the 1% cap adopted by the Spending Affordability Committee.
The General Assembly passed landmark legislation in school construction this year, which included many reforms counties have sought for years. With the law in effect June 1, which county will be the first to make a move?
School is almost out for summer. While students are on vacation, many school systems dig in to facility updates and renovations for the coming year and review long-range plans for school construction.
The earth is shifting below those school systems, this summer, with new rules in school construction, passed by the General Assembly this year, having taken effect on June 1. The 21st Century School Facilities Act makes many changes to school construction law. One of the areas of change is in the State’s rules for private-public partnerships.
Public-private partnerships in school construction have long been an area of interest of county governments. Counties struggle to ensure that school system needs are met, even as costs are increasing and the amount of available State funding is limited.
P3s may hold promise as a cost-effective method for school construction, a way to stretch public funding to meet the needs of Maryland’s students. While current State law already allows P3s for school construction, very few have gotten off the ground. MACo has pointed to hurdles in state law that make these arrangements difficult to achieve, and has urged State support for piloting these programs.
The legislation the passed this year, which was developed through a Commission that included county government representation, answers many of those concerns, by expanding authorities for county governments and school boards, reducing regulation of alternative financing, and creating a P3 pilot program.
MACo is currently working with one county government seeking to employ some of these new provisions for upcoming construction projects, and will continue coverage as counties take advantage of their new flexibility.