Conduit Street Podcast: On the Road with MACo, “Staggering” Price of Pre-K, & Primary Election Roundup

On the latest episode of the Conduit Street Podcast, Kevin Kinnally and Michael Sanderson discuss MACo’s odyssey across Maryland, update the “too close to call” county primary races, and explore the potential implications of the Kirwan Commission’s staggering cost estimates for expanding high-quality, full-day pre-K in Maryland.

Listen here:

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

You can listen to previous episodes of the Conduit Street Podcast on our website.

Useful Links

Previous Conduit Street Coverage: Expanding Pre-K Comes with “Staggering” Price Tag

Previous Conduit Street Coverage: Some County Primary Races Still Too Close to Call (Updated)

Feds Must Show Effects of Unfunded Mandates If This Bill Passes Congress

The House of Representatives has passed the Unfunded Mandates Information and Transparency Act (UMITA), but the Senate has yet to act. The National Association of Counties supports the legislation.

The National Association of Counties is urging US Senate action on legislation recently passed by the US House of Representatives that would increase transparency on federal unfunded mandates and their effect on State and County governments.

From NACo:

UMITA sets a variety of guidelines to further require federal agencies to analyze the effects of federal regulations on state and local governments. First, it would set specific standards for federal agency consultation with state and local governments when that agency is considering a new rule or regulation. UMITA would also require federal agencies to include consultation activities with state and local governments in annual compliance statements. Additionally, it allows the chair or ranking member of any standing or select congressional committee leadership to request a “lookback” of regulations to evaluate the financial impact of federal regulations.

According  to NACo, the U.S. Senate has not taken up the companion version of the UMITA bill. NACo encourages counties to ask their senators to support this legislation or similar bills.

For more information, see House passes bill enhancing transparency and coordination with local governments on unfunded mandates from the NACo blog.

The MACo Summer Conference will feature a federal policy update from Maryland’s US Senator Ben Cardin on Friday, August 17, 2018; 10:30 am – 11:30 am. In a town hall setting, Senator Cardin will give an update on legislation in the 115th Congress and speak with county elected officials about their top priorities.

Senator Cardin was first elected to the U.S. Senate in 2006. He is a senior member of the Environment & Public Works Committee and Small Business & Entrepreneurship Committee and serves on the Senate Finance Committee.


Learn more about MACo’s Summer Conference:


Single-payer Health Care Carries Hefty Price Tag

The Department of Legislative Services (DLS) estimates that State-sponsored health care could cost the State’s general fund as much as $24 billion annually, according to The Baltimore Sun. For perspective, the State’s general operating budget is $44 billion.

The report, which at this time is not available online, has sparked a firestorm between gubernatorial candidates Ben Jealous and incumbent Governor Larry Hogan. Jealous contends that the analysis is inaccurate, or at least premature, according to the Sun. Meanwhile, Hogan’s campaign spokesperson called Jealous’ plan for State-sponsored health care “dangerously irresponsible, unaffordable and unworkable.”

National Nurses United, a union supporting Jealous, estimates that a single-payer system would save the average resident about 10.5 percent a year. It also would provide coverage for nearly 400,000 state residents who currently go without health insurance.

On the other hand, Gene M. Ransom III, CEO of the Maryland State Medical Society – which represents Maryland doctors – told The Sun that

…. he worries about the disruption caused by a shift toward a single-payer system. He thinks it will cost much more than the state analysts say.

“I have a small percentage of doctors who really want to do single-payer,” he said. “I have more who don’t. This would be a major, major change. I’m really worried about these practical aspects.”

Such a change would inevitably result in a change to the State’s tax scheme to pay for it – perhaps either higher sales taxes, a new payroll tax, or fees charged for the service – or some combination of a variety of menu items.

Read the article here.

Hear Jealous and Hogan directly on issues like health care reform at the MACo Summer Conference Gubernatorial Candidates Forum, on Saturday morning, August 18 at 11:30 a.m.

The 2018 MACo Summer Conference will be held August 15-18 at the Roland Powell Convention Center in Ocean City, Maryland. This year’s theme is “Water, Water Everywhere.”

Learn more about MACo’s Summer Conference:


DLS: What Our Last Session Costs Us

Legislation passed this year could end up costing the State up to $808.8 million by fiscal 2023, according to a new report by the Department of Legislative Services (DLS).

Legislation passed during the 2018 session (excluding the operating and capital budget bills) is anticipated to result in a net decrease in general fund revenues by $319.7 million. General fund expenditures are anticipated to decrease by $184.6 million in fiscal 2019, mitigating the effects of the decreased revenue stream and resulting in a net negative impact of $135.1 million.

