Cecil County Budget Obstacles: No Pay Raises, Tax Freeze — Landfill Deficit Awaits Action

Cecil County Executive Tari Moore hosted the session 1/13/15 and tried to sound some warnings about the fiscal situation. “We have less revenue to work with,” she said, citing recent state aid cuts approved by the Board of Public Works affecting the current Fiscal 2015 county budget. And with the new Gov. Larry Hogan having to find hundreds of millions of dollars in additional spending cuts to balance his own upcoming budget, Cecil County will no doubt face more cutbacks in state assistance. Nevertheless, Moore pledged to develop “the most responsible budget I can.”

But deep in the charts and graphs in a fiscal report prepared by the county’s Finance Department, and that agency’s recent evaluation of the Fiscal 2014 budget year, there are ominous signs for Cecil County’s financial future. And even some belt-tightening steps planned by Moore for the new budget year—such as no cost-of-living raises for county employees and not adding new workers to the county payroll with the exception of some law enforcement positions—probably aren’t enough.

The finance documents state Moore wants to keep the property tax rate at the same level as it has been set for the current and her previous Fiscal 2014 budget years—and she also has developed a newfound reluctance to rely on reserve funds (“unassigned fund balances,” in budget-ese) to balance the Fiscal 2016 budget. She plans “limited/minimal use” of those reserves to balance her budget, according to the finance documents.

That could take quite a bit of alchemy, since Moore has used such fund balances to pay for various programs and services since taking office two years ago and only balanced her budget by tapping multi-million dollar withdrawals from such reserves that had been accumulated by the old Board of County Commissioners as a hedge against future fiscal difficulties. In the current budget year, Moore tapped $4.1 million from these fund balance reserves to balance her budget, according to the finance department’s documents.

And a key component of the county’s general revenues— “piggyback” income taxes collected by the state but delivered to the county—are flat or declining. A tiny increase in the current budget year’s income tax revenues was primarily the result of a new state “disparity grant” because the county’s income tax revenues had fallen off. But Gov. Martin O’Malley’s recent budget cuts slashed over $230,000 from the current budget year for that grant—leaving yet another hole in Cecil County’s budget.

[SEE exclusive CECIL TIMES report here: http://ceciltimes.com/2015/01/omalleys-parting-gift-to-cecil-county-cuts-in-disparity-grant-to-offset-low-income-tax-revenue/ ]

But the largest elephant in the budget room is the unaddressed continuing deficit in the county’s landfill operations—shortfalls of revenues to cover operational costs– that have required transfers of $4.9 million in taxpayer money to cover landfill expenses in the current budget year. The landfill funds have in effect signed an IOU, that someday the money will be paid back. But so far, the County Executive and the County Council have been reluctant to take the politically unpopular steps of making users of the services pay the full cost.

For starters in the gloomy prospects for the new county budget, the state shift of teacher pension costs to the county continues to rise. The state paid the full cost of teacher pensions in the past but several years ago began shifting an escalating portion of the burden to county governments. So in the new budget, the teacher pension costs for Cecil County will be $3.9 million, an increase of $591,000 over the current budget year.

Then there is the drop or minimal rise in recent property values in the county—with those values set by the state and to which the county’s local property tax rate is applied. The county’s “assessable base” (total property values) dropped from $9.86 billion in 2012 to $9.17 billion in 2015. The county expects a slight uptick of 1 percent for the new budget year, yielding a modest revenue increase of $941,000.

(One-third of the county’s properties are re-assessed by the state each year, and some areas will receive expected higher property value reports this year. But Moore pledged to help such property owners appeal higher assessments to the state—but if they succeed, it will mean lower property tax revenues to the county.)

For county employees, the county executive plans no cost-of-living increases (in contrast with modest rises in her past budget.) And the county administration is considering “early retirement incentives” or buy-outs that could incur short-term extra costs but ultimately save money by putting higher-paid, experienced employees out to pasture.

The Moore administration also indicates it wants to “re-bid” some major service contracts, such as the ConMed provider of medical services at the county’s detention center and a contractor providing maintenance of county vehicles, in an effort to obtain lower cost services.

HOWEVER, Moore’s financial documents did not include plans for re-bidding of the county’s animal control contract with A Buddy for Life, Inc., which is being paid $60,000 a month or $720,000 a year to handle animal control services at a rented kennel in Elkton. Under that contract, Moore could cancel it at any time for any reason. Some former volunteers and County Councilor Alan McCarthy (R-1), who is a licensed veterinarian, have complained about unsanitary conditions and animal overcrowding at the Buddies’ rented facility.

Sources told Cecil Times that Moore was presented with a proposal from the Cecil County SPCA more than six months ago to house animals at the licensed and much larger animal shelter the SPCA owns in Chesapeake City, for substantially less money than the Buddies receive– but Moore did not respond to the proposal.

Instead, Moore has been looking at possibly replicating in Cecil County the animal shelter operations in Harford and Queen Anne’s counties, where county governments own animal shelter facilities. In Harford County, taxpayers are currently on the hook for over $6.4 million to construct a new animal shelter and the Queen Anne’s facility is government-owned and maintained.

Meanwhile, Moore’s two budgets since she became County Executive have relied heavily on tapping county reserve funds, built up over decades by previous county Boards of Commissioners. Moore tapped those funds so as to freeze property tax rates, expand services and boost spending for politically popular programs on her watch. But those policies have taken a toll on such reserves, county financial documents show, and those decisions may come home to roost in the new budget year.

The “unassigned” fund balances that Moore relied upon for her past two budgets have declined as a result, according to Finance Department documents. In Fiscal 2013, covering the time period before Moore was sworn into office under a budget approved by the old Board of Commissioners, the unassigned fund balance stood at $15 million. But that figure was cut in half for the Fiscal 2014 budget—Moore’s first budget plan—to $7.4 million.

And in the current budget year, there was yet another “fund balance” appropriation/withdrawal to cover current expenses of $4.16 million, according to the Finance Department documents.

How Moore could achieve her stated budget goals, without decimating what is left of the “unassigned fund balance” accounts, is unclear, or perhaps clearly unattainable.

During the Tuesday evening citizen comments on budget issues, the vast majority of the roughly 40 citizen and public official speakers endorsed spending for the county public schools and libraries.

One of the more interesting commentaries for the schools came from Ken Cowley, an Earleville resident and official of the Cecilton Lions Club that is a key supporter of the Cecilton elementary school. He noted that the club paid to hire a part-time reading teacher to work with local students and their progress was “exhilarating.” But when the county government cut funds for a county schools-employed full-time reading teacher, the Lions club tried to pick up the slack but could not fully replicate such services.

And former Cecil County Schools Superintendent Carl Roberts drew major applause from the citizen audience when he spoke in broad terms, not limited to the school system, and urged the county executive to keep in mind the “strategic plan” she advocated and which was adopted by the County Council. That plan specified that the county was committed to “economic development, fiscal stability, education, infrastructure,” and “safe, active and healthy communities.”

Roberts said the county’s “core values” were reflected in that plan and “I don’t care what the tax rate is, I’ll pay it” if the county executive’s budget adheres to those values.