The State will lease office space from the Maryland Economic Development Corporation under a capital lease
starting in fiscal year 1996. The purchase and reconstruction of the property will be financed with revenue bonds.
The State's lease payments will equal the Development Corporation's bond payments. Future minimum payments
under this capital lease are as follows (amounts expressed in thousands).

Years Ending
June 30	Amount
1996..................................................................................................	$250
1997..................................................................................................	311
1998..................................................................................................	308
1999..................................................................................................	304
2000..................................................................................................	311
2001 and thereafter.......................................................................	3,083
Total future minimum payments ................................................	4,567
Less amount representing interest..............................................	1,752
Present value of payments ..........................................................	$2,815

The State receives significant financial assistance from the U.S. Government. Entitlement to the resources is
generally conditioned upon compliance with terms and conditions of the grant agreements and applicable Federal
regulations, including the expenditure of the resources for eligible purposes. Substantially all grants are subject to
financial and compliance audits by the grantors. Any disallowances as a result of these audits become a liability of
the fund which received the grant. As of June 30, 1995, the State estimates that no material liabilities will result
from such audits.

19. Landfill Closure and Postclosure Care Costs:

State and Federal laws require the Maryland Environmental Service (the Service), a component unit, to place a
final cover on the Midshore Regional Landfill (Midshore), which is expected to close in 2009, and the Easton
Landfill (Easton), which is filled to capacity and in the process of being closed, and to perform certain maintenance
and monitoring functions at the landfill sites for thirty years after closure. Although closure and postclosure care
costs at Midshore will be paid near or after the date the landfill stops accepting waste, the Service reports a portion
of these closure and postclosure care costs as a liability based on the use of 25% of the estimated capacity of the
landfill. The Service recognizes a liability for Easton equal to the estimated total current cost of closure and
postclosure care that has not been paid. A $3,709,000 liability is included in accounts payable and accrued liabilities
in the accompanying balance sheet of the Service. Total closure and postclosure care costs are currently estimated
to approximate $11,900,000, as determined through engineering studies. Actual costs may be higher due to
inflation.

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