Cecil County Council Strikes Out on Ethics Panel, Bond Bill and New $2.1 Million Reserve Funds Raid; Hornberger Throws Spitballs

NEWS ANALYSIS

“And it’s one, two, three strikes you’re out, at the Old Ball Game.”

The Cecil County Council stepped up to the legislative plate against the Hornberger administration this week but struck out, after some verbal swings at bat, on three major issues: the secret installation of a member of the Ethics Commission after the Council had turned down her nomination; a bond bill giving the county executive unilateral fiscal powers that the Council rejected last fall; and a sudden $2.1 million raid on reserve funds for schools spending just weeks after the county executive claimed she wouldn’t raid the reserves in her new budget.

On the bonds and reserve funds measures, the administration of County Executive Danielle Hornberger (but not Hornberger herself, who personally stayed far away from the fray) had the Council over a fiscal barrel by claiming the county would suffer fiscal harm if her demands were not met immediately—a loss of possible revenues from re-financing bonds at potentially lower interest rates, and an unforeseen (at least by this administration) need to come up with more money to comply with state schools funding requirements.

Unlike Hornberger’s administration, county officials in Wicomico and Howard counties revised their school funding budget proposals in mid-May with time to allow County Councils to consider offsetting cuts or revenue needs. But Hornberger waited until two weeks after her budget was adopted by the County Council on 6/1/2021 to spring a sudden surprise– and then force its adoption under “emergency” procedures that prevented a public hearing and forced approval on the same day as it was introduced, on Tuesday (6/15/2021).

So much for the “transparency” Hornberger promised in her political campaign last year.

There was much complaining by three of the Council’s five members and some pointed comments at both the afternoon worksession and evening legislative meetings on Tuesday (6/15/2021). But in the end, the panel gave unanimous consent to the bonds and schools legislative items. However, some members said privately after the meetings that they would still explore possible legal options on the secret installation of the disputed Ethics Commission member.

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ETHICS PANEL SECRETS:

Hornberger secretly installed a former co-worker, Heather O’Rourke, on the county Ethics Commission recently, despite the fact the County Council rejected her nomination to the panel in February. There was no notice given to the Council of the recent action, just a new inclusion of the woman’s name on the county website for the ethics panel. [SEE recent exclusive CECIL TIMES Special Report exposing the ethics panel moves here: http://ceciltimes.com/2021/06/hornberger-secretly-installs-orourke-on-ethics-panel-despite-county-councils-rejection-of-her-nomination-four-months-ago-council-members-angry-at-end-run/ ]

O’Rourke is a former co-worker with Hornberger at the North Bay camp in North East. The County Council rejected her nomination at a 2/16/2021 meeting because members felt she had not been honest with them at a 2/9/2021 meeting when she portrayed herself as a dedicated Democrat who would be independent-minded in dealing with a majority Republican ethics panel. But in fact, Board of Elections records showed she had changed her party registration just two days before Hornberger nominated her for the panel. (Hornberger fired all five sitting members of the Ethics Commission shortly after taking office, although most members still had years left on their staggered terms of office.)

At the latest Council worksession, county administrator Dan Schneckenburger claimed that “no” does not really mean “no” because O’Rourke’s nomination failed to garner a “second” and did not proceed to an up or down vote. He also claimed that a 30-day timeclock for action on the nomination should have started from the moment that Hornberger sent an email to the council including her name, and not a few days later when the nomination was officially introduced as a resolution in the Council. The Council acted on O’Rourke’s nomination within 29 days of the introduction of the nominations to the Council.

“You did not vote it down,” Schneckenburger claimed to the Council on Tuesday. “I thought you understood” that O’Rourke could be installed later if no definitive “no” vote was taken, he declared. “We heard nothing back from the Council,” he said.

But Councilor Al Miller (R-3) noted that minutes of the Council meeting show that “the motion failed” on O’Rourke’s nomination.

Council President Bob Meffley (R-1), who has largely been supportive of Hornberger and her agenda, took an uncharacteristic stance, challenging Hornberger’s veracity in direct conversations with him. He cited, by timestamp and date on his phone, two conversations with Hornberger in which he said she promised him that O’Rourke’s name would be “removed from the agenda.”

“When things are done through the back door, I don’t think that’s a good policy,” Meffley said.

The Council’s own attorney, John Downs, told members that “I think it’s disingenuous” to claim that a nomination dying for lack of a second amounts to inaction by the Council. “This person didn’t have enough support to get a second” on the vote, he said.

Councilor Bill Coutz (R-2) complained that “a technicality was taken advantage of.” He said Hornberger was taking “advantage of a loophole” and “this isn’t the kind of government we need”

But then Meffley backed down, telling Schneckenburger, “I just want to work with you guys” and then Meffley declared that the Council would just “move on” from the ethics nominee issue.

There was no resolution pending before the Council on the ethics panel issue, which was billed on the worksession agenda as a “discussion.” It remains to be seen if some members choose to pursue the matter through legal or other channels.

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RAID on RESERVE FUNDS FOR SCHOOLS:

Hornberger’s administration surprised the Council this week with a sudden demand—requiring use of emergency procedures to expedite Council action—to tap county “fund balance” emergency reserve funds to come up with over $2.1 million before 7/1/2021 for Cecil County Public Schools (CCPS) or else face loss of millions of state aid funds for the school system.

Ironically, Hornberger made a big political deal of claiming that her Fiscal 2022 budget did not tap the emergency reserve funds, as former executive Tari Moore did at precarious levels, for several years as the county’s first county executive.

But the ink was barely dry on Hornberger’s new budget before she hit the County Council this week with a demand for $2,159,160 that would be deficit-funded out of accumulated reserve funds.

