Frostburg legislative liaison reports state budget shortfall, IT tax and sewage-sludge bill developments

Rich, the city’s legislative liaison, told the Frostburg Mayor and City Council that Maryland entered the end of this legislative session facing a large budget shortfall that produced more than $1 billion in new fees or taxes and roughly $2 billion in state cuts. He said the administration and legislature closed the constitutional budget gap but warned the fiscal picture remains unstable and may prompt a special session later in the year.

Rich said two local priorities consumed much of his time in Annapolis: a proposed bill that would have restricted the land application of sewage sludge (and the “forever chemicals” it may contain) and changes to the state’s water revolving loan program. He said Frostburg and Cumberland played a central role in raising municipal concerns about the sewage-sludge bill, and that sponsor amendments followed. Ultimately, Rich said, the bill did not pass in the legislature’s final posture this year.

On the water revolving loan legislation, Rich said he worked with staff and members of the delegation to secure amendments that preserved Frostburg’s eligibility under the revised rating structure; he said those amendments improved the bill’s effects for Frostburg, though that bill also did not move forward this session.

Rich also described a separate change folded into the final budget: a digital-products/IT services tax (described in materials as a data/IT consulting services tax) that he said was narrower than an earlier, broader service-tax proposal but remains ambiguous in scope. He said the comptroller’s office will issue implementing guidance and that Frostburg is awaiting that guidance because the tax could affect municipal operations and many local businesses.

Rich highlighted several budgetary cost shifts that could increase local obligations: reductions in state funding for employer pension contributions administered by MSDE and MHEC; a proposed change shifting a larger share (from 50% toward 90%) of local costs for property valuation work to counties; and a requirement that localities absorb 50% of payments for new erroneous-conviction settlements entered by the Board of Public Works (Rich said he would confirm details and conditions). He warned these state-level changes, combined with new fees, will increase pressure on county and municipal budgets and could affect local rates and services.

Rich closed by urging continued coordination with the delegation and with neighboring jurisdictions on shared priorities and said he would keep Frostburg leaders informed as implementing details and any potential special session develop.