Part C
State Government

State Agencies, Offices, and Officials

Electronic Government

With electronic information and electronic information technology becoming an integral part of our everyday lives, the General Assembly during the 2000 session enacted three measures to push State agencies into embracing that technology while protecting against unnecessary invasions of privacy.

Internet Access to State Information and Services

Senate Bill 197/House Bill 274 (both passed) require the Secretary of Budget and Management to establish the following time line for agencies in the Executive Branch (except for public institutions of higher education) to make information and services available to the public over the Internet:

• 50 percent of the agencies by the year 2002;

• 65 percent of the agencies by the year 2003; and

• 80 percent of the agencies by the year 2004.

The bills require the Secretary to establish guidelines to implement the provisions and require agencies to develop annual project plans outlining the status of efforts to comply with the time line. The bills also require the Chief of the Office of Information Technology, within the Department of Budget and Management, to review the agency project plans. Finally, the statewide information technology master plan must include standards that assure nonvisual access to the information and services that each Executive Branch agency is required to make available to the public over the Internet.

eMaryland Initiative

Senate Bill 196/House Bill 276 (both passed) establish a CEO Board of Advisors for E-Commerce (CEO Board) and create an eMaryland Application Service Provider Consortium (ASP Consortium) at the University of Maryland College Park to assist in creating the most advanced electronic business environment in the nation and the world. The bills are based on the Internet policy recommendations of the State Information Technology Board.

The CEO Board may not exceed 12 members to be appointed by the Governor with the advice and consent of the Senate. The CEO Board will: (1) advise the Governor on economic development policies and initiatives to advance the promotion, deployment, and use of e-commerce in the State; (2) recommend ways to improve Maryland's position as an international leader in e-commerce; and (3) provide policy guidance to the ASP Consortium.

Overseen by a Management Committee, the ASP Consortium will develop partnerships with the State, universities, federal agencies, and technology companies to:

• develop pilot models for the deployment of Internet-based applications for government and educational institutions, such as procurement, financial, and human resource management applications;

• participate in collaborations to promote the development and testing of ASP technologies;

• provide assistance to small start-up companies wishing to utilize ASP technologies; and

• work with industry and public agencies to develop emerging e-commerce technologies.

The bills also expand the Information Technology Investment Fund to include an ASP account and to provide funding for ASP initiatives.

State Information Technology Board

Senate Bill 198/House Bill 275 (both passed) increase total membership on the State Information Technology Board (ITB) from 25 members to 34 members, to provide more representation from private sector representatives with expertise in information technology or electronic commerce. The bills also expand the duties of the ITB by requiring the ITB to make recommendations concerning the deployment of Internet-based applications and services for State government and educational institutions.

The bills are based on the ITB's Internet Policy Recommendation that it be restructured to allow for greater participation by private sector individuals with expertise in various fields of technology.

Public Records - Privacy Policies and Security

The ITB's Subcommittee on Internet User Privacy also made recommendations on privacy and security issues relating to public records, and those recommendations have been incorporated into Senate Bill 199/House Bill 277 (both passed).

The bills amend the State Public Information Act to prohibit the creation of a personal record by a unit of State or local government unless the need for the record is clearly established. Any personal information in a personal record must be appropriate and relevant to the purposes for which it is created and accurate and current to the extent possible. The personal information must not be obtained by fraudulent means.

Specifically, under the bills, a custodian of personal records in a unit of State government must make an attempt to collect any personal information directly from the individual whom the records reference. In requesting the information, the custodian must specify:

• the purpose for which the information is being collected;

• any specific consequences for failing to provide the information;

• the individual's right to inspect, amend, or correct the record;

• whether the information will be generally available for public inspection; and

• whether the information is to be made available, transferred to, or shared with an entity other than the official custodian.

Each unit of State government must post its privacy policies with regard to the collection of personal information on its Internet web site.

The provisions of Senate Bill 199/House Bill 277 do not apply to the following personal records:

• information relating to criminal law enforcement or the administration of the penal system;

• information contained in investigative materials kept to investigate a specific violation of State law and maintained by a State agency other than a law enforcement agency;

• information contained in public records that are archived in the Maryland Hall of Records; and

• information gathered as part of formal research projects previously reviewed and approved by federally mandated institutional review boards.

The bills also require each unit of State government to include, in its records management program, procedures to ensure the security of its records. The bills encourage local governments, which are not subject to the provisions of the bills, to conform their privacy policies to those in the bills. Finally, the bills specify that the legislation is not to be construed to preempt or supersede the State's medical records confidentiality law.

Social Security Numbers

A related bill, House Bill 37 (passed), scheduled to take effect July 1, 2001, prohibits the State and local governments from including an employee's Social Security number on any kind of identification card. Included in the prohibition are county public school systems, as well as public institutions of higher education. The bill repeals the authority of the Motor Vehicle Association (MVA) to use, include, or encode a driver's Social Security number as an identifying number for a driver's license.

Department of Planning

Senate Bill 204/House Bill 286 (both passed) rename the Office of Planning to be the Department of Planning and designate the agency as a principal department of the Executive Branch of State government. The bills create a Secretary of Planning and make the Secretary the head of the department, reporting directly to the Governor. The bills transfer all of the former powers and duties of the office and its director to the department and its secretary.

The bills state that it is the intent of the General Assembly that there be no increases in the budget of the new department directly attributable to making the office a department in the next fiscal year or in any subsequent fiscal year.

Other State Programs and Agencies

Vehicle Theft Prevention Council and Vehicle Theft Prevention Fund

House Bill 155 (passed) extends the termination date of the Vehicle Theft Prevention Council and Vehicle Theft Prevention Fund of the Department of State Police from July 1, 2000 to July 1, 2003.

The Vehicle Theft Prevention Council and Vehicle Theft Prevention Fund were originally created in 1994. The council has the authority to make grants and awards from the fund for motor vehicle theft intervention programs, establish programs to reduce the vehicle thefts and related crimes, identify priorities for theft prevention strategies and criteria for the council's evaluation of recipients of assistance from the council, and study and propose laws that will further prevent and deter vehicle thefts and related crimes.

Maryland State Arts Council

House Bill 520 (passed) requires the Maryland State Arts Council to publish an annual report. Under current law, it is authorized to publish an annual report but is not required to do so.

Maryland Advisory Council for Individuals with Disabilities

Senate Bill 47 (passed) increases, from 28 to 30, the number of members appointed by the Governor to the Maryland Advisory Council for Individuals with Disabilities. The two new members are to be a representative of the Department of Housing and Community Development and a representative of the nonprofit housing community. The additions recognize that housing issues are of increasing importance to individuals with disabilities who seek independence.

Maryland Veterans Commission

Senate Bill 299/House Bill 518 (both passed) increase the membership of the Maryland Veterans Commission from 27 to 28 members adding a representative of the Maryland Coalition of the Retired Enlisted Association.

Veterans Legislation

In other veterans related legislation, Senate Bill 264/House Bill 111 (both passed) require the Governor to issue a proclamation each year encouraging the citizens of the State to observe a moment of remembrance at 3 p.m. on Memorial Day to commemorate the heroic acts and efforts of Marylanders who have served and died in the United States Armed Forces. The bills are part of a national effort to "reclaim Memorial Day as a sacred day for our fellow Americans who paid the ultimate price by dying for our country" through a National Moment of Remembrance.

Senate Bill 195 (passed) requires that the Governor appropriate $250,000 in the State budget for fiscal 2001 to the Department of Veterans Affairs for donation to the national World War II Memorial Fund. The $250,000 represents $1 for each Maryland resident who served in the armed forces or the Merchant Marine during WWII.

House Bill 34 (passed) alters the compensation of honor guard members in the State militia serving in the burial services of a deceased veteran to provide that the compensation may not be less than the minimum wage plus expenses incurred to participate. Under current law, the compensation is to be 75 percent of one day's basic pay plus expenses incurred.

House Joint Resolution 3 (passed) recognizes the sacrifices of Americans missing and unaccounted for from our nation's wars by declaring the third Friday in September to be "POW/MIA Recognition Day." The resolution recognizes that the families of prisoners of war and of soldiers missing in action are deserving of national recognition, and it supports continued priority efforts to determine the fate of those missing Americans.

Impact of Slavery

The following bills are discussed under Part F, Courts and Civil Proceedings, subpart Human Relations.

Senate Bill 854 (passed) creates an 11-member Commission to Coordinate the Study, Commemoration, and Impact of Slavery's History and Legacy in Maryland.

Senate Joint Resolution 12 (passed) recognizes the contributions of Harriet Tubman and designates March 10 as Harriet Tubman Day in the State.

House Joint Resolution 12 (failed) would have requested the Governor to apologize on behalf of the citizens of Maryland for the State's history of slavery, its long-held silence in the face of slavery, and the atrocities committed under slavery in the State.

Other State Agency Business

A number of other bills passed which will affect the manner in which some State regulatory agencies conduct business.

Notaries Public

Senate Bill 74 (passed) authorizes the issuance of a notary public commission to an individual living outside the State if the state of residence of the individual allows a Maryland resident to serve as a notary public in that state. The bill also authorizes any member of the Senate of Maryland to approve the issuance of a notary public commission, if the applicant resides in a district in which the Senate office is vacant.

