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Hogan to seek $20 million for riot recovery

Gov. Larry Hogan will ask the Board of Public Works Wednesday to approve the expenditure of  a $20 million transfer from the state’s rainy day fund to cover  costs related to the Baltimore riots.

The details of the expenditures have not been made public and will be hand-delivered to the board outside of its published public agenda.

Douglass Mayer, a spokesman for Hogan, confirmed that a request for the $20 million expenditure will be made Wednesday, the last board meeting of the fiscal 2015 year.

Mayer said the Department of Budget and Management “will be making a request for $20 million on Wednesday. The full details aren’t going to be released right now.”

The funds include approximately $9 million for expenses such as overtime and business recovery loans and grants for down payments for first-time homebuyers, according to sources familiar with the details of the pending expenditures.

Included in that figure is approximately $6 million for the Maryland National Guard; about $859,000 for the Maryland Department of Transportation for personnel, overtime, and vehicles; $58,000 for personnel and overtime for the Department of General Services; $50,000 for the Department of Human Resources; and $1,672 from the state Department of Health and Mental Hygiene.

The request includes another nearly $11 million for so-called un-incurred costs, including an additional $1 million for a city summer jobs program and nearly $6 million to be transferred into a catastrophic events account for later use, according to sources familiar with the request.

The transfer into a contingent fund controlled by the three-member board appears to push the state’s reserve fund balance below the legislative Spending Affordability Committee recommendation to maintain a 5 percent balance.

Hogan’s budget as approved earlier this year provided for a $814.1 million fund balance or 5 percent of the approved nearly $16.5 billion state operating budget.

“The purpose of the rainy day fund is to ensure the state has the financial reserves necessary to address emergencies,” said Eric Shirk, a spokesman for the state Department of Budget and Management, in a statement. “Given the real and obvious threat to life, public safety and property, no one can argue that the unrest in Baltimore in April was anything other than a major emergency in the State of Maryland.

“Following the serious and unprecedented events in Baltimore, the right thing to do is to pay our National Guard, police, firefighters and other first responders as quickly as possible,” Shirk said. “Governor Hogan is proposing to make available $20 million out of the more than $800 million in our rainy day fund for this purpose. The legislation is already drafted to restore the fund in the next budget.”

Mayer, when asked why the request was not part of board’s agenda or supplemental agendas, said details were still being finalized.

Hogan announced in May that he would seek a transfer from the rainy day fund, which is an account  established for events that sharply and unexpectedly reduce state revenue.

Shrink said the governor, using emergency powers, moved the money into the board’s contingent fund at that time of the May announcement.

Mayer said the riot in April following the funeral of Freddie Gray, who died while in police custody, and resulting 10-day state of emergency that stretched into May is the definition of an emergency for which the rainy day fund should be used.

“This is the fund that DBM thought was best for us to use,” Mayer said. “These are our bills.”

Hogan announced part of the request, approximately $4.15 million, during a visit to west Baltimore Monday for the opening of the Martin Luther King Jr. Recreation Center.

Included in that amount are:

  • $1.5 million for business recovery loans;
  • $500,000 for business façade grants, which could help an estimated 50 businesses;
  • $150,000 for business façade design and implementation (architectural and workforce services); and
  • $2 million for settlement expense grants and down payment assistance loans for new homeowners. This attracts an additional $1 million committed by Baltimore City for deferred payment loans that can be forgiven, achieving $3 million in investments for homeownership an estimated 300 homeowners at $10,000 each.

“These are significant and necessary steps in our ongoing effort to help affected Baltimore City residents recover and rebuild,” Hogan said in an emailed statement. “These funds will allow business owners the opportunity to improve their property’s appearance and will provide job opportunities and work experience to our youth throughout the summer months.”