Sponsored By

County facing shortage as reserves empty out

(Feb. 27, 2015) Worcester Treasurer Phil Thompson was not expecting applause after his presentation of the fiscal 2015-2017 county revenue report last Thursday. Good thing, too, because his presentation painted a less-than-rosy picture.

Fiscal 2015, for instance, had general fund expenditures of $178 million. To cover that bill, the county had to take $6.4 million from a rainy day fund created during the real estate boom to cover shortages.

The projected 2016 budget, however, would need to take the remaining $10.5 million in that fund, known formally as the budget stabilization fund, to get close to last year’s expenditures, at $177.8 million, or about $500,000 less.

In fiscal 2017 things get worse, because general fund revenues are expected to nosedive to a little more than $169 million and there will be no stabilization fund to make up the difference.

“We expected the bottom of the trough to be the current fiscal year. The most recent State Department of Assessments and Taxation information and estimate indicate that’s most likely going to be next fiscal year. The two years are almost a dead heat, so to speak — they’re almost revenue neutral,” he said.

In a tax base measured in billions, the difference projected between fiscal 2015 and fiscal 2016 is about $700 million, according to a report furnished to the commissioners by Thompson based on the State Department of Assessments and Taxation estimates.

Fiscal 2015 shows a tax base of $14.86 billion, while another cycle of property reassessments will take the base down to $14.79 billion. For comparison, the tax base in 2009 was $20.25 billion.

“I’ve used the analogy more than once that we’d all like to see the recovery curve in the form of a perfect V-shape, where it’s going to be more like a U-shape. We’re going to spend a little time at the bottom before we start to see any significant recovery,” Thompson said.

According to Thompson, the numbers started to falter around 2012-2013, three years after the real estate market crash but well before the assessment cycle would hit bottom.

“Our four CPAs on staff recognized we were going to go into recession,” former Commissioner Judy Boggs said this week, “and in an effort to remain conservative, which Worcester County always is, established the budget stabilization fund to mitigate … difficult circumstances. It was a wonderful idea.”

The county deals with lots of estimates as a matter of course, Boggs said, so any time they had a little left over from this purchase or that fund, the commissioners would sock it away into the stabilization fund.

At its height, the fund was worth around $22 million and is currently almost $18 million. Still, it’s possible for the commissioners to spend every cent in the fund during the current budget cycle and still see a deficit from the 2015 budget.

“Government has to function. You’ve got to pick your priorities,” former commissioner Virgil Shockley said later, “there might be some properties coming online that will give you a one-time boost of $500-$600,000, but certain things have to function.”

Worcester County is divided into three assessment areas, each on the three-year assessment cycle. The western portion of the county is Area 1, Area 2 is the southern end and Area 3 is the Ocean City/Ocean Pines/Berlin section of Worcester. Area 3 will be assessed for 2016, effective July 1, 2015, which is part of the bad news.

“Ocean City in many ways sets the trend because it’s upwards of 60 percent of our total assessable base. Certainly in 2010 we knew what was happening with the national recession and the whole housing bubble burst. Again that occurred in 2013 as well and now we’re rolling into the third cycle where Ocean City has been reassessed with declining assessments,” Thompson said.

Ocean City’s next assessment after the current one won’t hit the books until 2019, where all eyes will be upon it.

“We’re monitor each and every one of the taxing districts, honestly, but the mid and southern portions of the county really never went up nearly as much as we saw on the island and in the resort area. As a result, it didn’t go down as much either,” Thompson said.

 

Plan Your Trip
OceanCity.com Recommends

Follow Oceancity.com

208,023FansLike
29,939FollowersFollow
1,910FollowersFollow
8,752FollowersFollow
764SubscribersSubscribe
Trimpers Rides, Ocean City

More articles

Booking.com

LEAVE A REPLY

Please enter your comment!
Please enter your name here