Bill Summary – FastDemocracy

HB 310
                                  Department of Legislative Services
                                             Maryland General Assembly
                                                   2021 Session
                                         FISCAL AND POLICY NOTE
                                            Third Reader - Revised
House Bill 310                                  (Delegate Lierman)
Appropriations                                                                                           Budget and Taxation
                                     Maryland Arts Capital Grant Program
This bill establishes the Maryland Arts Capital Grant Program. The Maryland State Arts
Council (MSAC) must administer the program and hire at least one full-time coordinator
for the program. From fiscal 2024 through 2029, the Governor must include $3.0 million
in the State operating or capital budget for the program. The council must award the total
amount each year, subject to specified requirements. The bill takes effect July 1, 2021.
                                                      Fiscal Summary
State Effect: No effect in FY 2022 or 2023. Overall general fund expenditures increase
by $3.1 million annually from FY 2024 through 2029, under the assumptions discussed
below. State revenues and expenditures increase beginning as early as FY 2024 to the
extent that eligible State entities receive and use grants under the program (not shown
below). This bill establishes a mandated appropriation for FY 2024 through 2029.
    ($ in millions)               FY 2022               FY 2023               FY 2024                FY 2025               FY 2026
   Revenues                                 $0                    $0                      $0                    $0                    $0
   GF Expenditure                             0                     0                    0.1                   0.1                   0.1
   PAYGO GF exp                               0                     0                    3.0                   3.0                   3.0
   Net Effect                              $0.0                  $0.0                 ($3.1)                ($3.1)                ($3.1)
Note:() = decrease; GF = general funds; FF = federal funds; SF = special funds; - = indeterminate increase; (-) = indeterminate decrease
Local Effect: Local government revenues and expenditures increase beginning as early as
FY 2024 to the extent that eligible local entities receive and use grants under the program.
Small Business Effect: None.
                                         Analysis
Bill Summary: MSAC must provide $3.0 million in grants annually from fiscal 2024
through 2029 to eligible recipients, which are organizations that have operating budgets of
less than $3.0 million and either (1) participate in MSAC’s Grants for Organizations
Program or Community Arts Development Program or (2) are open to the public and
provide cultural education or experiences. A grant may be awarded for the acquisition of,
expansion of, renovation of, or major repairs to a facility or other infrastructure that is
operated by an eligible recipient. No more than 15% of funds may be used for operating
expenses. For any fiscal year, an organization may not receive a grant of more than
$1.0 million for a single project.
MSAC, in consultation with the Department of Housing and Community Development
(DHCD) and the Department of Commerce, must establish a competitive application
process for the grants. The application must contain specified information, such as the
project plan, full budget, and a letter of support from the local governing body. Commerce
must establish, by regulation, a quantitative system to evaluate each application that takes
into account specified information, including the capacity of the applicant or partners of
the applicant to complete the project and leverage non-State funding.
MSAC and a grant recipient must execute a program agreement with which the grant
recipient must comply. MSAC may exercise any remedy authorized by law if the grant
recipient violates any provision of the agreement or does not meet any requirement
established by the bill.
Coordination with Legislative Bond Initiative Process
The bill expresses legislative intent that, before a legislative bond initiative (LBI) is
submitted on behalf of an organization for a project that is eligible for a grant under the
program established by bill, the organization:
      apply for a program grant;
      receive a letter of support from the executive director of MSAC stating that (1) the
       project is urgent and any funding the organization receives will be spent in the next
       fiscal year and (2) the organization has been awarded a program grant; and
      is authorized by the President of the Senate and the Speaker of the House to request
       an LBI.
Current Law: MSAC is a 17-member State agency established in 1967. The council’s
mission is to encourage and invest in the advancement of the arts for the people of the
State, which the council accomplishes largely through grants to arts organizations and local
arts agencies. The council also makes grants to enhance the availability of artists in public
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schools, further the creative work of individual artists, and support the preservation of folk
and traditional arts.
