Filing fee surcharge heads to governor’s desk

ANNAPOLIS — The Senate on Wednesday unanimously passed and sent to Gov. Martin O’Malley’s desk a bill to extend a filing-fee surcharge that helps fund legal services for low-income Marylanders.

The surcharge, which contributes about $6 million to the Maryland Legal Services Corp.’s budget, is “a huge safety net that will have holes in it” if not extended by the legislature, MLSC Chairman Glenn F. Ivey said on the eve of the Senate’s vote.

“It’s critical for the programs that we fund,” added Ivey, a former Prince George’s County state’s attorney and current partner at Leftwich & Ludaway LLC in Washington, D.C.

The Senate abandoned its own surcharge bill, which would have made the surcharges permanent, in favor of the five-year extension that passed the House as HB 838. The governor has said he supports the measure.

Divisions on abandoned property

Also on Wednesday, the Senate voted 47-0 on a separate measure to raise MLSC’s share of the Abandoned Property Fund, currently set at $500,000 a year. The Senate-passed measure, an amended version of HB 1303, would earmark a total of $4.5 million to be phased in over the next three years.

The Senate’s version, though, differs from the bill passed by the House of Delegates last month.

The House voted to earmark $3 million annually for MLSC. Under the Senate’s amendments, the agency would get $1 million in fiscal 2014, which begins July 1; $1.5 million in fiscal 2015; and $2 million in fiscal 2016. In fiscal 2017, MLSC’s earmark would revert to its current level of $500,000 annually.

Senators and delegates will soon meet to try to hammer out differences between the measures with the goal of having both chambers pass unified legislation before the General Assembly adjourns at 12 a.m. on Monday.

The General Assembly took action after MLSC Executive Director Susan M. Erlichman announced in January that the agency would suffer a 40 percent decline in revenue if the surcharge is not extended.

But even with the surcharge extension, service providers would see their grants from MLSC decline 5 percent in fiscal 2014 — which begins July 1 — in the absence of an additional funding source, such as an increased share of the Abandoned Property Fund, Erlichman said.

MLSC’s financial straits are tied to continuing low returns on its traditional funding source, the Interest on Lawyers’ Trust Accounts, which fell from $7 million to $2.3 million in 2010.

The General Assembly responded that year with legislation to increase the surcharge on circuit court filing fees by $30, and district court filings by $8, with the additional revenue going to MLSC.

It was expected to be a temporary measure to tide over MLSC until interest rates rose.

However, the situation is even more dire now, Erlichman has said. With rates hovering at 0.25 percent, IOLTA now accounts for just $1.8 million, or 12 percent, of MLSC revenues, she said.