In addition, the bill allows the Secretary of State to issue lists of public information from its records, on request, if the Secretary of State approves of the purpose for which the information is requested. The Secretary of State may charge a fee for the list, and may charge a reduced fee for a request by a governmental agency or for nonprofit purposes. The Secretary of State may not provide the information for purposes of telephone solicitation.

Finally, Senate Bill 74 allows the Secretary of State to charge a bad-check fee of not more than $25 for the use of a check with insufficient funds in the payment of fees for the processing of a notarial commission. The Secretary of State also may revoke a commission without public hearing for the payment of fees with a bad check.

Commissioner of Financial Regulation

Senate Bill 830/House Bill 727 (both passed) expand the investigative and enforcement powers of the Commissioner of Financial Regulation beyond those investigative or enforcement powers granted the commissioner under any other law.

The bills also direct the Governor, beginning in fiscal 2001, to appropriate in each fiscal year to the Division of Financial Regulation the monies to fund the positions necessary to implement the new powers authorized under this bill. The bills are discussed in greater detail under the Financial Institutions subpart of Part I, Financial Institutions, Commercial Law, and Corporations.

State Lottery Agency

Senate Bill 78 (passed) authorizes the State Lottery Agency to sell State lottery tickets directly to the public or at a promotional or special event if no licensed agent is available to conduct the sale and the person holding the promotional or special event has authorized the agency to sell the tickets at the event.

Elections

Election Board Responsibilities and Personnel

Counting of Write-In Candidates

A 1989 Fourth Circuit Court of Appeals decision struck the provisions of Maryland law relating to the reporting of the votes cast for write-in candidates. Consistent with this decision, the General Assembly amended the law to strike the fee requirement and to mandate that all write-in votes be reported (See Chapter 90, 1990 Laws of Maryland). In 1992, however, the U. S. Supreme Court declared that the First Amendment does not require that the states permit write-in votes. Subsequently, write-in votes for noncertified candidates were not counted or reported in Maryland until 1998 when a petition was filed with the State Board of Elections requesting write-in votes cast in the 1998 gubernatorial general election to be counted.

Upon advice of counsel and based on the statutory language, the State Board of Elections directed the local boards of canvassers to count the write-in votes for State-filed offices. Manual labor was the only means to accomplish this directive which was characterized by the local boards as both expensive and time consuming. Accordingly, Senate Bill 73 (passed) removes the statutory requirement that the write-in votes for noncertified candidates be counted.

Removal of Deceased Voters from Registries

In a number of jurisdictions, the local board of elections removes the name of a deceased voter from the voter registry upon becoming aware of the death of a voter through an obituary or other reliable report. The Attorney General questioned the use of this practice due to the lack of statutory authority for removing the names of voters from the registry based on any information other than reports required to be provided by local county health officers. Death notices, however, are not available through a local county health officer when a Maryland resident dies out-of-state. House Bill 449 (passed) provides statutory authority for the use of an obituary or other reliable report as a valid notice of death allowing the removal of an individual's name from a voter registry.

Compensation of Local Election Board Employees

Employees of a local board of elections who are not participants in a local county merit system are classified in the skilled service or professional service of the State Personnel Management System. Salaries for the local election board are determined under the State Personnel Management System but are paid by the local jurisdictions. In response to concerns that a more appropriate unit determine the compensation of local election board employees, Senate Bill 647/House Bill 881 (both passed) require the State Board of Elections, upon the recommendation of the State Administrator of Elections, to determine the fixed rate of compensation for employees who are not under the local merit system.

Residency of Election Judges

Senate Bill 843 (passed) alters the residency requirements for election judges. Rather than requiring that a judge be a registered voter who resides in the election district or ward for which the judge is appointed, Senate Bill 843 requires that the judge be a registered voter and resident of the county for which the judge is appointed.

Additionally, Senate Bill 843 modifies the requirements for the appointment of an election judge when a qualified individual cannot be found with reasonable effort. The bill allows the appointment of a registered voter residing anywhere in the State if a qualified individual residing within the specific locality cannot be found.

Campaign Finance - Transfers by Political Action Committees

The State election law imposes a number of requirements on political action committees (PACs) including a requirement that PACs file with the State Board of Elections the name and purpose of the PAC as well as campaign finance reports listing the names of contributors to the PAC and the date and amount of contributions. The name adopted by the PAC may not be used if the intent or effect is to deceive people as to the true nature or character of the committee. Additionally, PACs are prohibited from making more than $6,000 in donations to the treasurer or political committee of a candidate or of another political committee.

To ensure that it is clear when a donation is made by a political action committee, Senate Bill 381 (passed) requires PACs that make transfers to the treasurer or political committee of a candidate to include on the face of a check the official name of the PAC, as filed with the State Elections Board, and the words "Political Action Committee" or the notation "PAC."

Except for the election of certain members for the House of Delegates, Senate Bill 381 also repeals a requirement that in elections for an office representing more than one county, the name of the candidate be identified by the county where the candidate resides. Identification of the county where a candidate resides will continue to be required for the election of members to the House of Delegates in a legislative district that is comprised of two or more counties or parts of counties in which the members elected are required to live in different counties.

Primary Elections in Baltimore City

In November 1999, the voters of Baltimore City amended their city charter to provide for the election of city officials during the presidential election year rather than the year following the gubernatorial election. Although the city's general election may be altered through the charter amendment process, the date of the primary election is controlled by State law. Senate Bill 447 (failed) would have altered the Baltimore primary election cycle to coincide with the presidential election year consistent with 1999 changes to the city charter.

Ethics

Lobbyists - Disclosure of Business Transactions

The subject of ethics received considerable attention from the General Assembly during the 2000 session, with the key issue being the disclosure of business transactions between lobbyists and government officials. Last year, Chapter 130 of the Acts of 1999 enacted sweeping changes to the laws relating to legislative ethics. Prior to that enactment, the State had not passed a consolidated, comprehensive ethics law in 20 years. Most of the changes enacted in the 1999 session were recommended by the Special Study Commission on the Maryland Public Ethics Law chaired by Congressman Benjamin L. Cardin. The commission was not authorized, however, to review the provisions of current law that relate to regulated lobbyists, except to the extent that these provisions relate to the conduct of legislators.

In recognition of the enormous growth in the business of lobbying and its tremendous impact on the legislative environment in Annapolis, in the 1999 session, the General Assembly enacted legislation creating a Study Commission on Lobbyist Ethics (Chapter 2 of the Acts of 1999). Chapter 2 requires the commission to collect information on lobbying practices and standards of ethics for regulated lobbyists, to receive testimony, to develop a code of ethics for lobbyists, and to propose any appropriate statutory changes to the Maryland Public Ethics Law as it relates to regulated lobbyists. The work of that commission is underway, and a report is expected by November 1, 2000.

Under current law, a regulated lobbyist must file annual reports with the Ethics Commission concerning the lobbying activities of the lobbyist. The reports must include the total amount of money the lobbyist spent in influencing executive or legislative action and the name of each official, employee, or member of the immediate family of an official or employee given a gift or gifts over $75 during the yearly reporting period.

House Bill 974 (passed) requires individual regulated lobbyists who lobby the executive or legislative branches to file an additional report with the State Ethics Commission that discloses any business transaction or series of business transactions during the previous six months between the lobbyist and certain State officials, the spouses of those officials, or certain business entities in which a State official holds a specified ownership interest. The lobbyist must disclose a transaction valued at $1,000 or more or any series of transactions valued at $5,000 or more. The bill does not apply to entities that employ individual regulated lobbyists or lobbyists who work for the State.

State officials covered under the bill include: (1) members of the General Assembly, (2) the Governor, (3) the Lieutenant Governor, (4) the Attorney General, (5) the Secretary of State, (6) the Comptroller, (7) the State Treasurer, and (8) a secretary of any principal State department.

When filing a report, the lobbyist must disclose the date(s) of the business transaction or series of transactions, the name and title of the State official involved in the transaction, and the nature and value of anything exchanged.

An alternative to House Bill 974 was also considered during the 2000 session. Senate Bill 753/House Bill 973 (both failed) would have prohibited legislators or members of the immediate family of a legislator from directly participating in a business transaction where the legislator or family member received or anticipated receiving a monetary benefit. The prohibition would not have applied to: (1) normal retail sales with a cumulative value of less than $500 or (2) the renewal of existing insurance contracts in the ordinary course of business. The same prohibition and exceptions also would have applied to individual regulated lobbyists with respect to legislators or members of the immediate family of a legislator. In addition, a legislator would have had to report to the Joint Committee on Legislative Ethics the details of any business transaction between an individual regulated lobbyist and a business partner of the legislator or the immediate family of a legislator that had a cumulative value of $500 or more.

Joint Committee on Legislative Ethics - Rules of Legislative Ethics

Senate Joint Resolution 1/House Joint Resolution 7 (both passed) address several changes that resulted from the ethics law that went into effect in October 1999. The resolutions revoke the Rules of Legislative Ethics, which were rendered obsolete under the 1999 ethics law, and establish a new rule that allows the Joint Committee on Legislative Ethics to waive the normal confidentiality requirements that apply to its hearings, proceedings, and records by a three-fourths vote of the membership of the committee, but only if the disclosure is necessary to uphold the integrity of the ethics investigation process.

Procurement

Construction Contracts

Prompt Payment

In 1999, the General Assembly established a prompt payment requirement and an informal three-step dispute resolution process applicable to contractors who subcontract work under State construction contracts. The legislation required that a contractor pay a subcontractor undisputed amounts within ten days of receiving the final payment or a progress payment from the State. However, the 1999 legislation does not extend to the lower subcontractors and timely payment of lower tier subcontractors has remained a concern.

