A Note from County Councilman Dick Ladd

It’s May already and budget time is here for the County Council. County Executive Leopold has submitted his $1.192 Billion FY12 General Fund operating budget and his $169 million capital budget. 

Budgeted operating expenses are up only 1.5% or $17.9M over this year – nearly a budget freeze. This budget provides for a number of real world increases but the single largest increase is an additional $14.3M for debt service, including Board of Education (BoE) debt service.

To help offset these increases, such as energy and health care costs, all county employees will again take furloughs and take-home pay reductions of about 4.6%; 48 county positions will be eliminated; 14 employees are slated to be let go; and departmental operating budgets will be trimmed by as much as 12% in some cases. Total authorized county employment will decline to FY01 levels.  

This spending plan is based on having $31.4M (+2.9%) more recurring revenue than this fiscal year. This includes a $.03 increase in the property tax rate plus higher income tax revenues, state-shared revenues, and recordation and transfer tax revenues. However, these increases are offset by reductions in one-time funding available to balance the budget.

The $169M FY12 “General County” capital budget is down slightly from $172.3M projected in last year’s budget and shows slight increases in FY13-14.   

Importantly, $3.6M is requested in FY12 for the next phase (planning and design) with FY13-15 construction funding budgeted for the new Severna Park High School. FY12 feasibility study funding for Benfield Elementary is requested with FY15-17 construction funding programmed. No funding is programmed through FY17 for the next block of schools, which includes Arnold Elementary.

Also of note, the County Executive is applying an Attorney General’s opinion that allows including debt service payment increases made on behalf of the BoE in the calculations of mandated Maintenance of Effort (MoE) funding. In FY12, BoE debt service increases $12.4M to $53.9M. This $12.4M increase is larger than the traditionally calculated MoE amount of $5.7M for FY12.

The county budget does not fund two items in the BoE request: continuation of the FY2011 1% bonus ($3.4M) and a requested 5 1/2% average pay increase. The County budget notes, “The unrestricted budget retains every FY2011 School system employee, at their same salary, and would not require furloughs or layoffs as are being exercised in general county government.” With no new classroom teachers requested, the coming budget discussions will focus on the BoE’s ability to cover its increased costs.”

It is noteworthy that the county currently has a $9.5B charter imposed debt limitation. As a matter of policy, the county employs a debt affordability model that substantially limits the amount of “revenue supported debt” the County may issue. The FY12 budget shows that the county’s capacity to borrow is maxed out for the foreseeable future. If we have not covered our long-term capital infrastructure responsibilities within this budget, we have no capacity to do so unless we raise revenues, cut other projects, or increase our debt affordability ceiling policy model (or accept lower bond ratings). 

This is a bare bones budget. The County is still operating with a structural deficit.  We are not preparing for a number of things such as our health care obligations for retirees, expected growth in health and retirement benefit costs for current employees, keeping up with school modernization, equipment replacement, road repairs and Bay preservation. 

In my opinion, this bare bones budget is balanced fairly. All stakeholders are sharing in the pain. Taxpayers will get a small tax increase and the employees will carry a bit of the load through furloughs, reduced take home pay and pay freezes. We will all see some of our favorite county services and facilities again pushed close to their limits. 

As the Council has its budget hearings, there will be places found to further trim spending and places where additional funds may be justified. I am hopeful that our work over the next month will improve the budget further.  

I would welcome your comments on this year’s budget, so contact me at 410-222-1401 or at dladd@aacounty.org.