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Quoting the Maryland Capital Consolidated Bond Loan bill from the 2018 legislative session (Chapter 9 - Senate bill 186), 1(7):

“The proceeds of the loan must be expended or encumbered by the Board of Public Works for the purposes provided in this Act no later than June 1, 2025. If any funds authorized by this Act remain unexpended or unencumbered after June 1, 2025, the amount of the unexpended or unencumbered authorization shall be canceled and of no further force and effect.”

The question is two-part:

  • Does expended refer to by the Board of Public works?
  • If one has funds that remain unexpended but no funds that are not unencumbered, are the funds unexpended subject to cancelation?
    • As an example: $1,000,000 proceeds; $600,000 expended; $1,000,000 encumbered by the Board. Are the $400,000 unexpended funds subject to cancelation?
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Does expended refer to by the Board of Public works?

Yes.

If one has funds that remain unexpended but no funds that are not unencumbered, are the funds unexpended subject to cancelation?

As an example: $1,000,000 proceeds; $600,000 expended; $1,000,000 encumbered by the Board. Are the $400,000 unexpended funds subject to cancelation?

No.

  • Ohwilleke, could you explain with logical reasoning why you say “No.” – Gary Staples Mar 20 at 23:46
  • @GaryStaples If it is encumbered this means that there is a binding obligation to a third party to spend the $$ on something. It would violate a contract to cancel the funds and governments aren't allowed to unilaterally breach a contract. – ohwilleke Mar 21 at 5:42
  • That doesn’t address the legal meaning of “or” in that sentence. Also, the grantee has a contract with the government which can’t be breached, no matter what contracts they subsequently entered with other parties. Not only that but the grantee would be obligated to pay the contractor for work performed (or however payment per the contracts are arranged) but how the grantee gets the money to pay the contractor isn’t relevant; if the government doesn’t fund the grantee this does not automatically cancel the contract between the grantee and contractor. – Gary Staples Mar 22 at 10:07
  • @GaryStaples "how the grantee gets the money to pay the contractor isn’t relevant; if the government doesn’t fund the grantee this does not automatically cancel the contract between the grantee and contractor." If the funds are supported by an appropriation currently in force, the government can't cut a check to pay the contract even if the government admits that the contract is valid, giving rise to a breach of contract. The meaning of "or" has to be interpreted in the context over the overall process in a way that makes sense. – ohwilleke Mar 22 at 18:47

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