County Leaders Focus on School Funding at #MACoCon

During the 2017 MACo Winter Conference roundtable discussion “The Next Round of School Funding Debates,” attendees heard the latest updates on the Maryland Commission on Innovation and Excellence in Education, which is charged with making policy and funding recommendations for Maryland’s public education system.

Montgomery County Councilmember, Craig Rice

Montgomery County Councilmember, Craig Rice and Allegany County Commissioner, William Valentine, MACo’s representatives on the Commission, led the discussion.

Allegany County Commissioner, William Valentine

Commissioner Valentine and Councilmember Rice emphasized MACo’s position that any recommendations made by the Commission be fair and equitable to all twenty-four jurisdictions, and that no recommendations result in a “winners and losers” situation for Maryland counties.

Valentine and Rice also confirmed that the Commission would not have time to reach a final set of recommendations by December. This derails widely held expectations that its recommendations, translated into proposed legislation, would become a major centerpiece of the 2018 session of the General Assembly.

The session was moderated by MACo’s Executive Director Michael Sanderson and was held on Wednesday, December 6. The MACo Winter Conference was December 6-8, 2017 at the Hyatt Regency Chesapeake Bay Hotel in Cambridge, Maryland. This year’s conference theme was “The Power of Partnership.”

MDOT Awards $20.4 Million For Bicycle/Pedestrian Projects

The Maryland Department of Transportation (MDOT) is awarding $20.4 million in state and federal money to local governments and others to support improvements for bicycle and pedestrian safety and connectivity. Awards are made through the Maryland Bikeways Program ($2.1 million), and federal Recreational Trails Program ($478,000) and Transportation Alternatives Program ($17.8 million).

Awards made to counties include:

  • $269,834 to Montgomery for four bikeshare stations
  • $188,765 to Prince George’s for four bikeshare stations at National Harbor
  • approximately $4.95 million to Somerset to construct hiker-biker trails
  • $70,000 to Baltimore City to design 1.7 miles of separated bike lanes
  • $240,000 to Howard to design 3.3 miles of shared-use paths
  • approximately $4.7 million to Anne Arundel to construct a bridge along the Washington, Baltimore and Annapolis Trail
  • $737,362.50 to Prince George’s to construct Phase 1 of its County Bike Share Program
  • $257,777 to Baltimore City for Safe Routes to School at Pimlico Elementary School
  • 640,000 to Prince George’s for design of the Central Avenue Connector Trail
  • $46,840 to Montgomery for Safe Routes to School

The full list of awards is here.

The announcement comes the same day that the Task Force to Study Bicycle Safety on Maryland Highways issued a draft of its final report recommending, among other things, that MDOT:

 consider expanding and consistently funding state discretionary programs such as the Bikeways Program to better assist local jurisdictions in planning and building infrastructure that improves bike safety and increases bike mode share.

 

Preview the 2018 Session “Big Picture”

A compilation of Issue Papers previews major fiscal and policy issues facing the General Assembly in the year ahead. This resource is a handy guide to the top issues that your legislators will be tackling in the year ahead – a great preparation document for county officials in advance of meetings with their local Delegations.

Developed by the Department of Legislative Services, the 2018 Issue Papers are an annual staple for the Annapolis policy-inclined population. They are also a great resource for county officials tracking specific issues, or interested in the state budget and other top-tier topics.

Here are a few direct links to hot topics that may interest counties:

Operating Budget

Transportation Trust Fund

Pension Issues

Capital Budget and Debt

Education Aid and Maintenance of Effort

School Construction

Health Care Reform

Broadband Access

Public Safety

Environmental Issues

Aid to Local Governments

9-1-1 Funding and Modernization

Where New York’s Subway System Went Wrong

Decades of state and local disinvestment has taken its toll on New York City’s transit system, reveals The New York Timeslatest exposé, “How Politics and Bad Decisions Starved New York’s Subways.”  Apparently, only 65 percent of the infamous subway system’s trains arrive on time. In comparison, the Baltimore transit system experiences 95 percent on-time performance.

An examination by The New York Times reveals in stark terms how the needs of the aging, overburdened system have grown while city and state politicians have consistently steered money away from addressing them.

The average total compensation for subway managers has grown to nearly $300,000 annually, and yet the system has cut mechanic positions, resulting in equipment failures occurring twice as frequently as a decade ago. Daily ridership has doubled over the past 20 years, but the track mileage is lower than it was during World War II. Nearly 17 percent of the Metropolitan Transportation Authority (M.T.A.)’s goes to paying debt service now, rather than system operations or capital improvements.

…[P]oliticians and transit leaders have not acted on a series of chances to turn things around sooner. They ignored decades of warnings from state and city comptrollers. They failed to pass a congestion pricing plan in 2008. They chose not to give mass transit much of the proceeds from large settlements with banks after the financial crisis. They brushed aside the findings of the M.T.A. Transportation Reinvention Commission, a 2014 panel of transit leaders from around the world.

And through it all, The Times found, the M.T.A. has used sloppy data collection and accounting games that hide from the public the true causes of the subway’s problems.

The story is reportedly the first in a series. Read the first analysis here.

