Hornberger Budget Cuts Property Tax Rate Slightly, Keeps Income Tax Boost; $1 Extra for Schools, Cuts Library Operations

NEWS ANALYSIS

Cecil County Executive Danielle Hornberger submitted her first budget to the County Council on 4/1/2021, proposing about a 1-cent cut in the property tax rate while keeping income tax rates at the level set by her predecessor, Alan McCarthy. She also slashed operating funds for county libraries and bestowed the hefty sum of $1 above a state-required county aid level for public schools in order to avoid losing substantial state education aid.

At the same time, there were substantial pay raise costs for two of her newly appointed department heads whose Republican Party and Annapolis political credentials far exceed their local government experience.

The capital budget, which covers various construction projects that are supposed to have at least ten years of useful life, includes several surprise expenditures for projects that had been cast aside in the past for legal or practical/longevity reasons. The capital budget expenditures do not “count” in calculations for the property tax rate, the bell-weather of local politics, but the costs still must be paid over long-term bond expenses.

In her 2020 political campaign, Hornberger pledged to “rollback the tax increases” enacted under the four-year administration of McCarthy, whom she defeated in the Republican primary. In her budget for the 2022 fiscal year, which begins on 7/1/2021, she reduced the property tax rate slightly but retained the income tax boost as well as an increase in the county tax on hotel rooms.

In his first budget proposal four years ago, McCarthy raised the property tax rate from 0.9914 per $100 of assessed property value to $1.0414, about a 5-cent increase. He said the boost was necessary to end a longstanding policy of deficit spending that had drained emergency reserve funds. He retained the same property tax rate in all of his subsequent budgets.

In her budget, Hornberger sets the property tax rate at $1.0279 or slightly over a penny. (about 0.0135-cents) decrease. But county revenues from property taxes would still rise by $1.7 million in the new budget. (State property assessors re-calculate property values, with one-third of the county re-assessed each year. As property values rise, so do the tax bills paid by residents.)

Hornberger was more generous to business interests, with a more than three-cent cut in the “personal property tax” rate, which amounts to an inventory tax on business equipment and supplies. She set the business tax rate at $2.5698 per $100 of value, a reduction of .337-cents. That business tax cut will result in a revenue loss of $1.16 million in Fiscal 2022 in comparison with the current budget year.

Despite her campaign pledges, Hornberger made no reductions in the county’s income tax rate in her budget proposal. McCarthy set that rate at 3 percent, up from a rate of 2.8 percent that had not been changed in over a decade and a half. The state collects the so-called “piggyback” income tax on Maryland tax returns and remits the proceeds to counties. State law sets a maximum local income tax rate of 3.2 percent.

Also unchanged was the county’s tax on hotel rooms, collected on facilities located outside town limits, which rose from 3 percent to 6 percent four years ago; that is the same rate charged in Harford County.

For the first time since Cecil County initiated Charter government in 2012, the county executive’s budget was presented only in written form, without the executive speaking to press and public and answering questions about the budget. (Last year, as the pandemic raged, McCarthy conducted a Facebook live teleconference to discuss his budget.) Instead, Hornberger released a recorded video on her Facebook page, as she read a prepared statement on the budget that was included in her documents sent to the Council.

A key upcoming issue will be whether Hornberger’s property and “personal property” tax cuts will jeopardize the county’s ability to receive federal aid under the recently enacted Biden administration’s massive “American Rescue Plan.” Congress included a “claw back” provision that would disqualify local jurisdictions from receiving the new aid if they cut local taxes after March of this year. The provision is designed to prevent federal dollars from being used to subsidize local tax rate rollbacks

Key issues in the proposed budget include:

LIBRARIES–

The new North East library is slated to open this spring but Hornberger’s budget would make a significant 5.7 percent cut in operating funds for the library system just as it is putting the new $18.6 million facility into operation and moving the administrative offices of the system from Elkton to the new facility. The $366,202 cut in operating funds will no doubt result in lower staffing levels just as the new facility begins operations with new programs and amenities that require more staff than the previous tiny, bare bones facility in North East.

Hornberger’s budget documents are disingenuous, claiming credit for allowing continued repayments on the library’s long-term capital bond expenses. The facility has already been built, with a heavy infusion of state and federal aid, and if the bond repayments did not proceed, the county could be hit for financial sanctions as well as sustain a major dent in the county’s overall bond rating.

During the pandemic, when most library branches were closed or operating on limited hours for in-person visits, librarians pitched in on multiple fronts: conducting online learning programs and story hours for children who were studying at home while schools were closed or operating remote learning. Library staff also helped out the county health department in assisting residents sign up for COVID testing and vaccinations and conducting outreach to help seniors to navigate the process.

Hornberger’s hard core political supporters included many who opposed spending for the new library in North East and questioned why the county should support library operations, which they viewed as ‘outdated’ in the Internet era. In fact, the libraries have provided free Internet access to residents of many areas of the county that lack broadband services, as well as small business advisory services and help for job-hunters.

SCHOOLS—

In the new proposed budget, Cecil County Public Schools (CCPS) will receive the staggering sum of $1—yes, that’s one dollar—above the $86,367,865 provided in the current Fiscal 2021 budget year. And that is only because state rule changes due to the pandemic required the county to exceed its overall contributions from the previous budget year.

The Board of Education had approved a budget proposal calling for a scaled-back $1.4 million increase in county funds, after cutting back 15 staff positions.

