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MLSC to get extra $1M from Abandoned Property Fund

ANNAPOLIS — The General Assembly has approved and sent to Gov. Martin O’Malley’s desk legislation to provide an additional $1 million annually to provide legal services to low-income Marylanders.

The legislature tripled the amount of revenue that Maryland Legal Services Corp. receives from the state’s Abandoned Property Fund. MLSC, which had received $500,000 annually from the fund for nearly three decades, will now receive $1.5 million.

Gov. Martin O’Malley is expected to sign the legislation.

“We are very relieved and extremely delighted,” said Susan M. Erlichman, executive director of the Maryland Legal Services Corp., adding that the funding eliminates the need for a planned 5 percent cut to the legal aid agencies to which the corporation provides grants.

“Access to justice is truly a bipartisan issue,” Erlichman added.

The bill passed Monday supplements a funding measure sent to the governor last week. Under House Bill 838, legislators voted last week to extend through June 30, 2018, surcharges on filing fees in civil cases. The surcharge, which amounts to $6 million annually, is earmarked for the MLSC.

Without the extension, the increased surcharge would expire June 30.

The bill to increase MLSC’s share of the Abandoned Property Fund, HB 1303, emerged from a legislative compromise between House- and Senate-passed versions of the measure. The two houses differed on the amount and duration of the increase.

The House voted 131-8 for the permanent $1.5 million allocation. The Senate vote was 47-0.

The General Assembly activity followed Erlichman’s announcement in January that the agency would suffer a 40 percent decline in revenue if the surcharge is not extended beyond its June 30 expiration date.

She warned that that 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 the increased allocation from the Abandoned Property Fund.

With the surcharge preserved and Abandoned Property Fund revenue raised to $1.5 million annually, Erlichman said the funding cut is not needed.

MLSC’s financial straits are tied to continuing lows in the interest rate.

Legal services historically relied on funding from the Interest on Lawyers’ Trust Accounts. But with interest rates hovering at an anemic 0.25 percent for several years, IOLTA funding now accounts for just 12 percent, or $1.8 million, of MLSC revenues, Erlichman said.

MLSC’s situation is even more dire than it was in 2010, when IOLTA revenues fell from $7 million to $2.3 million, she added.

The General Assembly enacted legislation that year to increase the surcharge on circuit court filings by $30, district court filings by $8 and summary ejectments by $3, earmarking the additional revenue for MLSC.

The 2010 law put the sunset date of the surcharge at June 30, 2013, as lawmakers erroneously predicted that interest rates would increase by then.