Legislative Bond Initiatives
Unlike the operating budget, the General Assembly has the power to modify the capital
budget bill in any manner since it is a supplementary appropriation bill. The projects
proposed by the Governor may be deleted, the amounts allocated for specific purposes of
a project may be increased or decreased, or the General Assembly may add specific projects
and dollar amounts. Since the 2001 session, the General Assembly has used this power to
amend LBI projects into the annual capital budget bill instead of passing individual bond
authorization bills.
State Fiscal Effect: The bill requires that $3.0 million be provided to the Maryland Arts
Capital Grant Program from fiscal 2024 through 2029 in the State operating or capital
budget. This analysis assumes that funding is provided in the operating budget; to the extent
that funds are provided in the capital budget instead, overall State expenditures are not
affected beyond Commerce’s staffing costs, but $3.0 million annually is reallocated from
other capital projects.
The bill requires $3.0 million to be awarded under the program each year and MSAC to
hire at least one full-time coordinator to administer the program. Therefore, additional
general funds are needed to pay for the required coordinator.
Accordingly, general fund expenditures increase in total by $3,111,199 in fiscal 2024,
which accounts for a delayed implementation date of July 1, 2023, consistent with the
timing of the bill’s mandated appropriation and the grant awards being tied to that mandate.
The majority of that amount each year, $3.0 million, is considered general fund
pay-as-you-go (PAYGO). This estimate reflects the cost of hiring one program coordinator
to administer all aspects of the program; the coordinator is assumed to be a regular position
rather than a contractual position since the program extends beyond five years. The
estimate includes a salary, fringe benefits, one-time start-up costs, travel costs, and ongoing
operating expenses.
                 Position                                                 1.0
                 Salary and Fringe Benefits                         $100,454
                 PAYGO Grants                                      3,000,000
                 Other Operating Expenses                             10,745
                 Total FY 2024 State Expenditures                 $3,111,199
To the extent that funding is provided in fiscal 2022 or 2023, it is discretionary and the
coordinator must be hired sooner. Future year expenditures reflect a full salary with annual
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increases and employee turnover and ongoing operating expenses, in addition to
$3.0 million in PAYGO grants issued annually through fiscal 2029. DHCD and Commerce
can likely consult with MSAC as needed with existing budgeted resources, particularly if
the requirement largely involves information sharing. To the extent that assistance involves
significant and ongoing responsibilities, those agencies may require additional staff.
Grant recipients under MSAC’s Grants for Organizations and Community Arts programs
include nonprofit entities and units of State and local governments. State revenues and
expenditures increase beginning as early as fiscal 2024 to the extent that eligible State
entities receive and use grants under the program. The amount, if any, cannot be reliably
estimated at this time.
The bill’s requirements as they relate to LBIs do not affect overall State finances.
Local Fiscal Effect: Local government revenues and expenditures increase beginning as
early as fiscal 2024 to the extent that eligible local entities receive and use grants under the
program. The amount, if any, cannot be reliably estimated at this time.
                                 Additional Information
Prior Introductions: SB 287 of 2020, a similar bill, passed the Senate and was referred
to the House Appropriations Committee, but no further action was taken. HB 127, its
cross file, received a hearing from the House Appropriations Committee, but no further
action was taken. HB 1391 of 2019, a similar bill, received a hearing from the House
Appropriations Committee, but no further action was taken.
Designated Cross File: SB 323 (Senator Elfreth, et al.) - Budget and Taxation.
Information Source(s): Department of Commerce; Department of Housing and
Community Development; Maryland Association of Counties; Maryland Municipal
League; Department of Legislative Services
Fiscal Note History:       First Reader - January 11, 2021
an/vlg                     Third Reader - April 7, 2021
                                  Revised - Amendment(s) - April 7, 2021
Analysis by: Stephen M. Ross                              Direct Inquiries to:
                                                          (410) 946-5510
                                                          (301) 970-5510
HB 310/ Page 4
Statutes affected: 
Text - First - Maryland Arts Capital Grant Program: 4-514 Economic Development
Text - Third - Maryland Arts Capital Grant Program: 4-514 Economic Development