auditors, and engineers. The bill also creates a nonlapsing Public Service Commission
Fund to fund the operations of the PSC, establishing the PSC as a special fund
agency.

There can be no doubt that the industries regulated by the Public Service Commission
are undergoing fundamental and rapid changes. A stable and qualified workforce is
certainly necessary in this dynamic environment. However, while some flexibility in
salary-setting authority may be advisable, I object to the unnecessary step of
establishing the PSC as a special fund agency. The challenges facing the PSC should
be addressed in a manner that does not significantly limit the ability of the Governor
and the General Assembly to review the Commission's priorities and budget.

Many State agencies find it difficult to attract and retain qualified employees in
certain positions. Salaries offered in the private sector and by local governments often
exceed salaries offered by the State. By partnering with the General Assembly, we
have started to remedy some of the basic problems with our personnel system. We
have placed an emphasis on pay for performance and, this year, we adopted a revised
standard pay plan affecting over 44,000 positions, including many of the PSC
positions identified in Senate Bill 171. This will go a long way towards addressing a
major problem with the current pay plan; the limits on salary growth for the over 60
percent of State employees who have reached the highest step in their grade.

This interim, the Department of Budget & Management will finalize its
recommendations for updating and improving the salary structure for employees in
the Executive Pay Plan. The fiscal year 2001 budget that I submit to the General
Assembly next year will include a restructured Executive Pay Plan; the revised pay
plan will benefit employees at the Public Service Commission and throughout State
government.

Recruiting and retaining qualified staff is important to all State agencies and
commissions. For example, while the PSC is entering a period of change for the
industries it regulates, the Office of People's Counsel (OPC) must continue to
vigorously represent the interests of residential consumers before the Commission.
Senate Bill 171 fails to provide the same flexibility to OPC that is provided to the PSC
for comparable positions. There are specialized positions in virtually every State
agency. We should work aggressively to keep qualified people in those positions. Last
year, we implemented a targeted initiative to attract and retain qualified information
technology employees by providing competitive salaries. A similarly focused effort
may have been sufficient to address the challenges facing the PSC. The salary plan
reforms enacted for FY00 and scheduled for FY01 should be given a chance to work
prior to altering the status of the Commission. The special fund structure adopted in
Senate Bill 171 goes too far.

For the above reasons, I have vetoed Senate Bill 171.
Sincerely,

Parris N. Glendening
Governor