Maryland has experienced its own to-do over transportation investment throughout the last several years. Following last year’s political firestorm over how the State should prioritize transportation spending, the Maryland Department of Transportation (MDOT) has new plans for scoring major projects in its Consolidated Transportation Program (CTP) – and MDOT Secretary Pete Rahn will unveil that draft plan and solicit input from county officials first at the MACo Winter Conference session, Workshop: An Overview of the New Transportation Scoring Law.

The MACo Winter Conference will be held December 6-8, 2017 at the Hyatt Regency Chesapeake Bay Hotel in Cambridge, Maryland. This year the conference’s theme is “The Power of Partnership.”

Learn more about MACo’s 2017 Winter Conference:

Senator Cardin Holds Round Table with Maryland Business Leaders

Senator Ben Cardin discussed critical issues — taxes, healthcare, infrastructure — being debated in Congress that have are impacting Maryland’s business and residents at a round table held at the Maryland Chamber of Commerce on Friday, November 17.

Senator Cardin discusses taxes, healthcare, infrastructure, transportation priorities and more at business round table.

Senator Cardin discusses taxes, healthcare, infrastructure, transportation priorities and more at business round table.The Senator emphasized his commitment to addressing key priorities for Maryland including:

  • FBI – working on finding a path forward for moving the FBI to Prince George’s County.
  • Protecting Federal and Military Installations in Maryland – ensuring they receive the resources and support they need. There was not a round of BRAC this year but one may be coming in another year or so.
  • CSX/Howard Street Tunnel – addressing the issues with the tunnel is essential to its long-term viability and talks continue with CSX financial officers and CEOs.

Q&A with the round table participants centered a lot on their frustrations with the state of the national health care laws and rising premiums, but also involved lengthy discussions on taxes, cyber security, and small business procurement issues.

 

Conduit Street Podcast, Episode #5 – The Power of Partnership

MACo’s Winter Conference will focus on intergovernmental cooperation and ways that counties can partner with entities in the public and private sector to achieve the best results for Maryland’s residents. Sessions will highlight collaboration across county lines and service areas to address priorities like the opioid epidemic, Next Gen 9-1-1, and the environment, along with other important topics like mutual aid agreements and cooperative purchasing.

On the latest episode of the Conduit Street Podcast, Kevin Kinnally and Michael Sanderson discuss the MACo Winter Conference and its focus on reviewing timely issues that will be relevant during the upcoming Maryland General Assembly Session.

MACo has made the podcast available through both iTunes and Google Play by searching Conduit Street Podcast. You can also listen on our Conduit Street blog with a recap and link to the podcast.

Listen here:

Learn more about MACo’s 2017 Winter Conference:

Auditors, Inspectors General Receiving Less Love In State Budgets

States have significantly fewer auditors and inspectors general on payrolls than before the Great Recession, reports Governing

Governing identified an aggregate decline in filled staff positions reported by the National Association of State Auditors, Comptrollers and Treasurers of 7 percent over the decade ending in fiscal 2017. Thirty of 47 agencies reported that their staff was smaller than in 2007.

Those left have seen their budgets dwindle. From their coverage:

At a time when governments are trying to get a better grip on their finances, many states have cut funds for auditing and oversight. Such positions were sometimes among the first casualties in the aftermath of the recession. “I find it interesting that there is this nationwide trend of cutting back on the independent watchdog’s budget,” says Pennsylvania Auditor General Eugene DePasquale. “I’ve yet to find a taxpayer or a legislator who doesn’t want less waste, fraud and abuse in state government.”

Closer to home, the U.S. Senate Committee on Homeland Security and Governmental Affairs just wrote WMATA General Manager Paul J. Wiedefeld a letter suggesting that “the transit agency’s inspector general lacks the necessary independence to perform its oversight duties and keep the public informed of the results,” according to The Washington PostThe Committee requests a briefing from Wiedefeld on how the authority “oversees its own overseer.”

Delegate Marc Korman from Montgomery County tweeted thoughts on funding for WMATA’s inspector general:

DLS: State Workforce Understaffed

Department of Legislative Services (DLS) long-time analyst David Juppe had previously opined that State budget cuts to personnel have adversely impacted State hiring and retention. Now, he’s studying the issue and so far, it appears he’s right.

At the Spending Affordability Committee briefing on Tuesday, Juppe testified that the executive branch has abolished nearly 8,000 positions since 2002, leaving it with less than 50,000. Additionally, the State is understaffed by 1,300 positions, in addition to about 1,200 unfilled vacant positions.

From Fox 45:

[Juppe] says the bulk of the shortages are in the corrections department and the Department of Juvenile Services, as well as the health department. There also are shortages in the Maryland Department of the Environment, state police and the public defender’s office.

He hopes to have a study complete at the end of the year in time for the legislative session.

The analysis provided on Tuesday is available here.

Spending Affordability: Deschenaux’s Final Show

The Spending Affordability Committee (SAC) received its final briefing from the Department of Legislative Services (DLS) Executive Director Warren Deschenaux on Tuesday, November 14.

