February 9, 2010

Dear Constituents,

Another week in Annapolis proved to be less then exciting and exposing more of our fiscal problems to come.

GENERAL OBLIGATION BONDS

Bond bills are introduced each year that aim to support specific projects in the State. These capital projects must serve a wide spectrum of public purposes. The bonds that are issued are General Obligations bonds and are sold with a single coupon rate of 5% for 15 years. The debt service for the General Obligations bonds are funded almost entirely through property taxes. In Appendix F of the 2010 Budget Highlights has a worrisome note that the “Property tax collections are not expected to keep up with the debt service payments, thus requiring additional general funds effective in Fiscal Year 2011.” If the State of Maryland accepts more Bond Bills and increases our General Obligations, the funding of the debt service may increase property taxes. This year, Fiscal Year 2012, the O’Malley administration has provided $15,000,000 in the budget for Bond Bills.

Cutting back on grants and bonds when the State is facing debt service requirements that will out-pace property tax revenues is a sensible action to take.

UNEMPLOYMENT INSURANCE

In 2009 the General Assembly passed an expansion of the Unemployment Benefits, HB 740 which will take effect in October 1, 2010. This expansion has caused many businesses to realize up to 300% increase in their bi monthly payments. Unemployment benefits are paid by the employer in the form of unemployment taxes, any increase in benefits necessitates an increase in taxes on business.

House Bill 740 expanded the Unemployment benefits to part time workers. The Department of Legislative Services Issue Papers, 2010 Legislative Session, states “Maryland employers will pay from the highest tax rate table for calendar 2010 due to the low balance of the Unemployment Insurance Trust Fund.” When the funds are fully depleted, states may borrow from the Federal Government’s unemployment trust fund. The amount borrowed should be paid back within one year in order to prevent interest from accruing. Under the Obama plan states were required to amend their UI statute in-order to qualify for additional funds. These changes would include: (1) making part time workers eligible for benefits; (2) providing coverage to individuals who separate from work for compelling family reasons (illness of a family member, safety reasons due to domestic violence, change in spouse’s employment location); (3) providing Workforce Investment Act training benefits for at least 26 weeks in high demand industries; or (4) adding a $15 weekly allowance to UI payments for dependents.
Read the rest of this entry »

January 27, 2010

Dear Constituents,

I wanted to keep you updated on some of the topics as well as House/Senate Bills that were discussed this week.  I value your input and please continue to express your opinions on issues that are important to you.  Below are some of the “hot” issues for this week.

The Articulated Instruction Module Program (AIM)

On January 21^st the Baltimore County Delegation held a joint hearing regarding the AIM program.  It was the first time in sixteen years that both the House and Senate members met to discuss pressing issues affecting Baltimore County. The Aim program has been controversial. Teachers, PTA representatives and the Teachers Union have expressed their concerns about the amount of collected data required each quarter per student on top of what is currently required by the No Child Left Behind Act, Middle School Assessment (MSA) and High School Assessments (HSA).  It was stated that the data collection under this program would be an added layered on top of the time to satisfy the State’s requirements.  Superintendent Dr. Hairston of the Baltimore County School System scheduled an appearance before the Joint Delegation to discuss the program; unfortunately, Dr. Hairston could not attend the meeting because of physical therapy. The Baltimore County Delegation noted that the Superintendent could have rescheduled his appointment and been available to appear before this Delegation.   Mr. Ed Novak, Manager, Government & External Relations represented Dr. Hairston.  The program details were not known by Mr. Novak who was questioned vigorously by the Delegation.

Some points highlighted during the meeting are as follows:

The Teachers Union indicated that meetings were closed to its representative, in light of the open meetings law.

The PTA’s were highly concerned that classroom instruction would be limited due to the data collected and reported in a 12 page report card with 100 objectives per course. For a teacher with 100 students, the input per student is approximately 1.5 hours; it would take an additional 150 hours a year.

Teachers mentioned the potential of an ethic violation.  Dr. Dezmon, Assistant to the Superintendent, copyrighted this plan while working for Dr. Hairston on Baltimore County time.

Dr. Dezmon’s AIM program could benefit her directly with the profits of selling this program. The Dezmon Educational Strategies, LLC, has been copyrighted 6 times.

The AIM Program’s original purpose was to evaluate low performing students as a pilot program, but an emergency superintendent’s bulletin mandating the new program was issued December 18, 2009 for all Baltimore County Students.

The hearing was well attended but very disappointing because Dr. Hairston was not there to answer questions. It has been a very controversial issue in our school system because of the cumbersome, time consuming and redundant nature of the per student data collection contained in this AIM program.  By the end of the week Dr. Hairston said that he would discontinue the mandatory use of AIM.  A committee continues to work on issues raised by parents, teachers, and lawmakers who have been highly critical of the program.

Read the rest of this entry »

AAA Bond Rating

Maryland State Treasurer Nancy K. Kopp announced last week that all three major bond rating agencies again have affirmed the State’s strong Triple AAA bond rating in preparation for the sale of $400 million of General Obligation bonds.

Maryland is one of only seven states to be awarded the AAA rating, the highest possible rating, from all three major bond rating agencies: Fitch Ratings, Moody’s Investors Service and Standard & Poor’s. The rating means that the State can borrow money to undertake new critical building projects such as public schools, hospitals and prisons while paying relatively low interest rates and saving taxpayers millions of dollars.

The Maryland Board of Public Works, comprising Governor Martin O’Malley, Comptroller Peter Franchot and Treasurer Kopp, completed the successful sale of $400 million of General Obligation bonds. The bonds sold at an interest rate of 4.14%. The winning bidder was Merrill Lynch & Company. The sale occurred during the bi-weekly meeting of the State’s Board of Public Works.

Proceeds from the capital improvement bonds will cover the acquisition and construction of State facilities; public schools; community colleges; jails and correctional facilities, as well as grants to local governments and non-profit institutions for hospitals, cultural and other projects.

Computer Service Tax

Thank you to all that attended the rally on Wednesday against the 6% tax on computer services. This was a law that was unfairly placed on computer services during the Special Session. I hope that the majority of the General Assembly realizes the potential harm that this tax will do. Remember the move of Maryland National Bank’s credit card company’s MBNA that moved to Delaware because of the tax burden? I hope that the Assembly has more wisdom than greed in understanding the potential loss of computer service business in our state.

Read the rest of this entry »