Hogan warns state agencies about single-bid and last-minute contracts

ANNAPOLIS — State agencies were put on notice Wednesday as Gov. Larry Hogan threatened to kill the next contract brought to the Board of Public Works at the 11th hour.

Hogan made his comments after joining with Comptroller Peter V.R. Franchot to delay a decision on an environmental consulting contract. The single-bid contract for $5 million over four years with Annapolis-based Environmental Resources Management had already come under scrutiny because the winning company was also the incumbent contractor.

“Two things we don’t like at the Board of Public Works are single-bid contracts and coming in at the very last moment before the contract expires and you’ve managed to do both at the same time,” Hogan said speaking to Bruce Michael, director of the Resource Assessment Service at the Department of Natural Resources.

Hogan backed Franchot’s call to delay approval until the May 11 meeting of the board. Franchot said he would like to see a greater effort made to entice other bidders to compete for state contracts.

State Treasure Nancy K. Kopp voted to oppose the delay but expressed concern with agencies bringing in contracts “at the last minute and backing the board against the wall.”

Hogan was quick to respond to Kopp’s concern.

“I think the next time we see that we just reject the contract automatically,” Hogan said.

Property taxes hold steady

The board also approved a recommendation not to increase Maryland’s state property taxes this year.

The three-member panel voted to maintain the state property tax rate of 11.2 cents per $100 of assessed value on real property and 28 cents per $100 on public utilities.

The action comes a week after the State Commission on Debt recommended last week to hold the line on the tax rates for the fiscal year that begins July 1.

This will be the 11th year consecutive year for both rates.

The revenue from property taxes is dedicated to paying off state bond debt. Any gap between the tax revenue and the debt payments is covered by General Fund dollars.

The state started issuing more bonds in 2009 under then-Gov. Martin O’Malley as a way to free up cash from programs such as Program Open Space and the Chesapeake Bay Trust Fund to offset structural budget deficits amid a deep national recession.

Since then, the gap between what is owed and what is covered by property tax collections has been growing.

This year the state needed nearly $252 million in general fund dollars to make the required payments. Projections for fiscal 2018 show that gap is projected to increase to $356 million — an amount that surpasses state spending on school construction. By fiscal 2021, that amount grows to $521 million — nearly twice the projection for the current budget year.