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Warren Deschenaux, courtesy DLS’ new website

Capital Program 

Earlier this year, the Capital Debt Affordability Committee (CDAC) recommended an annual $995 million GO bond authorization level – the same level as the previous three years. The CDAC’s 2017 recommendation does not include an annual inflation adjustment, despite the fact that beginning in early calendar 2016 and through the first nine months of calendar 2017, construction inflation has risen significantly.

DLS indicated that the State’s capital commitments made in the 2017 session exceed the levels of GO bonds currently programmed in the 2017 CIP and recommended by CDAC.

The 2016 SAC recommendation, recognizing the need to address the increasing reliance on general funds for debt service, established a limit on new GO bond authorizations that increased by 1% on a year-over-year basis – less conservative than CDAC’s approach.

There is a $500 million difference between what CDAC has recommended, and what SAC has recommended over the last several years. SAC recommended $1.65 billion last year, and last year, the legislative authorization followed the SAC recommendation.

Debt Service

Now that we have debt, we have to pay for it.

– Warren Deschenaux.

Generally, the State has been using more and more general fund revenues for general fund debt service appropriations since 2013. From fiscal 2004 to 2013, general funds were appropriated for debt service costs only once. This was mainly because GO bonds were selling at substantial premiums; property values increased in excess of 10 percent in some fiscal years, resulting in additional State property tax revenue; and the State property tax rate was increased from $0.084 per $100 of assessable base to $0.132 in fiscal 2004, and then reduced to $0.112 in fiscal 2007.

The Annuity Bond Fund no longer generates sufficient revenues to support all GO bond debt service costs, requiring use of general funds for supplementation.

Provisions in the Federal Tax Plan That Affect State Debt

The biggest issue in the Federal tax plan impacting the State budget is the potential termination of private activity bonds (PABs). Each state gets an allocation for PABs. In Maryland, these bonds are used for housing development programs, student loans, and financing the Purple Line – as much as $300-350 million in some years. The Maryland Department of Housing and Community Development has said that elimination of PABs would significantly impact their programming.

The bill also proposes repeal of tax credit bonds, including Qualified Zone Academy Bonds and Qualified Energy Conservation Bonds. Since fiscal 2001, the State has issued $204 million in federally subsidized bonds, of which $166 million are tax credit
bonds. DLS estimates that tax credit bonds have reduced State debt service costs by $56 million.

Finally, the bill proposed the repeal of advanced refunding bonds, which provide the opportunity to refinance at a lower interest rates before bonds are callable, if interest rates decline. DLS reported that Maryland has saved $300 million that is attributable to advanced refunding.

The Bottom line: if PABs go away, our CIP will have to look very different.

– Warren Deschenaux.

House Speaker Busch asked what percentage of GO bonds fund hospitals, higher education and K-12 education projects, and learned that about 80 percent do, not including bonds repaid with special funds.

Transportation Trust Fund Forecast

Unlike last year, this year’s draft forecast by the Maryland Department of Transportation (MDOT) does not include future capital funds set aside for highway user revenue restoration. Of course, the General Assembly prevented MDOT from doing just that through budget language passed last session.

Like last year, however, MDOT and DLS disagree on their Transportation Trust Fund (TTF) projections, with DLS planning more conservatively.

DLS assumes that transportation taxes and fees generate $167 million less in revenues over the five-year forecast period than MDOT assumes. In addition, MDOT assumes a 2.4 percent increase for operating expenses, whereas DLS assumes a 5 percent increase. According to DLS, MDOT’s forecast could potentially result in $1.1 billion in planned debt that MDOT will not be able to issue, because it will not be able to cover the debt service.

House Appropriations Chair McIntosh asked whether MDOT’s reported decrease in expenditures associated with the Total Maximum Daily Load program resulted in a reduced program, or “counties picking up the costs.” DLS told her that was not the case.

State Personnel

Since fiscal 2002 the Executive Branch, excluding higher education, has abolished
almost 7,700 positions. DLS identified a need for nearly 1,300 additional authorized positions in addition to the need to fill approximately 1,200 existing positions.  Cost containment hiring freezes, limited employee compensation, and uncompetitive salary levels impede the State’s ability to attract and retain employees, according to the DLS analysis. Despite ranking fifth in personal income, Maryland state salaries ranked twenty-ninth out of the United States. According to the analysis,

Many of the understaffed areas have very high vacancy rates currently. Some of the
understaffing reflects current practices deviating from statute (e.g., State Department of Assessments and Taxation).

Responding to a question from House Speaker Busch, Deschenaux indicated that the State has 258 additional vacancies in state law enforcement over last year – which translates into higher overtime costs, stress on existing personnel and arguably an adverse impact on state prison conditions.

Warren Deschenaux’s last day is November 30 – after which time, he told the SAC,

all will be safe.

The Conduit Street Podcast Is Back!

After a brief hiatus, the Conduit Street Podcast is back! In this episode, Kevin Kinnally and Michael Sanderson discuss new developments in state and local education funding, federal tax reform, and Maryland’s state fiscal picture.

MACo has made the podcast available through iTunes by searching Conduit Street Podcast. You can also listen on our Conduit Street blog with a recap and link to the podcast.

Listen here: