Bill Summary – FastDemocracy

SB 803
                                  Department of Legislative Services
                                             Maryland General Assembly
                                                   2021 Session
                                         FISCAL AND POLICY NOTE
                                            Third Reader - Revised
Senate Bill 803                                 (Senators Edwards and Corderman)
Budget and Taxation                                                                                            Ways and Means
        Economic Development – Western Maryland Economic Future Investment
                         Board and Fund – Establishment
This bill establishes the Western Maryland Economic Future Investment program, board,
and fund. The Tri-County Council for Western Maryland must provide staff for the board
and administer the fund. The purpose of the fund is to provide grants for capital
infrastructure projects and business development projects that improve economic
conditions in the region, and it may only be used for that purpose and for administrative
expenses. A (council) member county or local entity within a member county may apply
for grant funding, as specified. From fiscal 2023 through 2027, the Governor must annually
appropriate at least $7.5 million in the operating or capital budget to the fund, although the
bill specifies the intent of the General Assembly that the annual appropriation be
$15.0 million. The bill terminates September 30, 2026.
                                                      Fiscal Summary
State Effect: No effect in FY 2022. General fund expenditures increase by at least
$7.5 million annually from FY 2023 through 2027, under the assumptions discussed below.
Special fund revenues and expenditures increase correspondingly. This bill establishes a
mandated appropriation from FY 2023 through 2027.
    ($ in millions)               FY 2022               FY 2023               FY 2024                FY 2025               FY 2026
   SF Revenue                               $0                 $7.5                  $7.5                   $7.5                 $7.5
   GF Expenditure                           $0                 $7.5                  $7.5                   $7.5                 $7.5
   SF Expenditure                           $0                 $7.5                  $7.5                   $7.5                 $7.5
   Net Effect                              $0.0              ($7.5)                ($7.5)                 ($7.5)               ($7.5)
Note:() = decrease; GF = general funds; FF = federal funds; SF = special funds; - = indeterminate increase; (-) = indeterminate decrease
Local Effect: Local revenues and expenditures for Allegany, Garrett, and Washington
counties increase significantly from FY 2023 through 2027.
Small Business Effect: Meaningful.
                                           Analysis
Bill Summary: The Western Maryland Economic Future Investment Board is established,
consisting largely of local government and economic development representatives, plus
one representative from the Department of Commerce, appointed by the Secretary of
Commerce, who must chair the board. A member of the board may not receive
compensation as a member of the board, but is entitled to reimbursement for travel
expenses. The board must adopt regulations to implement the program and meet a related
annual reporting requirement by December 31 each year.
A member county or local entity within a member county may submit a proposal for grant
funding under the program. To qualify, a project must be:
      a capital infrastructure project that (1) is linked to economic development in the
       region, as approved by the board, and (2) receives 20% matching funds from the
       member county where the project is located, another local entity, a private business,
       or a combination thereof;
      a business development project that (1) encourages and promotes downtown
       neighborhood revitalization, small business tourism, or other areas as approved by
       the board and (2) receives 10% matching funds from the member county where the
       project is located, another local entity, a private business, or a combination thereof;
       or
      any other project that the board determines is appropriate to promote economic
       development in the region.
The board must develop criteria to review, evaluate, and rate project proposals for funding
under the program and must distribute funding in accordance with those criteria; however,
the criteria must ensure that the project creates or retains jobs, creates or retains businesses,
increases wages, or creates new State or local tax revenue.
The board must monitor and track the progress of each project that receives grant funding
and, if the board determines that sufficient progress is not being made toward achieving
program requirements, the board may reclaim the awarded grant funds.
The grant funding provided under the program must be used to supplement, and not
supplant, any funds that would otherwise be provided to the board or the member counties.
Current Law: The Tri-County Council for Western Maryland is a 26-member regional
economic development organization representing Allegany, Garrett, and Washington
SB 803/ Page 2
counties. The council is governed by a board of directors, which includes representatives
from both the public and private sectors. There are other analogous councils across the
State.
State Fiscal Effect: The bill requires at least $7.5 million be appropriated to the Western
Maryland Economic Future Investment Fund from fiscal 2023 through 2027 in the State
operating or capital budget. This analysis assumes that the funding is provided in the
operating budget and that the minimum required funding is appropriated (despite the intent
language for $15.0 million in annual funding); to the extent that funds are provided in the
capital budget instead, overall State expenditures are not affected by the mandate, but funds
are reallocated from other capital projects.
Accordingly, general fund expenditures increase by at least $7.5 million annually from
fiscal 2023 through 2027 to meet the required funding mandate. Special fund revenues
increase correspondingly as funds are received and used to pay for administrative expenses
and to provide grants to eligible recipients. Administrative expenses for the council are
unknown at this time, as the council did not respond to multiple requests for information;
however, a significant majority of available funding should be available each year for
grants. Special fund revenues and expenditures may further increase in any year to the
extent that grants are recaptured from nonperforming projects and reallocated. Expenses
for board members are minimal and absorbable within existing budgeted resources, and
Commerce advises that existing staff can chair the board.
Local Fiscal Effect: Member counties may receive direct grant funding under the
program. Therefore, local revenues for Allegany, Garrett, and Washington counties
increase significantly from fiscal 2023 through 2027 from any such grants. Local
expenditures increase correspondingly as grant funds are expended on infrastructure
projects. Additionally, local governments are one of several eligible sources of matching
funds that are generally required under the program, so local expenditures may further
increase to the extent that such matching funds are provided.
Small Business Effect: Small businesses in industries supported by direct infrastructure
and business development spending benefit significantly beginning in fiscal 2023 and
through the completion of the funded projects. Other small businesses in Western Maryland
may benefit from the completed projects as well.
Additional Comments: Chapter 207 of 2020 established the Task Force on the Economic
Future of Western Maryland staffed by Commerce. The task force must study the current
economic conditions of Western Maryland and make recommendations on potential
methods to improve the economies of Allegany, Garrett, and Washington counties. The
bill implements a recommendation made in the task force’s interim report – albeit at a
lower funding level.
SB 803/ Page 3
The Department of Legislative Services notes that the bill’s termination one quarter of the
way through fiscal 2027 could make grant disbursal difficult in that year and preclude a
final reporting requirement.
                               Additional Information
Prior Introductions: None.
Designated Cross File: HB 1144 (Delegate Buckel) - Ways and Means.
Information Source(s): Department of Commerce; Department of Budget and
Management; Garrett County; Department of Legislative Services
Fiscal Note History:      First Reader - February 23, 2021
rh/vlg                    Third Reader - March 31, 2021
                                 Revised - Amendment(s) - March 31, 2021
Analysis by: Stephen M. Ross                           Direct Inquiries to:
                                                       (410) 946-5510
                                                       (301) 970-5510
SB 803/ Page 4
Statutes affected: 
Text - First - Economic Development – Western Maryland Economic Future Investment Board and Fund – Establishment: 13-701 Economic Development, 13-702 Economic Development, 13-734 Economic Development, 13-735 Economic Development, 13-736 Economic Development, 13-737 Economic Development, 13-738 Economic Development, 13-739 Economic Development, 13-740 Economic Development, 13-741 Economic Development, 6-226 State Finance and Procurement
Text - Third - Economic Development – Western Maryland Economic Future Investment Board and Fund – Establishment: 13-701 Economic Development, 13-702 Economic Development, 13-734 Economic Development, 13-735 Economic Development, 13-736 Economic Development, 13-737 Economic Development, 13-738 Economic Development, 13-739 Economic Development, 13-740 Economic Development, 13-741 Economic Development, 6-226 State Finance and Procurement