House Bill 600 (passed) caps the amount of retainage that the State may require in a construction contract at 5 percent, provided that 100 percent security has been provided under the Maryland Little Miller Act. However, the bill does not preclude the State from withholding additional money if the agency reasonably believes the withholding is necessary to protect the State's interest.

House Bill 600 limits the percentage of payments due to a subcontractor that a contractor or another subcontractor may withhold, based on the percentage withheld by the State or by a higher tier contractor. However, the withholding of additional payments is permissible if a lower tier subcontractor's performance on the job provides reasonable grounds justifying additional withholdings. The bill also requires that State agencies include a provision in the procurement contract governing prompt payment of subcontractors at each level of subcontracting, requiring an informal resolution process similar to that available to first tier subcontractors.

House Bill 600 also expands an escrow provision under the State's procurement law that has been applicable solely to transportation projects. The bill allows any prime contractor to provide for the escrowing of retainage payments on any State construction contract, provided that the contract does not involve tax-exempt financing. A proportion of interest earned must be included with each retainage payment.

Action by a Supplier on Payment Security

Senate Bill 740/House Bill 928 (both passed) amend the Maryland Little Miller Act to prohibit an executory contract between a supplier and a contractor or subcontractor from waiving or requiring the supplier to waive the right to sue on payment security. Senate Bill 740/House Bill 928 also prohibit an executory contract that conditions payment to the supplier on receipt of payment from a public body or other third party from abrogating the right of the supplier to sue on payment security. A provision of a contract made in violation of these provisions is void as against public policy. The protections under the bill are similar to those protecting suppliers under construction contracts that are subject to the State's mechanic's lien law.

Intergovernmental Cooperative Purchasing

The State's procurement law authorizes the State's primary procurement units to either sponsor or participate in intergovernmental cooperative purchasing agreements with other governments if entering such an agreement is in the best interest of the State. An "intergovernmental cooperative purchasing agreement" is defined, in part as a contract that is entered into by at least one governmental entity and a person selected under the procurement laws, that is available for use by the governmental entity entering the contract and at least one other governmental entity, and is intended to promote efficiency and savings.

A governmental entity is defined to include: (1) the federal government or an agency or other instrumentality of the federal government; (2) another state or an agency or other instrumentality of another state; (3) a bistate or multistate agency; (4) a county, municipal corporation, or other political subdivision of the State or of another state, or an agency or other instrumentality of the political subdivision; (5) a bicounty or multicounty agency; or (6) a primary procurement unit.

House Bill 177 (passed) expands the definition of "governmental entity" under the provisions authorizing intergovernmental cooperative purchasing to include "an affiliation, alliance, consortium, or group composed solely of governmental entities that is established for purposes of promoting intergovernmental cooperative purchasing." This bill grants the State's primary procurement authority to participate in an intergovernment cooperative purchasing agreement that is managed by a formalized group or consortium of governmental entities that is organized to promote cooperative purchasing rather than directly by any single governmental entity.

Minority Business Enterprise Programs

State MBE Program - Extension

In 1978, the General Assembly established the State's Minority Business Enterprise (MBE) Program. In 1989, the United States Supreme Court held, in City of Richmond v. J.A. Croson Co., 488 U.S. 469, that state or local MBE programs using race-based classifications are subject to strict scrutiny under the equal protection clause of the Fourteenth Amendment of the United States Constitution. Under Croson, not only does the governmental entity need to show a compelling governmental interest to justify a race-based program, but any remedy under the program must be narrowly tailored to address the interest identified.

In response to the Croson decision, the Board of Public Works commissioned Coopers and Lybrand to undertake a minority business utilization study to support the State's MBE Program. In 1990, the General Assembly altered the State's MBE Program, retaining the 10 percent MBE participation goal, but modifying the program in a manner intended to comply with Croson. The 1990 legislation narrowed the scope of the program and authorized the Board of Public Works to designate a single agency for the certification of MBEs. The Maryland Department of Transportation (MDOT) is charged with this responsibility. The 1990 legislation also authorized a further study to evaluate the MBE Program's continued compliance with Croson and subsequent judicial decisions. The MBE Program enacted in 1990 was to be in effect for a five-year period and was scheduled to terminate June 30, 1995.

In accordance with the 1990 legislation, MDOT contracted with National Economic Research Associates (NERA) to conduct a second minority business utilization study prior to the 1995 session. Based on the NERA study, the Administration proposed legislation during the 1995 session that would have increased the State's MBE participation goal from 10 to 18 percent and expanded the program to all units in the executive branch of State government. As proposed, the 1995 legislation would have also established a split goal for construction contracts - with a 5 percent minimum of a unit's total value of construction contracts made directly or indirectly with MBEs owned by women and a minimum of 13 percent with MBEs owned by other minorities. However, the General Assembly established a 14 percent MBE participation goal for all units in the executive branch of State government that are subject to the State's procurement law. For MDOT construction contracts, the goal applies only to contracts exceeding $100,000. The concept of split goals was rejected. The 1995 legislation also relaxed bonding requirements, required additional contractor outreach efforts to MBEs, required regulations providing enhanced record keeping requirements, and required the establishment of a graduation program. The 1995 program was to remain in effect until July 1, 2000.

The 1995 legislation required an additional study of the MBE Program, which was to be presented to the General Assembly by September 30, 1999. In December 1998, MDOT contracted with MGT of America to conduct the required study. However, after receiving a draft of the MGT study, MDOT raised questions about the methodology utilized and eventually issued a stop work order to MGT. MDOT has since contracted with another firm to complete a study through an emergency procurement process. Absent the completed study, however, there is no basis on which to project recommended goals for the future of the State's MBE Program.

Senate Bill 808/House Bill 287 (both passed) extend the termination date for the State's MBE Program to July 1, 2002. The bills also require that an executive summary of the required study be submitted to the Legislative Policy Committee of the General Assembly by December 1, 2000, and extend the deadline for the submission of the final report to January 10, 2001. The bills require that the study be initiated in consultation with the Office of the Attorney General. Senate Bill 808/House Bill 287 also decrease the threshold governing MDOT construction contracts that are not subject to the MBE Program from $100,000 to $50,000. The two-year extension gives the General Assembly the option of addressing the State's MBE Program during either the 2001 or 2002 session.

Local Boards of Education

In awarding a contract for school construction, improvements, supplies, or equipment, a county board of education and the New Baltimore City Board of School Commissioners are required to award a contract to the lowest responsible bidder that meets specifications with consideration given to: (1) quantities involved; (2) time required for delivery; (3) required purpose; (4) competency and responsibility of the bidder; and (5) ability of the bidder to perform satisfactory service. As part of legislation expanding the application of the prevailing wage law, discussed below, the General Assembly also addressed the requirement that local boards of education address the use of minority contractors in specified procurement activities.

Senate Bill 202 (passed) requires a local board of education to include specifications pertaining to utilization of minority contractors in awarding contracts for school buildings, improvements, supplies, or other equipment. The bill also provides, that the prequalification questionnaires, administered by local boards of education for the purposes of soliciting bids for school construction, must include questions regarding the diversity of a contractor's board of directors. The MBE provisions under Senate Bill 202 reflect current practice, consistent with requirements under the State's public school construction program.

Nonvisual Access for Information Technology

In 1998, the General Assembly required the Chief of Information Technology in the Department of Budget and Management to develop a clause for inclusion in State procurement contracts regarding nonvisual access. The clause is to be included in each invitation for bids or request for proposals for the procurement of information technology unless the information technology is not available with nonvisual access because the essential elements of the technology are visual, and nonvisual equivalence cannot be developed, or the cost of modifying the information technology for compatibility with software and hardware for nonvisual access would increase the cost of the procurement by more than 5 percent. "Nonvisual access" is defined as the ability to receive, use, and manipulate information, and operate controls necessary to access information technology, through keyboard control, synthesized speech, braille, or other methods not requiring sight.

Senate Bill 607/House Bill 592 (both passed) expand the 1998 legislation to address information technology services and require that the Chief of Information Technology adopt regulations establishing nonvisual access standards by January 1, 2003, for use by each unit of State government in the procurement of information technology and the provision of information technology services. "Information technology services" is defined as information provided by electronic means by or on behalf of a unit of State government.

Prevailing Wage in School Construction

The prevailing wage law covers any public works contract when State public funds are used to finance at least 50 percent of the construction costs of a particular project. The prevailing wage law does not apply to projects with a cost of less than $500,000. Public school projects, however, are subject to prevailing wages if the State funding contribution is at least 75 percent of total project funding.

Prevailing wages are the hourly wage rates paid in the locality in which the construction work is to be performed. If 50 percent or more of all workers in a trade are paid exactly the same rate, that rate is considered the prevailing wage. If not, then 40 percent or more of the employees for each work classification must be paid the same rate in order for the rate to qualify as prevailing. If fewer than 40 percent receive the same rate, a weighted average is calculated and used as the prevailing wage. Prevailing wages are based on hourly wage levels and employer benefit contributions.

Senate Bill 202 (passed) repeals the provisions of law that require 75 percent or more of an elementary or secondary school construction project to be funded by the State in order for the prevailing wage law to apply. Instead, schools with construction costs of $500,000 or more, for which the State funds 50 percent or more of the construction costs, will be subject to the prevailing wage law.

