McCarthy Budget on Track for County Council OK; Consultant to Council Commends Budget

May 30, 2018


It took a last minute impassioned appeal on Tuesday by Cecil County Executive Alan McCarthy to defend his budget and his track record on improving the county’s economy, and an independent consultant’s endorsement of McCarthy’s budget, to deflate a belated effort by one Council member to trim a few budget items. As a result, the proposed Fiscal 2019 budget appears headed to intact approval by the County Council next week.

The new budget, which takes effect on July 1, would be the second McCarthy proposal to emerge from the Council unscathed. But the current Fiscal 2018 budget, which contained property and income tax increases, was a much more controversial plan and only became law because a majority of the Council could not agree on any budget alternative. Under the county Charter, if the Council does not pass its own budget, the Executive’s proposal is automatically adopted.

In contrast, the new budget is much less controversial, since it contains no new tax hikes, and addresses a wide range of county priorities, from negotiated pay boosts for law enforcement and emergency services personnel to initial stages of construction on a new library and library administrative offices in North East.

One of the more striking aspects of this year’s budget worksession on Tuesday (5/29/2018) was that Councilors, at the prodding of Council President Joyce Bowlsbey (R-2), spoke about broad policy goals for the county instead of just picking on individual line items to debate or cut in the one-year budget document before them.

And an independent consultant’s report, a copy of which was obtained by CECIL TIMES, concluded the county was now on the right track but needed to do more, to safeguard or improve its bond rating status, to build up county reserve funds–which had been nearly depleted by McCarthy’s predecessor, Tari Moore. The meeting was also remarkable when, for the first time, Bowlsbey sharply criticized Moore’s drawing down of the reserve funds, saying of those actions, “She put us in a very precarious position.”

McCarthy has made it a bedrock principle of his administration to propose pay-as-you go budgets, balancing revenues and spending, without dipping into the emergency reserves. On Moore’s watch, the “unassigned fund balance” account, accumulated over many years as a cushion against sudden weather or other emergencies, dropped from $15 million to as low as $2 million, although Council budget cuts and economic improvements brought the fund back up to about $6 million when she left office. Moore froze property and income tax rates for most of her administration, dipping into the reserves to pay for annual services.

This year, the County Council decided, for the first time, to spend up to $10,000 to hire its own independent consultant to review the county executive’s budget and make recommendations to the Council. The consultants, Weyrich, Cronin & Sorra, an accounting and business consulting firm with offices in Harford County and in Cecil, commended efforts by McCarthy to replenish the emergency fund and also urged the Council to support his new budget as proposed.

Last Friday, the consultants sent Councilors a letter, obtained by CECIL TIMES, summarizing its review of the original budget proposal, Council hearings with department heads on their budgets, and public comments and concluded that “After our analysis of the county departments, and a review of all budget hearings, we recommend the passage of the Fiscal Year 19 budget.” The consultants said McCarthy’s proposal was “a budget that is balanced and serves many needs for the citizens of Cecil County.”

And in a detailed report to the Council, the consultants said that the county still needed to do more to re-build its emergency reserve fund, but that increased revenues in the current budget, and concerted efforts to begin replenishing the account, were steps in the right direction.

The consultants wrote that the reserve fund now amounted to less than one month’s county operating expenses, far less than the two months reserves specified as necessary by the national Government Finance Officers Association. Falling below that national standard can make bond-rating agencies wary of the county’s fiscal fitness and result in higher interest costs imposed on county-issued bonds for long term construction projects.

But the consultants added that there was now “a positive trend of increasing unassigned fund balances” although the account still falls short of national standards. “The County should endeavor to continue to this positive trend of reinstating unassigned general fund balances to appropriate levels,” the consultants concluded.

Bowlsbey said that, watching news reports of the recent horrendous flood damage in Ellicott City in Howard County, she worried about what Cecil County would do if flooding related to the Conowingo Dam once again put the town of Port Deposit underwater, and how the county would respond if there were inadequate emergency reserve funds available for relief efforts.

Appearing before the Council on Tuesday, McCarthy defended his budget policies, saying that it was his goal to make sure that the county could improve its fiscal position with bond rating agencies and said, “We’re on the precipice of putting Cecil County into the top tier” of financial soundness and added that he was “not willing to sacrifice its bond rating.”

Leading up to the budget worksession, Councilors were asked last week to draft any proposed changes to the budget so that members could be advised of proposals in advance and think about them, but no such proposals were submitted. But late on Memorial Day night Monday, Councilor Jackie Gregory (R-5) sent an email to Bowlsbey proposing cuts to the library’s salary account, a consultant to the County Executive, and the IT department, as well as delaying construction of a new artificial turf field at Bohemia Manor High School, to be considered the next morning.

