Bud­get talks start up again

Do­min­ion ac­counts for rev­enue in­crease; preser­va­tion dis­cussed

The Calvert Recorder - - Front Page - By TA­MARA WARD tward@somd­news.com

County staff be­gan dis­cus­sions with the Calvert County com­mis­sion­ers on plans to de­velop the fis­cal 2020 bud­get, out­lin­ing rev­enue from Do­min­ion Cove Point, land preser­va­tion and more, dur­ing Tues­day’s reg­u­larly sched­uled board meet­ing.

Depart­ment of Fi­nance and Bud­get Di­rec­tor Tim Hay­den and Deputy Di­rec­tor Lashon Bethea dis­cussed the bud­get de­vel­op­ment process in the first of many work ses­sions in prepa­ra­tion for the bud­get build for next year, start­ing with a look back at the past bud­get cy­cle.

“It looks like we’ll end the year with about a $2.5 mil­lion fund bal­ance,” Hay­den said, re­view­ing pre­lim­i­nary bud­get re­sults of fis­cal 2018, which ended June 1.

“The in­come tax rev­enue line item with a bud­get of $87.5 mil­lion came in short with an $83.8 [mil­lion] ac­tual re­sult,” Hay­den pointed out, later not­ing uncer­tainty of in­come re­ceipts with the re­cent fed­eral tax law changes.

Hay­den said over the

last few years the county had “un­fa­vor­able vari­ances” in the county’s in­come tax line, mean­ing the county re­ceived less than what was an­tic­i­pated.

“The feel­ing is [fis­cal 2019] will also come in low,” Hay­den said, of the 3 per­cent tax on Calvert res­i­dents’ in­come. “If I were com­ing up with a bud­get num­ber to­day, I would say $91 mil­lion is about right.”

The pair un­veiled pre­lim­i­nary fi­nan­cial pro­jec­tions for fis­cal 2020 in their staff-rec­om­mended bud­get that fore­casts $309,846,746 in to­tal rev­enue for the county.

Bethea said a lit­tle more than 90 per­cent of the county’s rev­enue is com­ing from prop­erty and in­come taxes, with in­come ac­count­ing for a third. Other taxes ac­count for nearly 7.5 per­cent of county rev­enue.

“This is an as­sump­tion that the rate will re­main at $0.937 of each $100 of the tax as­sess­ment,” Bethea said, of the prop­erty tax rate adopted in fis­cal 2019.

Hay­den said the prop­erty tax as­sess­ment trend is about a 1.3 per­cent an­nual in­crease, which the bud­get di­rec­tor es­ti­mates at $225 mil­lion and said will al­low for some new con-

struc­tion.

The to­tal rev­enue pro­jected for fis­cal 2020 is $12,330,613 more than the cur­rent adopted fis­cal 2019 bud­get at $297.5 mil­lion.

“Most of the in­crease is re­lated to the Do­min­ion [Pay­ment in Lieu of Taxes agree­ment]. The Do­min­ion PI­LOT will be $60,200,000 in fis­cal year ‘20,” Hay­den said.

Staff doc­u­ments note that start­ing in 2020, $7 mil­lion of Do­min­ion PI­LOT rev­enue should be con­sid­ered non-re­cur­ring, or one-time items. Hay­den said the $7 mil­lion is a rough num­ber. In 2024, the PI­LOT agree­ment changes from a fixed pay­ment to a 42 per­cent credit.

“Rev­enues at that time are pro­jected to be $54 mil­lion,” Hay­den said.

Com­mis­sioner Mike Hart (R) said it was es­sen­tial for the county’s in­fra­struc­ture to hap­pen quickly while the money is avail­able, re­fer­ring to the de­crease in rev­enue from Do­min­ion pro­jected down the road.

Hay­den said the staff bud­get is a “start­ing point” and de­ferred to the com­mis­sion­ers on what the rev­enues and ex­pen­di­tures should be for the next year.

“This board will be­gin the process, but it is who­ever is elected and sit­ting here, the next board, will in­herit those ini­tial deci-

sions and then they can make what­ever de­ci­sions they think are ap­pro­pri­ate,” Com­mis­sion­ers’ Pres­i­dent Evan Slaugh­en­houpt (R) said.

Hart said it will be a learn­ing curve for the new com­mis­sion­ers and the bud­get “is about done” in Jan­uary when new board mem­bers are sworn in.

Slaugh­en­houpt stressed the bud­get process is more dif­fi­cult than some of the cur­rent com­mis­sioner can­di­dates be­lieve.

“I found out that fast that first year. It was hum­bling and I ate a lot of crow,” Hart said.