Interestingly, the report features a section on the costs of new State mandates on local governments. DLS counts 22 new mandates on local governments as a result of the 2018 legislative session. A “mandate” is defined as “a directive in a bill requiring a local government unit to perform a task or assume a responsibility that has a discernible fiscal impact on the local government unit[.]”

The report also lists all bills that passed which may affect local government revenues, all bills impacting local government expenditures,  and whether those bills assert mandates, or not.

Interested in revenue forecasting? Find out how revenue estimating experts at the State and County levels “predict the future” at the MACo Summer Conference session, “Navigating Murky Waters: Predicting Unpredictable Revenue Streams.

MACo’s 2018 Summer Conference will be held Aug. 15-18 at the Roland Powell Convention Center, in Ocean City, MD.

Learn more about MACo’s Summer Conference:

State Revs Up Corrections Recruitment Efforts

Acknowledging a years-long problem with understaffing at state correctional facilities, the State Division of Corrections plans to step up its recruitment efforts.

The Division continues to hold job fairs and testing all around the state, and most recently announced that it plans to hire a private recruiting firm to fill vacancies.

Herald-Mail highlights frustration from unions, correctional officers, and state elected officials relating to the staffing shortage:

“I don’t understand why we’re having this conversation for three years in a row,” Patrick Moran, president of Council 3 of the American Federation of State, County and Municipal Employees, told Herald-Mail Media on Thursday. …

“What I’m getting is there’s frustration from the correctional officers with the administration and the union,” Del. Mike McKay, R-Washington/Allegany, said. “They feel their concerns are not getting to where they need to go.

“The staffing shortage is unacceptable,” he added.

Last session, the General Assembly included a number of provisions in the budget related to Corrections’ understaffing.

White House Releases Government Reform Proposal

On Thursday, the White House released a 132-page report detailing specific opportunities for reform of the Federal government. The comprehensive report lists 32 recommendations for organizational realignments, reassignments, consolidations, privatization of certain government services, disposition of government-owned assets, technology upgrades, customer service improvements, process reform, and more.

The report contends to address the federal government’s inefficiencies. It does not make recommendations for reducing the federal workforce – another goal put forth by the Administration.

The federal government is bloated, opaque, bureaucratic and inefficient.

– Mick Mulvaney, Director, White House Office of Management and Budget

silhouettes-81830_1920The report, “Delivering Government Solutions in the 21st Century: Reform Plan and Reorganization Recommendations,”  comes out as most of the country focuses on immigration policy and reform. In fact, it appears few news outlets have picked up the report release at all.

But, Route Fifty did – with focus given to potential affects on local governments

One noteworthy change would shift the $3 billion community development block grant program, or CDBG, from the Department of Housing and Urban Development to a new Bureau of Economic Growth under the Department of Commerce. …

The reorganization plan would also move the federal supplemental nutrition assistance program (SNAP), formerly known as food stamps, out of the Department of Agriculture and into the Department of Health and Human Services, which would then be renamed the Department of Health and Public Welfare.

Other noteworthy recommendations include:

  • Merging the Departments of Education and Labor into one Department of Education and the Workforce
  • Moving the Army Corps of Engineers (Corps) Civil Works out of the Department of Defense (DOD) to the Department of Transportation (DOT) and Department of the Interior (DOI)
  • Reorganizing the Department of Agriculture (USDA)’s Food Safety and Inspection
    Service and the food safety functions of the Department of Health and Human Services (HHS) Food and Drug Administration (FDA) into a single agency within USDA
  • Merging the Department of Commerce’s (Commerce) National Marine Fisheries Service with DOI’s Fish and Wildlife Service, centralizing dam permit review
  • Selling specific transmission assets owned by the Department of Energy (DOE), and generally, focus on disposing unneeded or undesired federal real estate
  • Either wholly restructure the postal system or privatize it altogether
  • Reorganize the Department of Transportation
  • Limit federal support for home purchasing:

….ending the conservatorship of Fannie Mae and Freddie Mac, reducing their role in the housing market, and providing an explicit, limited Federal backstop that is on-budget and apart from the Federal support for low- and moderate-income homebuyers.

Read the full report here.


SCOTUS Opens Door To State Taxation of Internet, “Remote” Sales

In a widely anticipated decision, the US Supreme Court has struck down a longstanding rule preventing states from imposing their sales taxes on sellers who do not have a physical presence in that state.

Today’s decision in the case South Dakota v. Wayfair, Inc. represents a stark turnaround from longstanding federal policy precluding state enforcement of sales taxes on sellers without a “nexus” (typically a physical presence such as a retail location) within that state. The decision, long sought by state and local governments, could promote far broader application of sales taxes, and remove a lingering tax inequity between local and remote sales.

