(March 20, 2015) Worcester County’s fiscal 2016 budget book would be soaked in red ink were the county commissioners to adopt the first draft of the spending package that agrees to every request.
The budget, containing the collected requests from almost every county department and municipality, is already 660 pages long without counting the Board of Education’s proposed budget or appeals for support from local nonprofits, county staff said.
The budget request total of $189.8 million exceeds by $22 million the county’s project $167.4 million in revenue in the coming year at the current tax rate.
According to county Treasurer Phil Thompson, Worcester has $17 million socked away in stabilization funds that can be used at the commissioners’ discretion, but that figure includes about $6 million already earmarked to fund the current year’s budget.
Stabilization funds are the last to be spent, Thompson said, so once traditional sources of funding run out for the year, the stabilization will kick in and carry the county into the next fiscal year. How much that will end up being is anyone’s guess, Thompson sai, and may even require a reduction of the $6 million budgeted last year.
It could also increase.
This leaves roughly $11 million in the stabilization account, which is money put away by previous boards of county commissioners as they watched tax revenues decline following the collapse of the real estate market and the mortgage crisis of the last decade.
Worcester County is on a three-year cycle of assessments, with Ocean City accounting for 60 percent of the total assessed value of the county. Ocean City was reassessed this year, and property values dipped slightly.
Several officials said they had been told by multiple sources that this year was going to be the “bottom of the trough,” but that turned out to not be the case. Ocean City won’t be reassessed until 2019, and so Worcester County’s budgeting troubles could last until then.
Meanwhile, the Board of Education is the elephant in the room.
The board’s operating budget request is about $82.7 million plus almost $11 million in debt, or 55.8 percent of the county’s total estimated revenue, according to a report by County Administrator Harold Higgins submitted to the commissioners.
Their request is almost $5 million greater than it was last year and includes a payroll increase of 4.2 percent or $2.3 million, a bus contract increase of 4.2 percent or $221,000 and a small increase to starting pay for teachers, according to Higgins’ report.
The county mirrored these increases for employees in its own budget request, Higgins said.
State law requires counties to fund schools at least equal to the previous year’s level, which is called “Maintenance of Effort.” It was passed in 2012 because seven counties, including neighboring Wicomico, slashed school budgets to make ends meet. If a particular county doesn’t comply with the state’s maintenance of effort guidelines, it loses state funding.
Thompson said this particular budget year is troubling because the county has been putting off other capital expenditures, such as road repairs and equipment purchases.
“There’s only so long you can put these things off,” he said.
The budget request for road maintenance increased by almost $2 million, including $1 million for blacktop, according to Higgins’ report.
Some departments have seen decreases to their requests already. Fire Company grants, for example, are tied to the assessment formula and so have decreased by almost $328,000. Recreation decreased about $575,000 because that department’s Project Open Space grant was completed. Debt Service decreased by almost $1.8 million due to the retirement of debts and “refunding activity.”
Higgins invoked the accounting mantra that shortfalls “must be reconciled, either with reductions in expenditures, additional revenues or a combination of the two,” several times during his presentation.
Should the commissioners choose to zero out stabilization funds this year, it would cover the additional amounts requested by half, but paint a dire picture for next year’s budget.
The other option would be to issue an ultimatum to all departments and other beneficiaries of the county budget to cut their budgets or else. The two words not spoken during the regular meeting were “tax increase.”
Worcester County could generate about $1.45 million per penny added to the tax rate, but to cover the total budget as proposed would require a 15-cent increase in the rate. That would amount to $300 on a property assessed at $200,000. Several members of the current board campaigned on being unwilling to institute tax increases.
The budgeting process begins in earnest when the commissioners meet with the Board of Education next Tuesday at 9 a.m. for a work session. The county will hold a public hearing on the budget at 7 p.m. on May 5 at Snow Hill Middle School.