In ad­di­tion to the pre­view of the gen­eral fund fore­cast, fi­nance and bud­get staff dis­cussed the planned ap­proach for county de­part­ments to de­velop ex­pen­di­tures for fis­cal 2020.

“We are seek­ing your ap­proval in rec­om­mend­ing that de­part­ments be in­structed to pro­pose main­te­nance on flat bud­gets. The only in­creases should be re­lated to legally man­dated ser­vices or ex­penses that are not dis­cre­tionary,” Bethea said.

The com­mis­sion­ers green-lighted the re­quest to send out the bud­get guid­ance to the de­part­ments Oct. 1.

Hay­den and Bethea also sought bud­get guid­ance from the com­mis­sion­ers on step in­creases and cost-of-liv­ing in­creas-

es for county em­ploy­ees, land preser­va­tion and fund­ing for the re­tiree health sub­sidy.

Staff en­cour­aged an an­nual step, not­ing it is his­tor­i­cally granted when fund­ing is avail­able. Bethea said the step in­crease will cost the county $1.1 mil­lion. Also fore­casted is a 1.5 per­cent cost-ofliv­ing ad­just­ment to­tal­ing $845,000.

Staff al­lo­cated $5.5 mil­lion for land preser­va­tion ef­forts for fis­cal 2020, as it did for fis­cal 2019.

Com­mis­sion­ers’ Vice Pres­i­dent Tom Hejl (R) asked if the county is buy­ing pub­lic land or pri­vate land, to which Hay­den re­sponded the county is buy­ing an ease­ment on the prop­erty.

“You are buy­ing trans­fer de­vel­op­ment rights. The large prop­erty own­ers — they are en­cour­aged to put their land into preser­va­tion and they do that by cre­at­ing an ag preser­va­tion district, an APD, and in order to lock that in, if you will, and pre­serve it, they have to sell” TDRs, County Ad­min­is­tra­tor Terry Shan­non said.

Shan­non said the county’s buy­ing those TDRs takes the TDRs out of the mar­ket and in order to build a home, home­own­ers must have five TDRs over and above what their lot den­sity is, but by buy­ing the TDRS, the county is lim­it­ing the num­ber of houses that can be built.

She said the county is buy­ing those from pri­vate prop­erty own­ers.

Hejl said peo­ple are not happy to learn the county is us­ing tax dol­lars to buy in­di­vid­u­als’ land to keep in preser­va­tion. He then ques­tioned about the ini­tial in­tent of the pro­gram be­ing for de­vel­op­ers.

Shan­non said that was at a time when the county was build­ing a new school a year and the com­mis­sion­ers twice re­duced how many houses could be built on so many acres.

“It was also an ef­fort to di­rect the hous­ing — trans­fer into town cen­ters where we can put the in­fra­struc­ture — water, sew­ers and roads,” Shan­non said.

Hay­den said $781,000 in county fund­ing is ear­marked for land preser­va­tion. Hart asked what the tax­payer gets for that money.

Nut­ter said what they get is a prom­ise not to over­pop­u­late, but asked how many times the county is go­ing to buy TDRs.

“I know some­one who’s got 26 and can’t sell them,” Nut­ter said, not­ing prob­lems with the TDR pro­gram.

“What re­ally drives de­vel­op­ment is the zon­ing laws — the zon­ing laws and the tier map sys­tem,” Hejl said.

Com­mis­sioner Steve Weems (R) said on the macro level the vi­sion for the county has never changed, en­cour­ag­ing de­vel­op­ment in the town cen­ters and main­tain­ing a ru­ral land­scape.

The board agreed to con­tinue at the same fund­ing level on those items.

Staff cal­cu­lated Board of Ed­u­ca­tion fund­ing us­ing the agreed-upon fund­ing for­mula. Ten­ta­tively based upon the es­ti­mated en­roll­ment and con­sumer price in­dex, fund­ing amounts to $130,183,970 in fis­cal 2020, an in­crease of $3.8 mil­lion from fis­cal 2019.

For other post-em­ploy­ment ben­e­fits, staff pro­posed $15,633,995 for the school em­ploy­ees trust and $4,165,999 for county em­ploy­ees.

“When it is not ear­marked each year, you’re go­ing to get be­hind,” Nut­ter said. “I think we’re do­ing the right way.”

Fac­ing a po­ten­tial deficit, Slaugh­en­houpt posed to the board whether to in­crease the tax rate or make cuts to pro­grams, dur­ing a dis­cus­sion on what-ifs. A de­ci­sion to make a de­ci­sion was de­ferred.

Ad­di­tional work ses­sions will be sched­uled. A pub­lic hear­ing on the staff-rec­om­mended bud­get will be held March 19, 2019. A hear­ing on the com­mis­sion­ers’ bud­get is planned for May 21, 2019.

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