Maryland does not authorize broad-based local sales taxes (like many other states do), so the local effects for county governments are likely to be far lesser than elsewhere. However, the potential effects on the state fiscal posture are significant. As the state grapples with a forecasted structural deficit, and anticipates substantial new education spending commitments, a broadened application of sales tax collection responsibilities by non-Maryland retailers could play a role in state fiscal planning.

Like in many states, Maryland’s sales tax is technically written as a “Sales and Use Tax,” meaning it obliges tax payment not only on taxable purchases within the state, but also on taxable items purchased elsewhere but brought into Maryland for use. The enforcement of those provisions, especially upon individuals, is understandably troublesome. Some Marylanders may receive notification from the Office of the Comptroller indicating a tax obligation after purchasing out-of-state furniture, for example, independent of whether the retailer collected sales tax. Taxpayers are able, and indeed obligated, to directly remit the “use tax” on such purchases. But implementation on smaller cross-border sales is administratively impossible. Efficient sales tax administration inherently relies on the seller’s willingness to calculate, collect, and remit the taxes due.

A more complex matter arises with online retailers, whose physical presence may be very limited geographically to one site, but who solicit and conduct business in Maryland and other states with similar tax laws. For decades, under previous court holdings, states could not impose any collection/remittance obligation onto such retailers, unless there was a physical tie to the collecting state. In today’s Wayfair ruling, the courts overturned that principle, and seemingly opened the doors for states, through legislation and/or administration, to seek broader application and collection of existing taxes.

In a joint statement, numerous local government organizations comments on the ruling:

State and local organizations applaud the U.S. Supreme Court’s decision recognizing that the 1992 Quill ruling put Main Street retailers at a competitive disadvantage to remote sellers and the efforts by states to simplify the sales tax collection process and giving those states remote sales tax collection authority. For 26 years Congress has failed to act and through the efforts of Justice Anthony Kennedy, the federal government has finally recognized the changing nature of commerce and state efforts to simplify the collection process.

For more background on the Wayfair case:

The SCOTOSblog site with links to arguments, filings, and other resources

The NACo coverage of April oral arguments on the Wayfair case

Treasurer of Maryland to Address County Elected Officials

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.

Learn more about MACo’s Summer Conference:

State Budget Wrap-Ups Benefit from Economic Tailwind

Many state budgets are closing out their fiscal year better than projected, driven by a stable economy and overflow effects of federal income tax changes.

Governing reports that state budgets — many of whom end their fiscal year in June – are exceeding cautious projections. They cite a somewhat better-than-forecasted economy, and state-level effects of income tax reforms as major drivers of this effect. From the article:

Much of the better-than-expected performance is being credited to a continually improving economy and booming stock market. Corporate income tax revenues posted a more than 3 percent increase after two straight years of declines.

States also saw a spike in personal income tax collections as many high-income taxpayers rushed to take advantage of expiring federal tax breaks under the December overhaul. “States are still working to untangle and better understand these trends and the impact of the federal tax law on their revenues,” the NASBO survey reported.

The article cites a survey by the National Association of State Budget Officers, reviewing the fiscal posture of each state’s budget.

Maryland has not released indications of its expected close-out, but did place restrictions on a $200 million segment of anticipated income tax returns as a set-aside for future education spending, in anticipation of some state-level effect of the federal income tax reforms.

Read the NASBO Spring 2018 Fiscal Survey of the States online

Read the Governing article online

Harford Receives Nearly $1M for Waterway Improvement Projects

Harford County was recently awarded $957,250 in state funding to improve waterways in Abingdon and Joppatown. The funding is available for FY19, which begins on July 1, 2018.

According to a press release:

Harford County will manage the following projects and provide matching funds where noted below:

  • Otter Point Creek – Bush River, Abingdon: $750,000 for maintenance dredging
  • Otter Point Creek Boat Launch, Abingdon: $99,000 for repairs to the existing finger piers, boat ramp and adjacent parking lot at Otter Point Creek
  • West Taylors Creek, Joppa: $63,250 plus $63,250 in matching county funding for maintenance dredging of the Taylors Creek channel west of the Mariner Point Park boat ramp
  • Rumsey Island and Taylors Creek Outfall, Joppatowne: $45,000 plus $45,000 in matching county funding for maintenance dredging of the Rumsey Island/Taylors Creek channel to restore access.

“I would like to thank Gov. Hogan and the Maryland General Assembly for their support of these worthy projects,” Harford County Executive Barry Glassman said. “This funding will help us keep boaters safe, promote jobs, and enhance our beautiful waterways for everyone to enjoy.”

Read the full press release for more information.