State Fiscal Effect

A number of factors will determine the extent of any increase in costs associated with Senate Bill 202, including market and wage conditions. A 1989 Department of Legislative Services (DLS) study concluded that the prevailing wage increases project costs by 5 to 15 percent, depending upon the type of project, labor costs as a share of total costs, and market conditions. In 1995, DLS reviewed the 1989 study and concluded that the 5 to 15 percent range was still valid.

Another study on the impact of prevailing wages was recently prepared for the Prince George's County Council. That study concluded that building a school in a prevailing wage jurisdiction in Maryland would cost 1.9 percent more than building the same school in a non-prevailing wage jurisdiction and that this result was not statistically significant.

The State share of eligible costs for school construction is 75 percent or less in all jurisdictions except Somerset, where it is 80 percent. In no jurisdiction is the State share less than 50 percent. The State share of eligible costs for public school construction is as follows:

Since not all construction costs are eligible costs for computing State funding, most school construction projects with a State share of 50 percent of eligible costs will not be required to pay prevailing wages.

For school construction projects in jurisdictions with 50 percent of the construction costs provided by the State, the local jurisdiction can avoid the impact of Senate Bill 202 by increasing the local share of construction costs by 1 percent to 51 percent. This would result in the State having a 1 percent decrease in expenditures for certain school construction projects under Senate Bill 202.

How many school construction projects would be subject to the prevailing wage because of Senate Bill 202 is not known. However, for illustrative purposes, based on the fiscal 2000 school construction projects, State expenditures could increase in fiscal 2001 by $3.0 to $14.8 million. These figures are based on the following assumptions:

• 20 percent ($15.8 million) of the $79.1 million for projects with 50 percent or less State funding for eligible costs will be subject to the prevailing wage;

• all of the $132.1 million in other jurisdictions is subject to the prevailing wage, and the State share is 65 percent of the construction costs;

• none of the projects associated with these State funds would be subject to prevailing wage without Senate Bill 202;

• project costs increase by 2 percent to 10 percent due to requiring payment of the prevailing wage; and

• State contractors are able to pass on all of the increase in costs to the State because of the high demand for construction services.

Local Fiscal Effect

The impact on local government expenditures depends on whether a jurisdiction has a school project of $500,000 or more with 50 percent or more of the construction costs provided by the State. Senate Bill 202 will not impact Allegany County, Caroline County, Somerset County, or Baltimore City since they are already subject to the prevailing wage rate. The counties most affected by Senate Bill 202 are those with a State share of school construction costs between 55 and 70 percent. For illustrative purposes, based on the fiscal 2000 school construction projects and the assumptions stated above, local expenditures could increase in fiscal 2001 by $1.4 to $7.1 million.

State Consultants - Conflicts of Interest

During the 1999 session, the General Assembly enacted legislation proposed by the Governor's Special Commission to Study Health Care Procurement Practices. During deliberations on the 1999 legislation, the committees considered an amendment addressing potential conflicts of interest involving consultants working for the State on procurement matters. Rather than adopt the suggested amendments as part of the Governor's Special Commission's proposed legislation, the Senate Economic and Environmental Affairs Committee requested the State Ethics Commission to review the proposed amendments during the 1999 interim. Following its review, the State Ethics Commission acknowledged potential vendor conflicts of interest. However, the State Ethics Commission recommended that this issue be addressed under the procurement law rather than the Maryland Public Ethics Law and that a disclosure program be developed requiring that a statement of actual or potential conflicts be submitted with any bid proposal.

Senate Bill 541/House Bill 702 (both passed) amend the Maryland Public Ethics Law to prohibit an individual or the individual's employer from submitting a bid or proposal, or assisting another person who submits a bid or proposal, for a contract if the individual is involved in assisting the agency in the award of the contract. The bills also amend the State procurement law to require that each invitation for bids or request for proposals for a contract that will involve the selection of a consultant who is to assist a State agency in specified contracting activities require that a bidder or offeror provide an affidavit disclosing any actual or potential conflict of interest of which the bidder or offeror knows, or reasonably can be expected to know. The Board of Public Works is required to adopt regulations concerning the disclosure and evaluation of conflicts of interest.

Regulations and the Administrative Procedure Act

Smart Codes

On May 26, 1999, over 300 architects, planners, code officials, environmentalists, and others joined Governor Parris Glendening for a Maryland Smart Codes Conference. During the conference, participants discussed impediments to smart growth development caused by Maryland's existing construction codes, including:

• lack of uniformity arising from overlapping and unclear requirements;

• lack of predictability due to varying requirements among jurisdictions and different interpretations by individual code enforcement officials;

• lack of flexibility as applied to existing buildings; and

• lack of training for code officials and private design professionals.

  Participants also highlighted impediments posed by development regulations in effect across the State, including:

• lack of incentives for innovative smart growth projects;

• imposition of cumbersome reviews for mixed-use and infill developments; and

• encouragement of inefficient land use by requiring wide roads, large lots, deep setbacks, excessive parking, and other provisions.

Subsequently, in July 1999, the Governor established the Smart Codes Strategy Group and a smaller steering committee to develop smart growth recommendations for existing building codes and development regulations. The group was charged with finding innovative ways to strengthen existing communities through redevelopment and reduce the land and infrastructure costs of new smart growth development. The group recommended legislation to address rehabilitation of existing buildings and promotion of infill and compact mixed use developments.

Maryland Building Rehabilitation Code

Vacant and underutilized buildings seriously detract from the areas in which they are located. Private and public interest in rehabilitating older buildings is enhanced by regulatory procedures and standards for rehabilitation and reuse that are more predictable, consistent, and flexible. This goal can be facilitated by the adoption of a consistent statewide building rehabilitation code that avoids the overlapping of State and local codes and the conflict and confusion created by differences in local codes.

Senate Bill 207/House Bill 284 (both passed) create a 27-member Maryland Building Rehabilitation Code Advisory Council and require the Department of Housing and Community Development (DHCD) to work with the Advisory Council in adopting by regulation a Maryland Building Rehabilitation Code (MBRC). The MBRC will be modeled on the Nationally Applicable Recommended Rehabilitation Provisions developed by the federal Department of Housing and Community Development and the National Association of Home Builders' Research Center. These bills also provide minimum standards that the MBRC must contain.

The purpose of the MBRC is to encourage and facilitate the rehabilitation of buildings by reducing the costs and constraints of existing procedures and standards. The MBRC applies to all rehabilitation projects for which a construction permit application is received by a local jurisdiction, the Maryland-National Capital Park and Planning Commission (M-NCPPC), or the Washington Suburban Sanitary Commission (WSSC). DHCD is required to submit the MBRC as proposed regulations to the AELR Committee on or before December 31, 2000, and to adopt the regulations as soon as possible thereafter. DHCD and the advisory council are then required to review the MBRC and adopt necessary revisions at least once every three years.

A local jurisdiction may adopt local amendments to the MBRC that apply only within the local jurisdiction. However, only a local jurisdiction that does not amend the MBRC is eligible for funding above the amount appropriated in the fiscal 2000 State budget for circuit rider inspectors provided under the DHCD's circuit rider program, training for the local jurisdiction's code enforcement officials, a smart growth mortgage program, the Department of Transportation's neighborhood conservation program, or the rural legacy program. In addition, only a local jurisdiction that does not amend the MBRC is eligible for a priority under the Department of Transportation's enhancements programs.

Senate Bill 207/House Bill 284 provide that the bill does not change the authority of the State, any local jurisdiction, the M-NCPPC, or the WSSC to regulate planning, zoning, new construction, or subdivision.

Infill Development and Smart Neighborhoods

"Infill development" is new development in a Priority Funding Area on vacant, bypassed, and underutilized lands within existing developed areas. "Smart neighborhood development" is a comprehensively planned, compact mixed use development within a priority funding area that integrates residential, commercial, open space, and public uses.

House Bill 285 (passed) requires the Maryland Office of Planning to:

• draft model land-use codes for infill development and smart neighborhood development;

• draft guidelines to provide local governments with information on innovative planning and implementation techniques to encourage and facilitate infill development and smart code neighborhood development;

• circulate the models and guidelines to other State agencies and departments; and

• work with local governments, State agencies, and departments to develop incentives to encourage the voluntary adoption and implementation by local governments of the intent of these models and guidelines.

House Bill 285 provides that the bill does not change the authority of any local jurisdiction, the M-NCPPC, or the WSSC to regulate planning, zoning, or subdivision.

Comptroller

Cigarette Business Licenses

Currently, if an applicant for a cigarette business license meets the requirements for a license, the Comptroller must issue the license and has no authority to conduct any further investigation of the application. The Comptroller may deny a license application, reprimand a licensee, or suspend or revoke a license if the applicant or licensee fraudulently or deceptively obtains or attempts to obtain a license, fraudulently or deceptively uses a license, fails to comply with the Maryland Cigarette Sales Below Cost Act, or buys cigarettes for resale in violation of a license or from an unauthorized person.

House Bill 95 (passed) adds new circumstances under which the Comptroller may deny a license to an applicant, reprimand a licensee, or suspend or revoke a license. These include a felony conviction, a misdemeanor conviction of a crime of moral turpitude that is directly related to the fitness of the applicant or licensee, or the failure to pay a tax due. The Comptroller must grant a waiver from these provisions to any person who is licensed as of October 1, 2000, for a conviction occurring prior to that date.

