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Bill Summary · SB 564

SB 564 — Catastrophic Event Account: Transfer of Funds to State Disaster Recovery Fund

Status: Favorable with Amendments (Budget & Taxation). Introduced: Feb 20, 2025. Effective date: July 1, 2025.

Purpose / Intent

Allow faster and more flexible use of State emergency reserves by authorizing limited transfers from the Catastrophic Event Account (administered by the Department of Budget and Management, DBM) to the State Disaster Recovery Fund (administered by the Maryland Department of Emergency Management, MDEM) when the State Disaster Recovery Fund is depleted or insufficient to meet estimated disaster recovery needs. Shorten the Legislative Policy Committee (LPC) review window for Catastrophic Event Account budget amendment transfers.

Key provisions

  • Authorizes the Governor to transfer funds from the Catastrophic Event Account to the State Disaster Recovery Fund when either:
    1. the balance of the State Disaster Recovery Fund has been depleted due to previous use or transfer; or
    2. estimated costs for providing adequate disaster relief for a natural disaster or catastrophic situation exceed the State Disaster Recovery Fund balance.
  • Conforming statutory edits: updates Public Safety Article §14–110.5 and State Finance & Procurement Article §7–324 to reflect the new transfer authority.
  • Reduces the LPC review-and-comment period before the Governor may transfer funds from the Catastrophic Event Account by budget amendment from 15 days to 5 days (the 2‑day LPC review period for federal government shutdown assistance remains unchanged).
  • Reaffirms existing restrictions: Catastrophic Event Account funds may not be used to offset regular operating deficits; uses remain for disaster/catastrophe response and certain federal shutdown employee assistance.

Fiscal and operational impact

  • Transfers simply move existing special funds between accounts; therefore, a transfer itself produces no net change in overall State finances.
  • If a transfer occurs:
    • Special fund expenditures from the Catastrophic Event Account increase (outflows) and special fund revenues to the State Disaster Recovery Fund increase correspondingly.
    • Interest income normally credited to the Revenue Stabilization Account (Rainy Day Fund) from the Catastrophic Event Account could decline minimally if a substantial balance is moved.
  • Current fund levels (per the fiscal note): Catastrophic Event Account projected closing balance for FY 2026 — $10.0 million. State Disaster Recovery Fund balance as of Feb 2025 — $1.5 million; FY 2026 budget includes $1.1 million (about $1.0M GF and $0.1M federal).
  • DBM and MDEM can implement the statutory/administrative changes with existing resources.
  • Local governments and state units seeking disaster recovery support may benefit from faster availability of funds due to the shortened LPC review period.
  • Local government and small business fiscal effects are anticipated to be minimal.

Who is affected

  • State: DBM (administrator of Catastrophic Event Account), MDEM (administrator of State Disaster Recovery Fund), Executive (Governor) and LPC (reduced review period).
  • Local governments: potential beneficiaries of disaster recovery funding; may receive funds more quickly in qualifying circumstances.
  • No new recurring state expenditures mandated; transfers are discretionary when conditions are met.

Procedural / timeline notes

  • LPC review timeframe for Account-to-account transfers reduced from 15 days to 5 days; transfers for federal shutdown assistance continue to require only a 2‑day LPC review.
  • Bill takes effect July 1, 2025.
  • The bill makes narrowly targeted changes to permit transfers under specified emergency circumstances and to accelerate the executive branch’s ability to move funds for disaster recovery when the State Disaster Recovery Fund is exhausted or clearly insufficient.

Compiled from official sources — confirm details with the bill’s official record.

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