In Hornberger’s budget passed by the Council, CCPS received the staggering sum of $1—yes, that’s one dollar—above the $86,367,865 provided in the current Fiscal 2021 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” (MOE) on per student funding by a county, requiring at least the same amount of spending as the previous year. But if enrollment drops, county spending can decline, too. Due to the pandemic an estimated 400 Cecil County students fell off the enrollment roster as of last September, when the state sets the enrollment calculation. In response to the pandemic, earlier this year the state ordered an expanded baseline for the upcoming budget year to make sure that school funds weren’t slashed due to the sudden loss of enrolled students because of the pandemic.

But despite months of warnings from the state and the Maryland Association of Counties (MACO), the Hornberger administration now belatedly claimed on Tuesday it only learned two days before the Council voted on the local budget that more money was needed. Even if that were true, Hornberger did not tell the Council before their vote and instead waited until two weeks later to demand more money, and force action on an emergency basis that prevented a public hearing on the expenditures.

As early as Governor Hogan’s budget bill submitted on 1/20/2021, the state advised there would be “hold harmless” grants and other provisions to protect schools from the sudden loss of student enrollment due to the pandemic, but he insisted that counties must provide “more” money in Fiscal 2022 than the current budget year. (Hence that $1 increase for CCPS in Hornberger’s original budget proposal.)

But unlike the local executive’s secrecy, Howard County Executive Calvin Ball submitted a revised schools funding request on 5/17/2021 to comply with the MOE requirements and even proposed offsetting spending cuts to his County Council to cover the costs.

In Wicomico County, the Council received revised schools’ figures on 5/20/2021 and the next day members held open discussions on an extra $1.2 million needed to comply with MOE requirements for that county and how to offset the costs in the Fiscal 2022 budget.

In Cecil County, there was no similar transparency by the administration when the budget was under consideration by the Council, which voted to adopt the spending plan on 6/1/2021.

“That’s a lot of money that we did not know about,” observed Meffley.

“Everybody knew this was coming,” observed Councilor Al Miller (R-3), who questioned why the administration did not make it clear to the Council and the public that her budget did NOT make allowances for the MOE requirements.

One obvious reason for the silence: disclosure of the need to come up with over $2 million in funds for schools would have wiped out Hornberger’s much ballyhooed penny cut in the property tax rate in Fiscal 2022.

Hornberger’s belated demand for schools money now put the Council in a bind: failure to OK more school funds could jeopardize millions in state aid to the county that is a core of educational budget support here. So the Council voted, 5-0, to OK the Hornberger bill, on an emergency basis, so money will be in the schools’ bank account in time for the July 1 start of the 2022 fiscal year.

The request submitted to the Council tried to claim the money wasn’t really coming from a raid on the “fund balance” reserve accounts because Hornberger had chosen not to spend some money in the “Fiscal 2020 budget.” Look at a calendar. When she was sworn into office last December, the county was already halfway through the Fiscal 2021 budget year.

The resolution voted on by the Council specified the schools money was coming out of the county’s fund balance account.

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BOND POWERS:

The County Council and Hornberger’s administration have been locked in a procedural fight for weeks over legislation to give the County Executive exclusive authority to seek “refunding” or refinancing of bonds. With interest rates at historically low levels, the county has for the past few years sought to refinance old bonds so as to save money by getting lower interest rates on long-term bonds used to finance major capital projects such as school construction.

In the past, such refinancing of bonds was a no-brainer for the county executive and the Council, since both sides wanted to save taxpayers’ money. But Hornberger sought exclusive rights to go to the bond market whenever she wanted and to do so without Council oversight.

Last fall, the Council rejected a proposal by then County Executive Alan McCarthy to allow him to move quickly to refinance bonds as market conditions changed and there were concerns that interest rates might begin to rise again. His bill included four pages of procedural safeguards but the Council voted no because members thought it infringed on Council powers.

This year, Hornberger—who adamantly opposed the McCarthy proposal during her 2020 election campaign—submitted a one-paragraph bill that would allow her to act unilaterally with no Council role.

The Council balked at turning over its oversight powers to her and demanded more Council involvement. She came back with two mini-amendments that still gave her exclusive authority but a fig leaf tossed to the Council: after she acted on her own the Executive “shall submit a Report to the County Council providing the details of the Bonds issued and the terms of the sale.”

But even that provision has a gaping loophole: she doesn’t really have to submit the report to the council: “The failure of the County Executive to provide such a report shall have no effect on the validity or enforceability of the Bonds.”

Another amendment provided a six-month reduction in a “sunset” clause: the powers would expire on 6/30/2022 instead of 12/31/2022.

Councilor Coutz complained that the amendment amounted to an “oh, well,” with no teeth to actually require the county executive to send a report to the Council. “My objection is giving up the oversight,” he said.

But several Council members indicated their concerns that unless the county goes to bond refinancing markets soon, there could be less savings for the county to reap from a refinancing as experts have warned that higher interest rates are looming.

There is added pressure to get as much bond refinancing savings as possible now because Hornberger’s Fiscal 2022 budget is already counting bond chickens before they are hatched: her budget assumes the county will save $580,000 on bond payments and re-allocates that money to various spending items in her new budget.

And when faced with sustained pressure from citizens angered by a massive $366,202 cut in operating funds for the public libraries that would force reduced operating hours or even closing some branches, Hornberger suddenly told library officials she could turn over an estimated $190,000 in extra funds to the libraries obtained from a new ‘estimate’ of additional cost savings on the bonds

The full library budget cuts were still in the budget passed by the Council and it is anyone’s guess whether Hornberger will ever get such a large extra amount when the bonds refinancing goes to the financial markets. (Under county law, a budget amendment would have to be sent to the County Council for approval before extra funds could be given to the libraries.)