The bill also requires the Comptroller to investigate applications for cigarette business licenses with regard to the applicant, the business to be operated, and the facts set forth in the application.

Possession of Unstamped or Improperly Stamped Tobacco Products

House Bill 149 (passed) reduces the penalties for offenses related to unstamped or improperly stamped cigarettes based on the quantity of cigarettes. A person who possesses, sells, or attempts to sell 30 cartons or less of unstamped or improperly stamped cigarettes is guilty of a misdemeanor and on conviction may be fined up to $500 or imprisoned up to three months or both. For an offense involving more than 30 cartons, a person is guilty of a misdemeanor and on conviction may be fined up to $1,000 or imprisoned up to one year or both, which is the penalty under current law regardless of the quantity of cigarettes involved.

In 1999, the General Assembly enacted legislation extending the tobacco tax to other tobacco products, including cigars, chewing tobacco, loose pipe tobacco, and snuff, effective July 1, 2000. House Bill 149 also reduces the penalty for a person who willfully possesses, sells, or attempts to sell other tobacco products on which the tobacco tax has not been paid. A violator is guilty of a misdemeanor and on conviction may be fined up to $500 or imprisoned up to three months or both.

Motor Fuel Licenses

Corporate mergers and restructurings within the petroleum industry have resulted in entities that do not meet all of the qualifications of a Class "A" motor fuel license. A typical example would be an entity affiliated with the parent company that does not operate as a refiner and therefore does not meet the present qualifications for a license. The primary benefit of the license is that it allows for tax-free sales of gasoline among Class "A" license holders.

House Bill 151 (passed) expands the conditions under which an applicant may qualify for a Class "A" motor fuel license by allowing an entity to qualify if it is owned by a parent company that would otherwise qualify for the license.

Public Schools Forms Management

Senate Bill 900 (passed) delays until July 1, 2003, the application of standards for racial identification in State government data collection forms, as those standards relate to schools, school systems, and the State Department of Education (MSDE).

Legislation enacted in 1998 implemented revised federal reporting standards required by the federal Office of Management and Budget, which establish the categories of federal data that may be collected on race and ethnicity. The federal standards permit five racial categories and one ethnic category and disallow the use of a single, multi-racial category. Any data collection form prepared by a unit of State government that requires the identification of persons by race must include the following racial categories: (1) American Indian or Alaskan native; (2) Asian; (3) Black or African American; (4) Native Hawaiian or other Pacific Islander; and (5) White. The federal standards also require a separate question, preceding the question on racial categories, of whether the respondent is of Hispanic or Latino origin.

The1998 enactment (Chapter 459) was to be applicable to any data collection form created or revised after July 1, 1998, and to all data collection forms used as of January 1, 2002. The United States Department of Education Office for Civil Rights (OCR) is currently developing new racial and ethnic categories for its data reporting forms that will comply with the new federal standards. However, OCR has made no final decision on when its data collection forms will be amended to reflect these changes and has until January 1, 2003, to adopt the new federal standards. The discrepancy in the deadlines for compliance with the federal and State standards is a problem for MSDE with regard to MSDE forms that serve as the basis for reporting race and ethnic data to OCR. If MSDE's forms are changed to reflect the new State standards before OCR changes the federal forms, data will be collected that will put MSDE out of compliance with OCR requirements. Senate Bill 900 addresses this discrepancy by extending the State deadline.

Personnel

Employee Compensation

Employee compensation enhancements constitute a major component of the fiscal 2001 budget. Most significant is a $41.0 million general fund increase for a 4 percent general salary increase starting on November 15, 2000. There is also $38.6 million in general funds for salary increments. The administration is beginning what could potentially become an annual process by implementing position upgrades in a number of statewide and agency-specific positions, at a cost of $11.9 million in general funds. The pay-for-performance policy continues through fiscal 2001, totaling $6.3 million in general funds. Combined, these elements of employee compensation account for a general fund increase of $91.5 million over fiscal 2000 expenditures.

In fiscal 2001, two additional structural changes to employee compensation are anticipated. First, the executive pay plan will no longer cover employees below the level of assistant and deputy secretary. The approximately 150 executive service employees remaining will be compensated by way of salary bands where only minimum and maximum salaries are defined. The approximately 400 managerial service employees currently in the executive pay plan will move to the proposed expanded standard pay plan. Grades 23 to 26 will be added to the plan to accommodate these employees. The cost of this adjustment will be absorbed within existing budgets.

House Bill 1270 (passed) implements the provisions of the negotiated agreements between the Governor and the collective bargaining units. This omnibus bill makes changes to State personnel rules relating to holiday pay, gives State employees the ability to cash out unused sick leave and increases death benefits for State employees killed in the performance of job duties. House Bill 1270 makes the following changes regarding State personnel policies:

• clarifies that State employees receive holiday pay and compensatory time (time and a half) for any hours actually worked on a scheduled holiday;

• allows employees to receive cash payment for up to 40 hours of unused sick leave per calendar year if an employee has used no more than 40 hours of sick leave during the calendar year and has a sick leave balance of at least 240 hours at the end of calendar year;

• allows employees to receive cash payment of up to 56 hours of unused sick leave per calendar year if an employee has used no more than 24 hours of sick leave during the calendar year and has a sick leave balance of at least 240 hours at the end of the calendar year; and

• increases the death benefit for an employee killed in the line of duty from $50,000 to $100,000.

In addition to enhancing compensation for State employees, House Bill 1270 alters aspects of the executive pay plan by establishing minimum and maximum salaries for positions in the plan, as an alternative to existing grades and steps. The bill also removes the requirement of Board of Public Works approval of employee salary adjustments in the executive pay plan. The standard pay plan would be expanded by adding several grades at the top of the plan, which would consist of those employees removed from the executive pay plan.

House Bill 1252 (passed) requires that essential State employees receive compensatory time or additional pay for any required work in Anne Arundel, Cecil, Harford, or Kent Counties during Hurricane Floyd. Any payments made to these employees will be funded from the State Reserve Fund's Catastrophic Event Fund.

Employee Leave

Advances in medical science are making organ transplants more feasible.

Senate Bill 17/House Bill 106 (both passed) add organ donation leave to the types of leave with pay available to State employees. This leave may only be granted with appropriate medical documentation. The bills provide up to seven days for bone marrow donations in a 12-month period and up to 30 days for actual organ donations in a 12-month period. The federal government also recently provided its employees with organ donation leave.

State Employment

As part of the reform of the personnel system in 1996, the General Assembly mandated that the Department of Budget and Management study the issue of long-term contractual employment. During the 1998 session, the General Assembly passed legislation that allowed the conversion of contractual employees to permanent positions after only six months of satisfactory job performance. Senate Bill 172 (passed) continues the State's efforts to reduce the high number of long-term contractual employees. Senate Bill 172 provides that a State contractual employee who is selected to fill a permanent position in the same agency that employs the contractual employee will be given service credits for time spent as a contractual employee to establish steps in the pay grade, annual leave, and seniority rights. The provision addresses an inequity by providing these credits if an existing contractual employee is selected for a different position within the same agency without a break in service.

Senate Bill 163/House Bill 267 (both passed) extend the termination date for the Competitive Re-Engineering Pilot Program from September 30, 2000, to

September 30, 2003. The bills also extend the deadline for submission of a report on the pilot program to the budget committees from October 1, 1999, to October 1, 2002. In 1997, the General Assembly created the Competitive Re-Engineering Pilot Program to allow agency heads to nominate services for improvement through voluntary re-engineering or redesign by employees before privatization is pursued.

Several bills dealt with transferring local child support enforcement employees to the Child Support Enforcement Administration of the State Department of Human Resources. Existing State law allows for these transfers to occur. Senate Bill 463/ House Bill 525 (both passed) provide that employees of the local child support enforcement office in Baltimore County who were transferred to the State after June 30, 1999, must be credited with the years of service with the county for purposes of establishing seniority and layoff rights. Current law requires that transferred employees shall receive no reduction in compensation, so the bills also require that the salaries of the transferred employees be based on the same hourly rate that the employees were receiving at the time of transfer. House Bill 222 (passed) transfers child support enforcement employees of the Howard County State's Attorney's Office to the State. The transferred employees must be credited with the years of service with the county for purposes of establishing seniority and layoff rights. These transferred employees will have no reduction in compensation or accumulated leave, and they should be placed in positions that are comparable to their former positions.

Pensions and Retirement

Law Enforcement Officers' Pension System - Enhancement and Expansion of Membership

Two bills altering the Law Enforcement Officers' Pension System (LEOPS) were passed during the 1999 session: one enhancing the system's benefit structure the other expanding its membership by including in it some additional State fire and law enforcement officers who were previously in the general employees' system. House Bill 604 (passed) and House Bill 605 (passed) are the products of collective bargaining between the Governor and the bargaining unit representing State law enforcement officers.

LEOPS Enhancement

House Bill 604 enhances retirement benefits for active members and retirees of LEOPS. Current LEOPS membership includes Department of Natural Resources rangers and police, University of Maryland police, Maryland Transportation Authority police, deputy State fire marshals, and several other smaller State law enforcement units.

Description of Enhancements:

• Most of the approximately 1,100 LEOPS active members will be required to contribute 4% of salary. Currently, members pay no contributions if their salary is below the Social Security wage base.

