New Cecil County Budget Freezes Property, Income Tax Rates; Boosts Schools by $2.4 Million

Cecil County Executive Alan McCarthy unveiled his new Fiscal 2020 budget plan on Friday (3/29/2019), freezing property and income tax rates at current levels and boosting school spending by $2.44 million, or 3.6 percent above the state-mandated local aid for the schools.

The budget, McCarthy’s third since taking office, continues his stated policy of refusing to tap into emergency and fiscal cushion reserve funds and enacting “pay as you go” budgets that balance expenditures with available revenues each year. In addition, new fiscal regulations initiated by McCarthy and approved recently by the County Council will make it harder for any future county executive to turn back the clock to the “deficit spending” of his predecessor as county executive and past County Commissioner boards.

The budget proposes no new major initiatives but continues and expands projects launched in previous budgets, including a third artificial turf high school athletic field (North East); continued development of the Calvert regional park, including expanded parking areas; construction of the new North East library; and development of a new Chesapeake City elementary school.

But the budget also provides for hiring two new assistant state’s attorneys, beginning next January, to help prosecute the rising caseload of drug-related crimes in the county, due to the ongoing opioid epidemic. And emergency services will add three paramedic positions to respond with advanced life support ambulance services from the county’s three paramedic stations. (A total of four additional paramedics have already been hired under McCarthy’s two previous budgets.)

The executive’s budget proposal now goes to the County Council, which cannot increase spending but can make spending cuts. The Council has scheduled a series of budget worksessions to hear from department heads and agency leaders on details of their budget plans over the next two months. The Council must adopt a budget by early June.

Speaking with reporters after his budget presentation, McCarthy showed off a new baseball bat, wrapped in plastic, that a friend had given him just in case he needed to fend off critics of his budget. “I’m hoping I won’t need to use it,” he said with a laugh.

But even before his budget was unveiled, public school advocates launched pressure tactics, including the highly unusual step of the Cecil County Public Schools (CCPS) superintendent and the president of the local teachers’ union recording a joint video that urged their supporters to not only contact elected officials, but also gave contact information for county government budget and finance employees to urge lobbying them to support the full schools’ budget requests.

And the ink was barely dry on the budget plan before some county volunteer fire company officials complained that not all of their new equipment purchase requests were granted.

The budget supports a new ambulance for the Cecilton Volunteer Fire Company and a new fire engine for the Hack’s Point company, both of which are located in southern Cecil County. But the budget did not grant requests for a new engine for Singerly, in Elkton, nor did it grant new ambulances for Water Witch, in Port Deposit, and for the North East station. However, the new budget continues the initiative the County Executive began last year to establish a guaranteed pension fund to ensure retirement benefits for volunteer firefighters, a program that in the past was reliant on annual appropriations that did not protect long-term benefits.

In his first year as county executive after winning the 2016 election, McCarthy took a lot of heat by proposing a five-cent increase on the local property tax rate, with the result that the tax bill on a house assessed at $200,000 rose by $100. He also boosted the local “piggyback” income tax rate from 2.8 percent to 3 percent. Those steps produced the first fully balanced county budget in over two decades, with spending and revenues balanced without draining emergency reserve funds. Those tax rates were frozen in his second budget last year, and will remain the same again in McCarthy’s new budget for Fiscal 2020, which begins on 7/1/2019.

McCarthy has filed as a candidate for re-election in the 2020 election.

Highlights of the new budget proposal include:

SPENDING:

McCarthy noted that spending requests from county agencies and departments totaled $20 million more than anticipated revenues could afford. With just $6.8 million in new, unrestricted revenues available to boost program spending, “do the math,” he said: “Only about one-third of those budget requests could be included in this proposal.”

The county’s total operating budget, including general operations, health insurance, motor vehicles and landfill and sewer services accounts, totals $282.1 million. The county’s Capital Improvement Plan (capital budget), which covers major construction projects expected to have a life expectancy of 10 years or more, totals $45.4 million. Including a $2.9 million public safety employees’ pension fund and other accounts, the total combined budget amounts to $330.6 million.

