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Sponsor seeks audit exemption for Marylandsmallest municipalities to reduce rising costs
Summary
Sen. Mounts and the Maryland Municipal League asked the committee to exempt very small municipalities with annual revenue at or below $100,000 from the certified legislative audit requirement unless requested by the joint audit committee, citing rising audit costs and limited local budgets.
A bill to exempt the state's smallest municipalities from mandatory certified legislative audits drew a presentation from its sponsor and the Maryland Municipal League, which said audit costs have risen sharply for small jurisdictions.
"What it would do, it would exempt them from the legislative audit. These municipalities would still be required to submit requisite financial information," Senator Mounts told the House Environment and Transportation Committee while introducing SB962. He said the exemption would apply when a municipality's revenue was $100,000 or less in the previous year.
Justin Fiore of the Maryland Municipal League told the committee the change would affect roughly a dozen of the league's smallest members and that audit costs have risen because fewer large auditing firms take on small municipal clients and because audit complexity has increased over time.
"So we're seeing thousands of dollar increases on small municipalities," Fiore said. He illustrated the economies-of-scale impact: a $4,000 audit cost spread over 40,000 residents equals 10 cents per resident; applied to a municipality of 100 residents, the same $4,000 is $400 per person.
Mounts said the bill received unanimous approval from the Senate and from the Senate Budget and Taxation Committee. He asked for a favorable report from the House committee and turned the microphone to Fiore for additional remarks. The hearing transcript does not record a committee vote.
The legislation would require participating municipalities to continue submitting financial information to the Department of Legislative Services; the exemption would only remove the requirement for a certified legislative audit unless the joint audit committee requested one.