• These members receive 2% of average final compensation for each year of service, with a maximum normal service retirement allowance not to exceed 60% of average final compensation. The current benefit provides 1.0% of average final compensation up to the Social Security integration level and 1.7% thereafter (with a supplemental benefit until age 62).

• Active members, former vested members, and retirees receive a 3% compound COLA (versus current 3% simple COLA).

• A LEOPS member becomes eligible for an accidental disability retirement benefit if the member is totally and permanently incapacitated for duty arising out of or in the course of the actual performance of duty. The bill therefore allows LEOPS members to qualify for accidental disability based on occupational diseases (such as heart condition, hypertension) if the disability arises out of or in the course of the actual performance of duty (similar to the provisions for the State Police system). Current law requires the disability to be the "natural and proximate" result of a specific accident.

• LEOPS "retirement tier" members (who transferred from the "old" Employees' Retirement System and retained that benefit structure) have a six-month window (through December 31, 2000) to select the enhanced LEOPS benefit or to continue under their current structure. If the member opts to remain in the "retirement system" option of LEOPS, the member continues to pay the retirement system contribution rate of 5% or 7% and receives the retirement system COLA.

• LEOPS members are eligible for a Deferred Retirement Option Program (DROP) that allows them to "retire" from LEOPS but continue to be employed by their current employer in the same position with the same rank and status for a fixed period of time. The member's benefit payments (based on service credit and salary at "retirement") are maintained by the State retirement system in a fictional account where the member earns interest and receives any cost-of-living adjustments to the basic retirement allowance. The member does not accrue any additional service during the DROP period. At the end of the fixed period, the member terminates employment and receives the value of the DROP account and begins to receive the normal retirement allowance as well. The specifics of the DROP are as follows:

• To be eligible for the DROP, a member must have at least 25 years but less than 30 years of service.

• The maximum period of the DROP is five years, with constraints that limit total seniority to 30.

• A DROP participant is officially a retiree of LEOPS even though the member continues to work and is eligible for death and special disability benefits.

• The DROP member earns 6% (compounded monthly) on the member's retirement allowance paid during the DROP period, versus the current statutory regular interest of 5%.

• Upon termination of the DROP, the member or designated beneficiary receives the DROP amount in a lump sum.

• Implementation of the DROP is contingent on receipt of an affirmative determination letter from the Internal Revenue Service indicating that the DROP does not harm the tax-qualified status of LEOPS.

• The bill introduces some technical provisions similar to those included in the Employees' Pension System under House Bill 421 (passed) discussed below, including:

• a four-year break-in-service rule;

• termination of membership upon withdrawal of contributions, with the right to repurchase past service with the redeposit of contributions plus interest; and

• a period of two years to file a disability application after termination of membership (for a total of six years from termination of employment).

• LEOPS members are now able to transfer pension credit from other systems into LEOPS. (Current law prevents such transfers.)

Fiscal Impact - Additional Employer Pension Contributions Required: Under the bill, LEOPS members can retire at 30 years of service with 60% of average final compensation, the maximum benefit allowed. Alternatively, they can retire at 25 years of service with 50% of average final compensation, versus 42.5% under current law. The DROP also affects pension costs by shortening the average age and years of service until retirement.

The State's actuary estimates the net present value of the additional pension benefits under the enhancement to be $62.0 million. The additional liabilities are amortized over 19 years through fiscal 2020. The first year cost in fiscal 2002 is $4.4 million, increasing 5% per year thereafter.

As a percentage of payroll, the employer contribution rate will increase from 23.38% (fiscal 2001) to 31.97% (this rate is based on the assumption that the State makes contributions for all system members, including those in the DROP).

Expansion of LEOPS Membership

House Bill 605 expands membership in LEOPS to include police officers of the Department of General Services, the Department of Health and Mental Hygiene, the Motor Vehicle Administration, and the Department of Labor, Licensing, and Regulation, and members of the BWI Airport fire department. Current employees have the option (until December 29, 2000) to transfer to the LEOPS. Future employees will be automatically enrolled in the LEOPS.

Approximately 174 State fire and law enforcement officers are covered under the bill. These employees are currently enrolled in the Employees' Pension System (EPS), which provides a full retirement benefit after 30 years of service. LEOPS is a "25 years and out" system and has other provisions geared toward law enforcement officers. The employees covered under the bill also receive the enhancement described above under House Bill 604.

It is assumed that all 174 police and fire/rescue personnel will transfer to LEOPS. As a result of the change, the fiscal 2001 employer contribution rate for these officers will increase from 5.71% of pay (under EPS) to 23.38%, an increase of 17.67% of pay per year. This amount is estimated at $1.1 million for fiscal 2001 only.

In addition, the actuary estimates that the net increased actuarial liabilities and additional normal costs to the State Retirement and Pension System under the proposal to be approximately $11 million. The actuarial liabilities are amortized over 19 years through the year 2020. The total ongoing cost of the enhancement is estimated at $1.8 million beginning in fiscal 2002, and increasing approximately 5% per year thereafter.

Teachers' Retirement and Pension Systems

Several bills affected members and retirees of the teachers' retirement and pension systems.

Teachers at Reconstituted Schools

Under Senate Bill 866/House Bill 1297 (both passed) members of the teachers' retirement and pension systems who are hired by a third-party contractor to work in one of the three reconstituted schools in Baltimore City (and any future reconstituted schools) may withdraw their previous member contributions while employed by the contractor. The member may redeposit those contributions plus regular interest and restore the service credit if the member returns to employment with a board of education. These members may also purchase up to five years of service credit at less than full actuarial cost for employment with the private contractor.

Teacher Reemployment

Chapter 518 of 1999 (SB 15) exempted retirees of the teachers' retirement and pension systems from the reemployment earnings limitation if they are reemployed as classroom teachers. Under State pension law, the pension benefits of retired members are reduced if they are reemployed with a participating employer and they earn above a certain amount in their new job. These retired members do not accrue additional pension service credit. They do, however, receive their retirement benefit simultaneously with their reemployment salary. This year, two bills were passed that expanded the exemption from the earnings limitation to other members of the teachers' retirement and pension systems.

Senate Bill 220 (passed) exempts retirees of the teachers' retirement and pension systems from the reemployment earnings limitation if they are reemployed as principals, under certain conditions. The bill takes effect July 1, 2000, and terminates on June 30, 2004.

The bill exempts from the reemployment earnings limitation a retiree of the teachers' retirement or pension system who:

• was employed as a principal within five years of the member's retirement and, based on the retiree's qualifications, has been hired as a principal;

• has verification of better than satisfactory performance in the last assignment as a principal and receives verification of better than satisfactory performance each year the retiree is employed as a principal under this exemption;

• retired with a normal service retirement allowance, or retired with an early service retirement allowance and has been retired for at least 12 months; and

• is not reemployed as a principal under the bill for more than four years.

House Bill 1404 (passed) exempts from the reemployment earnings limitation a retiree of the Teachers' Retirement System (TRS) who retired from a board of education or local school system and who is reemployed in a part-time position with the University of Maryland. The bill terminates after one year.

Joint Committee on Pensions Legislation

Each year, the Joint Committee on Pensions introduces pension legislation at the request of the State Retirement and Pension System (SRPS) and on its own initiative. In the 2000 session, six bills introduced by the joint committee were passed.

Transfers to or from Employees' and Teachers' Pension Systems

House Bill 348 (passed) alters the terms for the transfer of service credit to or from the contributory Employees' Pension System (EPS) and Teachers' Pension System (TPS) as it affects employee contributions. Under prior law, public employees transferring service credit to the EPS or TPS were required to transfer all employee contributions associated with that prior service, even if those contributions exceeded the amount of contributions made by EPS or TPS members during the same period of service. Under the bill, these employees need only transfer the amount of contributions made by EPS or TPS members. Any additional contributions will be refunded. The bill also changes the provisions regarding transfers from the EPS and TPS to other public systems in Maryland.

House Bill 420 (passed) clarifies that member transfers between comparable subsystems of the SRPS, such as the EPS and TPS, are not subject to Title 37 of the State Personnel and Pensions Article governing the transfer of employees among State and local pension systems in Maryland.

Purchase of Service Credit in Employees' Pension System

To assist State employees who were employed for periods with the State but receive no pension credit for that service, House Bill 349 (passed) reduces by one-half the amount that a State employee member of the Employees' Pension System (EPS) must pay to the State Retirement and Pension System (SRPS) when purchasing service credit for previous employment with the State, including contractual service. Currently, State employees may purchase up to ten years of service for prior service in a variety of contexts, including State employment; however, the member must pay the full actuarial cost. This cost is often prohibitively high, and little credit is actually purchased because of the high cost. The bill requires payment of one-half of the full actuarial cost for up to ten years of service. State pension liabilities are estimated to increase by $33 million, resulting in increased employer pension contributions of $2.2 million in fiscal 2002 as a result of reducing purchase-of-service costs, increasing 5% per year thereafter based on actuarial assumptions.

Administrative and Operational Expenses

House Bill 419 (passed) increases the maximum spending authority for administrative and operational expenses of the State Retirement and Pension System of Maryland (SRPS) and the State Retirement Agency, by expanding the base upon which the spending limit is calculated. Spending authority is increased by approximately $6 million; any additional expenditures, however, would require an appropriation.