Normally, the state requires a “maintenance of effort” on per student funding by a county, reflecting enrollment, so if enrollment drops county spending can decline, too. But due to the pandemic an estimated 400 county students fell off the enrollment roster as of last September, when the state sets the enrollment calculation. So the state ordered a new standard for the upcoming budget year to make sure that school funds weren’t slashed due to the loss of students because of the pandemic.

In the new budget, CCPS will in fact benefit from McCarthy’s budget decision last year to boost county school aid by $1.4 million above the previous year’s total operating funds allocation, and representing $2 million over the basic “maintenance of effort” per-pupil aid level required last year. Those allocations set a new baseline that could not be cut under the revised state rules for the new budget year.

Cecil County has faced declining school enrollment for several years, even before the pandemic. While CCPS was well ahead of other counties in re-opening in-person classroom instruction during the pandemic, it won’t be known until the fall how many students will come back and enroll for the new school year.

For Cecil College, the new budget will provide “level” funding for operational costs. Although freezing the county aid level, the allocation is just enough to allow the college to receive its full allocation of state aid.

STATE’S ATTORNEY—

The State’s Attorney allocations are among the most intriguing head-scratchers of the new budget, on both operating and capital budget proposals.

For several years, past State’s Attorneys and judges have complained of overcrowded, aging facilities for the State’s Attorney’s office housed in the County Courthouse in Elkton. In addition, there were concerns that crime victims and witnesses often came into contact with the defendants accused of crimes in their cases, causing emotional stress and fear.

Last year, the county administration acquired the vacant Cecil Bank building, adjacent to the courthouse parking lot in Elkton, with plans to use it as a modern office space for the State’s Attorney office that would last well into the future, equipped with elevators and facilities fully compliant with the rules of the Americans with Disabilities Act (ADA).

But now Hornberger wants to spend $700,000 to “renovate” the existing State’s Attorney offices on the third floor of the Courthouse, work that the budget admits would only meet the office’s needs for five years—which violates the procedures for capital budget spending which is supposed to be used only for projects with a “useful life” of over ten years.

The current State’s Attorney, James Dellmyer, was not elected to his post, but was appointed as an interim and then acting holder of the position after Amanda Bessicks resigned from the job just a few months after being elected. He has filed for election to the position in the 2022 election.

Hornberger’s new budget also states that she would give the State’s Attorney an additional prosecutor position for a new domestic violence unit and a victim witness coordinator. The office had a victim coordinator for many years in the past.

I-95 TOLLBOOTH

For years, county leaders have urged removal or re-location of the Interstate 95 toll plaza in the western section of the county, which they view as an impediment to business and tourism development as motorists have to pay a hefty toll to enter the county from the other side of the Susquehanna River. But state and federal officials have rejected the idea of moving the tollbooths closer to the Delaware line because it would negatively impact revenues that pay for the long-term bonds used to construct and maintain the roadway.

But now Hornberger wants to spend $500,000 of local taxpayers’ money to do an “impact study” on toll booth relocation, without saying where a new toll plaza might be located.

POLITICAL FRIENDS —

The same day she was sworn into office last December, Hornberger’s pick as the new county administrator, Dan Schneckenburger, fired several long-serving department heads. Prominently, she picked two politically connected Annapolis Republican political consultants for the key positions of County Attorney and Director of Finance. [SEE previous Cecil Times report here: http://ceciltimes.com/2020/12/hornberger-hires-annapolis-political-consultants-for-key-cecil-county-jobs-long-on-state-gop-ties-short-on-local-government-legal-experience/ ]

The new budget lists a salary of $149,323 for Schneckenburger—a substantial boost over the $141,751 salary of former administrator Al Wein, according to a Public Information Act request filed last year by Cecil Times. Wein had 30 years’ experience in local government management roles. Schneckenburger served one term on the Cecil County Council and lost a campaign for re-election to the Council and also lost a race for County Executive four years ago.

The new budget lists a salary of $126,885 for the new Finance Department director James Appel—a hefty raise from the $115,090 salary of the ousted Lisa Saxton, according to the Cecil Times PIA request. Saxton had over 20 years’ experience in finance positions. Appell has a long resume as a political consultant and holder of multiple Republican Party campaign positions in state and Anne Arundel county GOP groups and close ties to Dirk Haire, head of the state Republican party who aided Hornberger’s campaign. Appel is also the campaign finance treasurer for state Sen. Steve Hershey (R-36) who represents Cecil County in Annapolis.

Hornberger hired Lawrence Scott, an Annapolis political consultant and local lobbyist, as the new County Attorney—despite the fact that he had never set foot into a state courtroom or entered written representation of a client in a civil or criminal court case, according to the Maryland courts database. He replaced Jason Allison, who served in the administrations of Tari Moore and McCarthy.

Allison was paid an annual salary of $106,808, according to the Cecil Times PIA request. (A deputy attorney in the office was paid about $76,000). The new budget list a major 18.2 percent increase– $33,333—in the professional legal salaries, for a total of $216,166. The budget does not break out Scott’s pay separately from the deputy. (Outside legal consultants are listed in a separate line item.)

The Cecil County Council will begin budget worksessions on Tuesday 4/6/2021, continuing for several weeks with testimony from county department heads about their budgets.

On Thursday, 4/8.2021, Hornberger will be holding a political campaign fundraising event, with a campaign flyer pitch that she is being attacked by Washington and Annapolis outsiders: “Do you want the same people running Washington DC and Annapolis to be deciding policy here in Cecil County?”