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Board of Public Works Defies Legislative Restriction on State Center Litigation Spending

The Maryland General Assembly’s budget negotiation process came under fire during the Board of Public Works meeting after officials complained about two budgetary restrictions imposed by lawmakers over the past two years.

Gov. Lawrence J. Hogan Jr. (R) and Comptroller Peter V.R. Franchot (D) voted in favor of a move to pay $363,449 out of a state contingency fund for continued litigation over the State Center project in Baltimore. Lawmakers in the General Assembly struck a $346,000 appropriation for the litigation costs in a final version of the state budget passed in March.

Hogan and Franchot said striking the budget language was fiscally irresponsible because the appropriation was to cover legal fees already incurred. Treasurer Nancy K. Kopp (D), who expressed regret over her vote to initiate the litigation in the first place, said it was a valid exercise of the legislature’s power.

The money was shifted by the 2-1 vote from a $500,000 Contingent Fund available to the Board of Public Works. That fund balance is now $136,551 for the rest of the fiscal year.

In the 2020 budget, which is set to take effect on July 1, lawmakers added budget language declaring their intent that Contingent Fund spending should only be allowed when the Board of Public Works is unanimous. Hogan said the language has been deemed unconstitutional.

In 2016, a unanimous Board of Public Works voted to end leases at State Center – a 28-acre government complex in midtown Baltimore originally constructed in the 1950s and 60s – with Ekistics LLC, the site developer, citing stalled progress on a $1.5-billion redevelopment plan. The state sued the company, which countersued the state, alleging that Hogan had refused to work on the project after his election.

The funds in question Wednesday were for litigation fees incurred between December 2018 and February 2019. The litigation remains pending in Baltimore City Circuit Court.

“This was a unanimous decision by the Board of Public Works several years ago to vote against the capital leases…” Hogan said Wednesday.

“It was, and I regret that to this day,” Kopp jumped in.

Hogan said the only way for the state to pay the outstanding fees was to utilize the Contingency Fund. “That’s what the contingency fee is for so we can pay our bills in a case like this where the legislature does something stupid and takes away the money that we needed to pay our bills with,” Hogan said.

It was the second spat of the day over restrictive budget language passed by lawmakers.

Earlier in the meeting, the board voted 3-0 to disapprove a recommended contract for advanced research and data analysis of the state’s Child Care Subsidy Program. The proposed $2.3 million contract to Nobi Group, a Tennessee-based company, with the Maryland State Department of Education, was rejected after board members learned the Maryland-based incumbent for the contract had been excluded from bidding via budget language passed in 2018. Officials said lawmakers were displeased that year with previous analyses by the Regional Economic Studies Institute at Towson University, but the agency did not request the restrictive language.

Franchot said the budget language essentially resulted in a no-bid contract making its way to the board.

The board members ultimately decided to reject the current contract proposals and start the process over after July 1, when the 2019 budget language is no longer in effect.

Franchot said the best way to deal with conflicts over budget restrictions is greater transparency in the budget negotiation process. “I would love to see a video tape of these conference committee votes. Where these [budget] language items fall out of the ceiling, I guess. Nobody takes credit for anything,” Franchot.

Kopp — the General Assembly’s designated representative on the BPW — pointed out that all of the budget language is ultimately approved in open floor sessions.

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Board of Public Works Defies Legislative Restriction on State Center Litigation Spending