Contributing Employees' and Teachers' Benefits

To fill some statutory gaps in the Employees' Pension System (EPS) and the Teachers' Pension System (TPS) following the 1998 pension enhancement (Chapter 530 of 1998), House Bill 421 (passed) adds the following provisions:

• Membership in the contributory EPS and TPS continues for four years after separation from employment unless the member withdraws his or her accumulated contributions, becomes a retiree, or dies. There are currently no break-in-service provisions for the contributory EPS and TPS.

• On the withdrawal of accumulated contributions by former members of the contributory EPS or TPS, the former members are not entitled to further benefits on account of membership in the systems. These former contributory EPS or TPS members, however, can redeposit withdrawn member contributions (plus interest) and repurchase previously forfeited service. There are currently no provisions in EPS or TPS for redeposit of contributions.

• Members of the contributory EPS or TPS receive eligibility service credit for prior service if: (1) the member was entitled to a vested EPS or TPS benefit at the time of separation from the first stretch of employment; (2) the member has either not withdrawn his or her contributions or has redeposited those contributions; and (3) the member works for at least one year during the second period of employment.

• Members of the contributory EPS or TPS receive eligibility service credit for prior service if: (1) the member separated from the first period of employment on or before June 30, 1998; (2) the member was not entitled to a vested benefit from the EPS or TPS at the time of separation; and (3) the member works for at least one year during the second period of employment. Currently, former vested service earned prior to July 1, 1998 (the date of enactment of the pension enhancement) cannot be combined with current pension service if the member was not a member on that date. The prior service is calculated using the pre-enhancement formula.

Pension liabilities are estimated to increase by $16.7 million as a result of

House Bill 421 (primarily as a result of granting the enhanced pension benefit to returning former vested members), resulting in increased employer pension contributions of $1.1 million in fiscal 2002, and increasing in future years based on actuarial assumptions.

Rules for New Participating Governmental Units

House Bill 423 (passed) modifies the rules governing the entry of a participating local government into the "municipal pool" of the SRPS so that the pension liabilities associated with existing retirees and former vested members of the local governmental unit will not be transferred to the SRPS. (Only assets and liabilities associated with active employees transferring to the SRPS will be transferred). The local government is given the option to continue to operate a local pension system to provide benefits to retirees, former vested members, and those active employees who do not elect to join the SRPS.

Correctional Officers' Retirement System

Members of the Correctional Officers' Retirement System (CORS) may receive eligibility service credit for service transferred from the Employees' Pension System (EPS) under Senate Bill 618/House Bill 404 (both passed) if the member was vested but the membership in the EPS was terminated as a result of being laid off for nondisciplinary reasons. The CORS member may transfer credit at the rate of six months for each year of EPS service.

Correctional officers have an unlimited period after an accident to apply for an accidental disability benefit under House Bill 136 (passed). Previously, such an application was restricted to five years after the accident. The bill also requires the retirement agency to study the issue of infectious diseases, which may not always manifest themselves within the five-year limit for accidental disability applications that applies to the employees' and teachers' systems.

Pension Credit for Military Service

National Guard

Members of the State Retirement and Pension System (SRPS) are now eligible under certain conditions for four months of military service credit for each year of service with the Maryland National Guard under Senate Bill 21/House Bill 897 (both passed). For participants in the SRPS (including participating governmental unit employees), the bills allow up to 36 months of military service credit for Maryland National Guard service. Because these employees are already eligible for service credit for active duty during their two-week training periods, the service granted under the bills applies to general annual participation in the National Guard during the member's employment with the participating employer, in addition to credit for active duty. The service granted under these bills therefore allow the Maryland National Guard member to receive 16 months of service in a year (12 months of normal service plus four months of military service). This pension credit would be in addition to any federal National Guard pension for which the member is eligible. Total military service credit toward State pensions, however, is limited to five years under current law, and the additional Guard service credit under the bills is subject to that limit. State pension liabilities will increase by an estimated $5.6 million, resulting in increased annual State pension contributions of $384,200 (all funds) beginning in fiscal 2002, assuming 210 members receive three additional years of service credit.

State Police Helicopter Pilots

House Bill 176 (passed) eliminates, in a limited circumstance, the prohibition against a member of the State Police Retirement System receiving military service credit in that system for prior military service if the member will also receive a federal military pension based on that service. Specifically, a member, former member, or retiree is exempt from the prohibition if the member was hired by the Department of State Police as an aviator to operate a helicopter for the State Emergency Medical System. The issue arose when the retirement system granted such military service credit despite the existing prohibition against it. The bill takes effect July 1, 2000, and applies retroactively to individuals hired by the Department of State Police on or after July 1, 1987. The bill terminates after July 31, 2000.

Participating and Withdrawn Governmental Units

With the passage of enhancement of the Employees' Pension System (EPS) in 1998 (Chapter 530 of 1998), more local governments in Maryland have expressed interest in participating in the EPS. House Bill 1111 (passed) includes the supportive service employees of the Kent County Board of Education in the EPS and

House Bill 1306 (passed) includes the employees of the Town of Oakland, Garrett County.

On the other hand, Prince George's County, the largest participating employer in the EPS, has expressed interest in leaving the State system and creating its own pension system. Senate Bill 643/House Bill 1036 (both failed) would have allowed the county, and any other participating employer, to leave the "municipal pool" under more favorable terms than currently exist. The bills would have relieved the county of a "transition liability" that was imposed when the assets of the participating employers were pooled and would have allowed the county to cash out its share of the municipal pool's current actuarial surplus.

Several bills also dealt with employers who formerly participated in the State system but which have since withdrawn in order to operate their own plans. When the pension system was enhanced in 1998, the enhancement was not extended to employees of a withdrawn employer. House Bill 509 (passed) grants the enhanced benefits to employees of the Frederick County government who had remained in the EPS.

House Bill 362 (failed) would have increased the cost-of-living allowance (COLA) for members of the Employees' Pension System who are retirees of the University of Maryland Medical System (UMMS) (also a withdrawn employer) from a 3% simple COLA to a 3% compound COLA. Senate Bill 571/House Bill 534 (both failed) would have provided the pension enhancement to EPS members and retirees who are or were employed by UMMS. The bill also offered certain UMMS members an early retirement incentive similar to those offered to State employees in 1996 and other University of Maryland personnel in 1998.

Retiree Health Insurance

The State's pension system is approaching full actuarial funding, which means that the system's anticipated assets over the next twenty years almost equal accrued and future pension liabilities. The State's retiree health insurance subsidy, on the other hand, is funded on a pay-as-you-go basis, rather than an actuarial basis. This means that the State is collecting only enough to fund this year's health care obligations. Because of the demographics of State workers, however, these health care costs are expected to rise as "baby boomer" employees begin to retire. To address this issue, Senate Bill 583 (failed) would have required the State to contribute funds to a newly created Postretirement Health Funding System. Such contributions would have only been required in years that State pension contributions were in decline, so that the total cost to the State would never rise. The Senate Budget and Taxation Committee referred the bill, and the larger issue of funding for the retiree health insurance subsidy, to summer study by the Joint Committee on Pensions.

Optional Retirement Program

House Bill 224 (failed) would have increased the State's contribution to the Optional Retirement Program (ORP) for faculty members at the State's higher education institutions. The bill was originally introduced as a departmental bill by the University System of Maryland for its faculty but was amended to include other State universities and community colleges. The bill would have increased the employer contribution from 7.25% of salary to 9.25% of salary and instituted a mandatory 2% employee contribution.

Other Pension Legislation

House Bill 812 (failed) would have imposed a penalty on the retirement agency if it provided a benefit estimate that was incorrect by more than 1%. The issue of the accuracy of benefit estimates was referred to summer study. House Bill 1307 (passed) allows the Northeast Maryland Waste Disposal Authority to participate in the deferred compensation matching program at its own expense. House Bill 908 (failed) would have increased the pensions of associate judges and the chief judge of the Baltimore City Orphans' Court. The maximum pension for an associate judge would have increased from $15,000 per year to $25,000 per year and the maximum pension for the chief judge would have increased from $15,250 per year to $30,000 per year.

General Assembly

Legislative Rules and Procedures

Rules Changes

Early in the 2000 session, the Senate adopted rules that altered the membership of the Budget and Taxation Committee from 13 to 14 and the Judicial Proceedings Committee from 11 to 10. Another rule that was adopted authorized the President of the Senate to appoint a President Pro Tem Emeritus. The Senate also adopted several technical changes to the rules, most of which reflected nomenclature changes relating to the Department of Legislative Services. Both the Senate and the House adopted rules to allow the expansion of the conference committees on the operating and capital budgets from three senators and three delegates to up to five senators and five delegates for each of those conference committees. The Ethics Rules, which had previously only duplicated the ethics statute, were revised in accordance with the omnibus ethics enactment of the 1999 session.

Procedures

Legislators' District Office Allowances: House Bill 269 (failed) would have changed current procedures to allow members of the General Assembly to charge to their district office accounts the cost of mailings, including newsletters and questionnaires, to constituents and community organizations, as long as the mailings were connected to legislative business, were not printed on campaign stationery, and did not solicit campaign contributions.