The capital budget includes $8 million for county school construction projects and an $8 million allocation to the county library system to continue work on the planned new North East library. Road and bridge construction work is tallied at $9.7 million.

REVENUES:

Total revenues for the general fund (apart from the separate and dedicated ‘enterprise’ funds such as landfill and sewer accounts that receive fees from users of the services) are projected at $202.8 million, a 3.9 percent rise over the current Fiscal 2019 budget. The largest gain in revenues came from the “personal property tax,” which is an annual business inventory and equipment tax., and is projected to rise by 39.9 percent over the current budget year, bringing in an additional $3.9 million to county coffers.

McCarthy said that this was due to the major expansion of recent business development in the county and observed that even if some businesses located in “enterprise zones” that give them a break on property taxes, the county still can collect on personal property requirements.

The county budget projects a modest 1.2 percent increase in revenues from income taxes, and McCarthy told reporters the county was being cautious to take into account state and national economic forecasts.

A few weeks ago, the state Board of Revenue Estimates warned that state revenues could drop by $269 million over the next two years, largely due to reduced income tax revenues.

EDUCATION:

The county would give CCPS a $2.44 million increase over current operating budget levels, providing $84.9 million—the largest component of the county’s overall spending, despite declining school enrollment. The budget would boost county school aid by $3 million or 3.6 percent above the state-mandated “maintenance of effort” level, which requires counties to provide at least as much school aid as in the previous year.

CCPS had asked the county for a $6.2 million increase. Responding to McCarthy’s budget proposal on Friday, CCPS Superintendent Jeff Lawson said in a written statement posted on the schools’ website that : “The schools system appreciated the 3 percent increase from the county’s portion of funding. However, it is important to keep in mind that this comes on the heels of 3 consecutive years that average a 1.1 percent increase.”

He also lamented what he said was a declining level of state aid to CCPS over the past few years.

However, the General Assembly recently approved a Fiscal 2020 state budget that is expected to give $255 million statewide to local public schools as a “down payment” on implementing recommendations of the Kirwan Commission, which is recommending a massive infusion of school spending to boost teachers’ pay and improve educational services to public schools in the state. Detailed legislative proposals, including how to pay for the new spending, are not expected until next year’s General Assembly session, including calculations on how much local counties might have to pay as their share of the program’s new mandates.

But at this stage, the new state budget is expected to infuse millions into county schools in the Fiscal 2020 budget cycle that will come as a windfall that had not been anticipated when local school budget requests were drawn up.

CCPS could make up much of the difference between what it wanted from the county for spending and what the new county budget provides. County Finance Director Lisa Saxton said that preliminary calculations show that CCPS could get an extra $1.5 million to support teachers’ salaries, plus an as yet unspecified boost for special education funding, since the county has one of the highest rates of special education students in the state.

The county budget also provides for equipment and other costs to establish a new diesel mechanic technical training program at the School of Technology that is expected to begin training students this fall. Other capital spending projects include the new North East High turf fields as well as various school repair projects and continued work on developing the new Chesapeake City elementary school.

EMPLOYEES

The largest increase in staffing levels would come at the Animal Services agency, with 2.5 full-time equivalent new positions, after previous staff increases in past budgets and budget amendments. As previously noted, the State’s Attorney’s office will add two prosecutors for half of the budget year. The Sheriff’s Office will add one new clerical employee but the corrections staff will be cut by 1 job. Parks and Recreation will add 1.5 full time equivalent positions to deal with expanded programs, including a new after school activities program in conjunction with county schools.

The county will also pay for an expected 5.8 percent rise in the costs of health care for county employees, including college and library workers.

All county workers will get a 1 percent cost-of-living raise, while unionized Sheriff’s Office and Emergency Services workers will get 1.5 percent COLAs and step scale increases based on years of service as negotiated in their contracts.

The county will also continue to implement a pay scale step adjustment program implemented last year to address step increase scales that had been “compressed” by past years of no pay raises. As a result, some newer hires were making as much as or more than longtime employees and the new system seeks to address that problem in order to retain experienced workers.