It was unusual for the County Executive to show up at the Council’s major budget worksession, but McCarthy took to the witness table to defend his budget and his overall policy goals in an impassioned appeal and urge the Council to look at the big picture of the county’s progress rather than “nickel-dime” cuts.

McCarthy cited his track record in less than two years in office, with opening of multiple new major employers providing over 1,500 new jobs, ending the past practice or raiding emergency funds for current spending programs, and instead working to re-build the reserve funds depleted by his predecessor. The county cannot continue to “move forward” if the Council is “constantly nipping, nipping, nipping at the budget,” he said.

“I will not allow Cecil County to languish in the past,” McCarthy said, adding that he was determined to “make Cecil County a 20TH Century county.”

“You can see tangible proof” in the past 18 months of his administration, McCarthy said. “And if that’s not good enough for you, I don’t know what else we can do.”

Gregory wanted to eliminate an item in McCarthy’s budget to continue a consulting arrangement with Carl Roberts, the former county superintendent of schools, who has been conducting a review of county government departments and operations to find greater efficiencies. It was Roberts’ recommendation to streamline planning and public works duties and shift permitting reviews and issuance to a re-constituted Department of Land Use and Development Services. That change has received “rave reviews” from business owners for streamlining the process of bringing new projects to the county and enhancing economic development, McCarthy said.

Gregory said that McCarthy should be the one to implement such changes and no consultant should be needed.

McCarthy responded forcefully, saying that perhaps Gregory “could find me extra hours in the day.” He pointed out that in conversations with other county executives in the state he was asked how many full-time employees he had working on “special projects” and planning for the future and he had to reply none. “Goose egg,” he observed.

Gregory’s other budget cut ideas were shot down by fellow council members or facts from county employees, such as Cecil County Public Library Director Morgan Miller, who told the Council that library salary accounts were in line with state salary guidelines and included training funds. Miller also defended the proposed North East library project against critics who have questioned its costs and scope. “Nobody wants a Taj Mahal,” she said. And online chat group claims that the facility would feature a rock-climbing wall and a Starbucks café are simply not true, she noted.

Councilor Bob Meffley (R-1) pulled out his pen and paper and did a series of cost calculations, pointing out that the proposed new North East library, with a total price tag of $18 million including land costs, was a far more cost-efficient undertaking than a much smaller Havre de Grace Library in Harford County that was built several years ago and has been cited on social media by a group of conservative activists as a cheaper project than the North East facility. Harford County already owned the land, the facility is much smaller, was built several years ago when construction costs were cheaper, and the per square footage costs there were much higher than the proposed North East project, which includes administrative offices that would be moved from Elkton, Meffley noted.

Miller said the library system was willing to spread out construction from a two year timetable to a three year schedule to accommodate county budget needs and to give her more time to get additional state grants. The state has already listed the North East library as the top priority of all library projects in all of Maryland and she said she was expecting an additional $1 million in additional state aid for the facility.

Gregory got no traction for her bit here, bit there spending cuts suggestions with fellow Councilors. But Councilor Dan Schneckenburger (R-3), who is a current candidate for re-election, sided with her in suggesting that perhaps something could be done with anticipated budget surplus funds that may be achieved when the books are closed on the current budget year on 6/30/2018—after the new budget must be adopted.

But county budget officials cautioned that a rough projection of a potential $1.9 million surplus at the end of the current budget year was no guarantee of that much money being available for spending in the new budget year beginning 7/1/18.

Schneckenburger and Gregory suggested that perhaps the county could tap such surplus funds to give more money to county fire companies and to re-instate an early payment discount on property tax bills. That early property tax payment discount, discontinued three years ago, would reduce county revenues by an estimated $1 million a year, or over half of a potential surplus, budget officials said.

The analysis by the independent budget consultant undercut potential budget objections by Schneckenburger, who had argued strenuously for hiring an outside consultant. That might suggest a “be careful what you wish for” scenario. Schneckenburger has persistently criticized McCarthy ever since McCarthy overwhelmingly defeated Schneckenburger in the 2016 election for county executive. Schneckenburger is currently a candidate for re-election to the County Council, but in a recent candidate forum, he refused to commit to serving a full four-year term on the Council if re-elected.

The County Executive position is up for voters to consider in two years. McCarthy is widely expected to seek re-election. And Schneckenburger has far from ruled out another campaign for county executive in 2020.

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