False Testimony Before Committees: Senate Bill 88 (failed) was a reintroduction of legislation introduced for a number of years that would prohibit a person from making a false statement, concealing a material fact, or making a false representation in a recorded proceeding to a committee or other unit of the Legislative Branch of State government. A violation of the provisions of the bill would have been a misdemeanor subject to a fine of $1,000 or up to one year in prison. The bill was limited to hearings or proceedings that are required to be recorded by the rules of the Senate and House. The Senate has been audio tape recording its committee hearings for many years, while committee hearings in the House are not recorded.

Legislative Redistricting

The General Assembly will address legislative redistricting and Congressional reapportionment in the 2002 session. However, during the 2000 session, House Bill 268 (failed) would have required that, to the extent practicable, each legislative district be wholly contained within a county. The measure would have also required that, if a legislative district were configured so that the majority of its population resides in one county and the remaining portion of its population resides in another county, the legislative district had to be subdivided into delegate districts in a manner to provide that the lesser population would be contained within a single-member district.

Program Evaluation Act (Sunset Review)

Over 20 years ago, the General Assembly created the Program Evaluation Act, popularly known as Sunset Review. The Act has become institutionalized as part of the legislature's oversight function with respect to the operation of a large number of regulatory boards and commissions under various departments in the Executive Branch of State government. The Department of Legislative Services (DLS) is charged by law to undertake the periodic evaluation of the boards and commission subject to the Act and report its findings and recommendations to the General Assembly. The Act requires affirmative action taken by the legislature to continue the existence of the boards and commissions subject to review and evaluation. Without that action, the agencies subject to the Act will terminate ("sunset"). In some cases, DLS will recommend that some regulatory entities be excused from a full evaluation. In other cases, full evaluations will be undertaken by DLS, and those evaluations will be accompanied by legislative proposals to address matters raised in the evaluations.

During the 2000 session, the General Assembly took action on the following boards and commissions that had been the subject of some level of sunset review activity during the 1999 interim:

• Athletic Commission - Termination date extended ten years; commission required to report on specified items in 2001 - Senate Bill 363/House Bill 580 (both passed)

• Chiropractic Examiners - Termination date extended ten years - Senate Bill 573/House Bill 575 (both passed)

• Collection Agency Licensing Board - Termination date extended ten years - Senate Bill 575/House Bill 574 (both passed)

• Home Improvement Commission - Termination date extended ten years; limitation on recovery from the Home Improvement Guaranty Fund increased; commission to report on status of certain actions in 2001 - Senate Bill 362/House Bill 581 (both passed)

• Horse Industry Board - Termination dated extended five years; reporting requirements of the board expanded - Senate Bill 369/House Bill 299 (both passed)

• Physical Therapy Examiners - Termination date extended ten years - Senate Bill 572/House Bill 576 (both passed)

• Podiatric Medical Examiners - Termination date extended ten years - Senate Bill 574/House Bill 573 (both passed)

• Racing Commission (and the Maryland bred fund and standardbred fund advisory committees) - Termination dates extended ten years; commission required to inspect satellite simulcast facilities at least four times each year -  Senate Bill 368 (passed)

• Tobacco Authority - Termination date extended by five years; authority is required to report annually to the General Assembly on the status of tobacco growing in Maryland - Senate Bill 364/House Bill 353 (both passed)

The General Assembly also reorganized the boards and commissions subject to the Program Evaluation Act in alphabetical order to facilitate future changes to provisions of the Act. (See Senate Bill 585/House Bill 966 (both passed).) In addition, the bills corrected certain evaluation dates, agency names, and title references and conformed the Act to current practice by changing the date for the Legislative Policy Committee of the General Assembly to take action on preliminary evaluations.

New Task Forces and Study Groups

The number of new task forces, commissions, and study groups of limited duration created by bills and joint resolutions during the 2000 session was higher than usual. Most of them are discussed under the appropriate subject-area parts of this 90 Day Report. The new task forces and study groups are:

• Agricultural Land Preservation Foundation, Task Force to Study the - House Bill 740 (passed)

• Montgomery County School Board Composition Task Force - House Bill 803 (passed)

• Environmental Effects of Methyl Tertiary-Butyl Ether (MTBE), Task Force on the - House Bill 823 (passed)

• Resource Based Industry in Maryland, Task Force on - House Bill 933/Senate Bill 446 (both passed)

• Prince George's County Transfer Tax Rate, Task Force on - House Bill 1004 (passed)

• Maryland Enterprise Zone Program, Task Force to Study the - House Bill 1208 (passed)

• Health Care Needs of Inmates in Transition from Correctional Institutions, Task Force to Study the - House Bill 1232 (passed)

• Transit Policy Panel - House Bill 1248/Senate Bill 811 (both passed)

• Early Child Care and Education, Judith P. Hoyer Blue Ribbon Commission on the Financing of - House Bill 1284/Senate Bill 869 (both passed)

• Matthew Henson Memorial, Task Force to Study Establishing - House Joint Resolution 15 (passed)

• Crisis in Nursing, Statewide Commission on the - Senate Bill 311 (passed)

• Attention Deficit Disorder, Advisory Council on - Senate Bill 742/House Bill 694 (both passed)

• Slavery's History and Legacy in Maryland, Commission to Coordinate the Study, Commemoration, and Impact of - Senate Bill 854 (passed)

• Southern Maryland - Hughesville-Lexington Park Railway Corridor Commission - Senate Joint Resolution 8 (passed)

Legislation - Single Subject Rule

The Annual Curative Bill

Each year, the Department of Legislative Services prepares the annual "curative bill" that is intended to cure technical defects in legislation generally resulting from title/body conflicts in legislation. Many of these defects are identified by the office of the Assistant Attorney General who serves as counsel to the General Assembly. One of the objectives of the curative bill, an omnibus bill first developed in 1984, is to serve as a mechanism to protect the legislative process by reducing the potential of legal challenges to the validity of statutes based on technical defects in those statutes.

The annual curative bill for the 2000 session - Senate Bill 158 (passed) and signed into law as Chapter 1 of the Acts of 2000 - contains several components addressing title/body conflicts that arose in 1999 legislation and identified as such in bill review letters prepared by the Attorney General's Office. The bill also contained a provision addressing a potential single-subject issue arising from an enactment in 1998 that dealt with corporation law. The provision was included in Senate Bill 158 at the recommendation of the Attorney General's Office.

During the 2000 session, the Court of Appeals of Maryland ruled (in the case of a Migdal v. State of Maryland) that the 1998 enactment violated the single subject rule of the Constitution of Maryland.

The Migdal decision was controversial in the General Assembly for two reasons. First, the legislature has long been advised by the Attorney General's Office that Maryland courts broadly interpret the single subject rule. The 1998 legislation that was the subject of the Migdal case had been reviewed by the Attorney General's Office during and after the 1998 session and had not raised any concerns about it being violative of the single subject rule. Second, the Court of Appeals dedicated much of its opinion to the legislative process in the waning days of the 1998 session and took considerable interest in the long-standing procedures involving the amendment of bills in the General Assembly. The result of the Migdal decision gave rise to concerns that the Court of Appeals decision had a chilling effect on the legislature's flexibility to amend legislation affecting important public policy decisions that General Assembly faces within the time constraints of the annual session.

To address their concerns, legislative leaders introduced legislation that would have amended the Constitution of Maryland to revise the single subject rule in a way to preserve the ability of the General Assembly to amend legislation rule in the manner generally thought to be available to the legislature prior to Migdal. Senate Bill 904/ House Bill 1436 (both failed) garnered considerable attention because of the focus they helped place on the relationship between the legislative and judicial branches during the 2000 session.

The Annual Corrective Bill

The annual "corrective bill" - Senate Bill 159 (passed) - is also prepared by the Department of Legislative Services. Like the curative bill, it is an omnibus bill, but it corrects numerous technical, spelling, and similar mistakes to codified provisions throughout the Annotated Code. The corrective bill is based on suggestions for corrections from a variety of sources, primarily the publishers of the Code (Lexis Law Publishers in Charlottesville, Virginia, formerly known as the Michie Company), the proofreading staff of the Department of Legislative Services, the Attorney General's Office, and other users of the Annotated Code. The corrective bill contains drafters' notes explaining the origin of the errors and what they were. There is a provision at the end of the bill that states legislative intent that nothing in the bill is intended to have a substantive impact.

Legislation - Retroactive Application

Beyond the Migdal case, the Court of Appeals rulings in other cases this session produced legislation to address the General Assembly's concerns about the court's holdings. One of the areas dealt with by the court was late fees on contracts, while another dealt with subrogation rights of health maintenance organizations. Senate Bill 145 (passed), which responded to the court decision on late fees, is discussed in the Commercial Law subpart of Part I - Financial Institutions, Commercial Law, and Corporations of this 90 Day Report. Senate Bill 903 (passed), which responded to the court decision on subrogation rights of health maintenance organizations, is discussed in the Health Maintenance Organization subpart of Part J - Health of this 90 Day Report. Both bills contained retroactivity provisions. While the Constitution of Maryland has no specific prohibition against retroactive civil laws (there are specific prohibitions on retroactive or ex post facto criminal laws), statutes affecting substantive rights are generally presumed to operate only prospectively. A law passed by the General Assembly that retroactively affects "vested" rights or impairs a contract may be held to violate the due process or impairment of contract provisions of the United States Constitution.

Interest in addressing concerns about retroactive provisions in legislation was expressed by Senate Bill 905 (failed). The bill, a constitutional amendment, would have prohibited the passage of retroactive civil laws except upon a two-thirds vote of all the members elected to each of the two houses of the General Assembly.