GOVERNOR VETOES SURETY BONDS BILL:

Insurance companies praised Gov. Robert Ehrlich (R) for vetoing legislation that would have elevated the trigger point for when surety bonds are required on municipal projects.

According to the American Insurance Association, the measure (SB 324) would have exposed the state to a greater likelihood of loss on public works projects by raising the state’s threshold for when surety bonds are required from $100,000 to $200,000, making it the second highest level in the country.

AIA lobbyists said that signing the bill into law would have hurt small and emerging contractors and suppliers, and exposed the state to a greater chance of loss with no recourse.

“Members of AIA write most of the surety bonds for public and private projects in the state of Maryland,” stated Taylor Cosby, AIA vice president, Mid-Atlantic region. “It is important for small and emerging contractors to have the opportunity to compete for these types of projects, and doubling the threshold on when a payment and performance bond is required on a public construction project will not accomplish that goal. In fact, SB 324 ran counter to this objective by encouraging small contractors to potentially overextend their resources.”