Cecil County Council OKs New Budget; Political Tunes Counter Fiscal Harmony

June 4, 2019


“I don’t care too much for money/Money can’t buy me love.”–The Beatles

The Cecil County Council voted Tuesday evening (6/4/2019) to approve County Executive Alan McCarthy’s proposed Fiscal 2020 budget, but not before some grandstanding and the political equivalent of tapping on a calculator with dead batteries. Sometimes, even if the numbers don’t add up, singing about money can be a serenade for election year love.

By a vote of 4-1, the County Council approved the executive’s budget for the fiscal year beginning 7/1/2019, which freezes the county property tax rate at the same rate that has been in effect for the past two years. The budget also provides a substantial spending boost for county schools, which receive the largest overall spending allocation from county taxpayers.

County Councilor Jackie Gregory (R-5) voted against the operating budget, the capital budget, and legislation to formalize the property tax rate. She did not offer any specific spending cut amendments to the budget at the evening session, just as she failed to do in previous worksessions on the budget, and instead cited President Trump and Governor Hogan as her inspirations. Gregory has filed for re-election to her Council seat and has expressed interest in possibly seeking a state office in the future.

Councilor Bill Coutz, (R-2) voted for the budget but issued a broadside against the county administration, claiming that councilors’ questions about budget issues were “met with resistance and disdain.” He said he thought there should be a “more open environment” and “a more co-operative environment” between the executive and the Council. Coutz won his Council seat in last November’s election and made a brief but unsuccessful bid to seek the top Council post of President, but Councilor Bob Meffley (R-1), who is in his third year on the Council, won support for the post from a majority of fellow Council members.

Earlier in the day, Gregory suggested a proposal–which wasn’t in written form and not offered for a formal vote at the Council’s morning worksession—to advance her goal of a property tax rate reduction. Her wishes blurred the clear legal and fiscal lines between the operating budget (which is what determines the property tax rate) and long-term capital improvement projects and apparently would have violated the county Charter’s requirements for a balanced budget.

The County Executive’s proposed budget did not raise the property tax rate or other taxes. But Gregory said at the worksession, “I’m committed to not raising taxes.” She proposed siphoning $1.5 million from the county’s reserve funds to slightly reduce the property tax rate.

But McCarthy has made it a core principle of his budgets to oppose deficit spending policies and has insisted that spending must not exceed available revenues. As a result, he has produced the first fully balanced budgets that did not tap emergency reserve funds in nearly two decades of county budget policy.

Gregory did suggest cutting an unspecified amount from the capital budget for construction work at the Calvert regional park. After the meeting, she told CECIL TIMES she would also like to cut $475,000 from operating funds for the parks. But that still left her more than $1 million short of the $1.5 million needed to pay for her goal. While her numbers did not add up, either fiscally or legally, she also avoided the risk of potential fallout by taking responsibility to cut other popular spending programs to pay fully for her plan.

The new Parks and Recreation budget includes a $611,765 operating budget increase, including 1.5 full-time-equivalent additional staffing for the Calvert regional park and continuing to develop the newly opened Brantwood Park south of Elkton, as well as a new after-school youth program. Councilor George Patchell (R-4) singled out the new $166,000 after-school program that provides children with sports equipment and supervision for recreation programs in co-operation with local schools. “This is a vital program,” Patchell said, citing the benefits to children in offering wholesome, supervised activities.

Gregory said the county should take $1.5 million from reserve funds, which she called a budget “surplus,” and use the money to lower the property tax rate. But Meffley said that would offer minimal tax relief to citizens—just $2.75 a month—or “not enough to buy a Happy Meal.”

Adding to the dietary dilemma, Gregory’s menu would have given indigestion to new fiscal stability procedures, recently approved by the Council including a yes vote from Gregory, to boost the so-called “rainy day” emergency fund from 7.5 percent of the county budget to 10 percent, as called for by bond rating agencies and practiced by many other county governments in the state. In addition, the county has re-named another smaller reserve fund, now amounting to 1 percent of the overall operating budget, as a budget “contingency” fund—which is designed to track revenues and expenses so as to provide rapid-response to changing fiscal conditions in case revenues fall short of projections during the fiscal year.

In his first year as county executive after winning the 2016 election, McCarthy took a lot of political 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 per year. 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.

For the new 2020 fiscal year, 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.

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

The county budget would give Cecil County Public Schools (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. (Declining enrollment would have allowed the county to reduce its overall spending and still obey the MOE rule, but the executive chose not to reduce local aid accordingly.)

CCPS had asked for an increase of about $6.2 million from county funds. As the budget process proceeded, the county learned there would be a windfall of new state aid, amounting to $3.95 million in Fiscal 2020, under state legislation designed to serve as a “down payment” on broad state spending boosts for education as called for by a state panel, known as the Kirwan Commission.

The infusion of the new Kirwan funds, plus McCarthy’s increase of $2.44 million, totals $6.39 million in increased funds for county schools—or slightly more than the $6.2 million boost the schools had asked for.

In other overall initiatives, 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. And 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.

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