Secretary of State outlines FY26 budget, flags technology and grants issues

Micah Richards, presenting the Department of Legislative Services' fiscal 2026 analysis for the Secretary of State, told the Health and Human Services Subcommittee that the office's fiscal 2026 allowance increases by about $123,000 to $5.7 million.

The analysis, Richards said, highlights that 75% of the office's budget supports personnel costs and roughly 10% supports contractual services, with software maintenance as the largest line item in that category. He flagged a 2023 statute (chapter 101 of 2023) that provided a $982,000 grant to the Sister States of Maryland Incorporated for a project exploring cultural linkages between Black Marylanders and civil rights movements abroad; as of Jan. 10, 2025, roughly $209,000 had been distributed and about $772,000 remained expected to be used on fiscal 2025 projects.

The Secretary of State, speaking after Richards, emphasized the office's revenue generation and its broad responsibilities. The secretary said, "Our office is authorized to spend about $2,000,000 from its special funds to support our personnel costs and other operations. In total we receive over $4,000,000 in revenues from fees that are split between the general fund and a special fund." The secretary added that roughly $2.3 million was reverted to the general fund in FY24 and that the office's net cost to the state is small compared with the services it provides.

Both presenters described problems and remedies for the secretary's electronic filing system. Richards told the committee that the prior vendor, Digital Management Corporation, failed to complete the Electronic Filing System (ELF 2) project; the office moved to a new vendor and plans to launch a new ELF 3 product in March 2025. The secretary said the new vendor (Open Law Library) will provide a statutory database, improved searchability, accessibility features and beta testing. "Unlike the rollout of the ELF 2, we are intentionally working with the vendor to secure an actual database as required under the law and appropriate beta testing and training," the secretary said.

Richards noted a proposed fiscal 2025 deficiency of about $98,000 in general funds for travel and a position reclassification in the international affairs division. He also reported that a $10,000 FY25 appropriation to the Build Haiti Foundation was reverted because the foundation did not have administrative means to receive it.

The analysis highlights enforcement and program metrics: registered charities increased 5% from FY23 to FY24 while delinquent charities decreased 0.7%. Contacts with delinquent charities (enforcement activities) rose 8% but delinquencies resolved decreased 26% from prior years; DLS asked the secretary to explain that downward trend. Richards said the office's new online filing system, implemented in August 2022, sends automated pre-delinquency notices and does not label online filers as delinquent until review confirms delinquency, which can reduce artificially inflated delinquency counts seen under the prior paper-based system.

The secretary described other program details: the Address Confidentiality Program (ACP) had an increase in participation and re-enrollments and currently operates with five staff plus two positions funded by federal Victims of Crime Act (VOCA) grants that may decline. The office uses fee revenue to certify about 59,000 documents for international use annually, and the restoration of a processing fee raised roughly $177,000 more to the general fund compared with the prior fee.

The DLS presentation recommended that the Secretary of State concur with the governor's allowance; the secretary said the office concurs with the recommendation and is available for questions.

The committee did not take formal action on the presentation during this hearing.