Calvert Commissioners’ President Steve Weems
Prince Frederick, MD – There doesn’t appear to be an option for simply riding out the storm in regards to the Calvert County Government’s operating budget for the next several fiscal years. During the county commissioners’ April 14 meeting the board received a snapshot of the county government’s current financial state. Terms such as furloughs, staff reductions and tax increases—which staff delicately labeled “revenue enhancements” appeared on the wide screen.
Department of Finance and Budget Director Tim Hayden explained how, since fiscal year (FY) 2008, a convergence of a reduction of state revenues to Calvert—totaling $5.8 million—and an increase in state shared expenses—totaling $5.2 million—have created an $11 million “negative variance.”
Joan Thorp, the department’s deputy secretary, said county government has had “very minor” staff increases during the eight year down period.
Even the looming liquefaction project at Dominion Cove Point Liquefied Natural Gas (LNG) Plant in Lusby, touted as a financial bonanza for the county by its supporters, has apparently failed to fuel optimism.
While a joint memo from the Department of Finance and Budget’s leaders noted “the Dominion Payment in Lieu of Tax (PILOT) agreement will provide significant funding to the county,” the county still faces challenges meeting accounting standards for Other Post-Employment Benefits (OPEB). Hayden and Thorp also noted the county’s budget “is not currently structurally balanced.” Plus, their statement about the Dominion PILOT came with the caveat “should the project come to completion.”
“It’s not sold until it leaves the lot,” said Commissioner Mike Hart [R – District 1] of the $3.8 billion exportation project at Cove Point.
“What if you don’t get that Dominion money?” Commissioner Pat Nutter [R – District 2] asked. “I have a hard time acting like that money is there.” Nutter opined that the county is one federal judge’s ruling away from losing the momentum of the project.
The county government’s financial officers noted that even with the Dominion PILOT expected to kick in during FY 2018, “the budget will still face challenges. We will still only be able to fund half of our required OPEB funding.”
The state-mandated graduated funding responsibility to the jurisdictions for teachers’ pensions creates the biggest predicament in meeting OPEB requirements in FY 2018. The finance staffers likened OPEB to “a tidal wave which could become a bond rating issue if it isn’t addressed.
The current projected revenues for FY 2016 are $233.13 million while the projected expenditures total $239 million. The options presented for closing the gap were use of fund balance, county government employee furloughs, reductions in the county government workforce and revenue increases.
It was noted that furloughs would be a first in Calvert County Government history. Staff has estimated that even 10 employee furlough days would not plug the current budget gap.
Regarding the strategy of increasing the property tax rate, Hayden pointed out that Calvert’s formula of $0.892 per $100 of assessed value has not changed in 28 years. Calvert has the fifth-lowest property tax rate in Maryland. At the current rate the revenue yield is projected at $98.4 million. Increasing the rate to $0.992 per $100 of assessed value would increase the yield by $11 million.
“I want to hear what the public has to say,” declared Commissioner Evan K. Slaughenhoupt Jr. [R- District 3], who made it clear he opposes a tax increase. Keeping the tax rates low, said Slaughenhoupt, retains the county’s “flexibility” in case “a compelling need” arises. “You are going to be giving up your flexibility,” he said.
Hart admitted he had no appetite for a tax increase, noting property tax hikes are likely to harm Calvert’s senior population living on fixed incomes. “Our seniors are golden,” said Hart.
“We’re hurting somebody no matter what,” said Commissioner Tom Hejl [R – At Large]. “We’re $6 million in the whole. We’re going to have to make hard decisions.”
After going well over a generation without a hike in the property tax rate, Hejl conceded with the realities of 2015 “we have to look at it.” Hejl stated he was opposed to “closing services” and “laying off a whole lot of people.”
“You have to look at everything,” said Nutter. “You have to give tax raise a thought.”
Commissioners’ President Steve Weems [R- At Large] wistfully recalled Calvert’s late 20th century history, specifically the 1970s when Calvert Cliffs Nuclear Power Plant was built and came on line. The plant gave the county’s anemic operating budget amazing potency. During the 1990s Calvert was, percentagewise, far and away the fastest-growing county in Maryland. Weems observed that the residential growth added to the county’s affluence. And now Calvert finds itself a financial crossroads.
“We do need dialogue,” Weems concluded, exhorting the public to give the board feedback.
The commissioners will present their budget to the public at a hearing scheduled for May 19. June 2 is the day the commissioners must finalize the FY 2016 budget.
Contact Marty Madden at marty.madden@thebaynet.com