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Capital project funds help county with budget

May 10, 2009|By HEATHER KEELS

Coming Tuesday: Find out what road, school and other projects are on the horizon with a look into the county's six-year Capital Improvement Plan.

WASHINGTON COUNTY -- Rising property tax revenues and conservative budgeting in previous years are softening the blow of about $5.4 million worth of state funding cuts to Washington County's budget, county officials said.

Entering the homestretch of budget preparation season, the Washington County Commissioners and county budget staff are proposing a $347.7 million fiscal year 2010 budget that offsets cuts by reallocating capital funds set aside in better times.

A public hearing on the proposed budget is scheduled for 7 p.m. Thursday in Hagerstown Community College's Kepler Theater.

The overall budget is 2.2 percent larger than the current year's budget of $340.5 million, but during a discussion of the latest budget draft on April 28, County Administrator Gregory B. Murray stressed that most of that increase is in capital improvement funding, which represents a long-term investment in infrastructure.

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The county's proposed operating budget would increase only about 0.8 percent, an increase Murray said was very low.

"Our employees are the ones we have to thank for that," he said. "They've really been conservative in some of the initiatives we've undertaken, using creative ideas."

At a time when other Maryland counties are discussing layoffs, hiring freezes and drastic cuts, Washington County has not had to resort to such measures because budget staff anticipated the economic downturn and have been taking preparatory actions over the past four to six years, the commissioners have said.

As extra revenue came in during the housing boom, budget officials made sure it was not used for "baseline" spending that the county would have to continue in future years, but instead put it in a pay-as-you-go account for capital projects that could be reined back during leaner times, county Budget and Finance Director Debra S. Murray said.

The county put about $21 million in that "pay-go" fund over the past six years, about $3.8 million of which it proposes withdrawing this year to make up for cuts to the general fund, she said.

Another $4.3 million of that "pay-go" money is proposed for use to offset cuts to highway fund revenue, Gregory Murray said.

Commissioners President John F. Barr, who has been meeting with officials from other counties every Wednesday in Annapolis, said he could tell from the looks on some of his counterparts' faces as cuts were announced that they had not made similar preparations.

"They're just beside themselves for what they're going to do," Barr said. "Financially, they're in pretty dire straits."

State cuts include a more than 50 percent reduction in highway-user revenues passed down to the county; and the elimination of all state funding normally contributed toward the cost of housing state inmates in the Washington County Detention Center and the cost of police, fire and other support at state parks.

The reduction in highway-user revenues reflects a drop in tax and titling revenues statewide as vehicle and fuel sales have dropped, Debra Murray said. The county is getting $4.3 million less in highway-user revenues than the $7.9 million it requested, she said.

The county originally budgeted about $1 million for housing state prisoners and $100,000 in state park fees, Debra Murray said.

Another large drop in projected revenue is from recordation tax, which is collected when a loan is refinanced. With many residents already maxed out on home equity, recordation tax revenue is down about 43 percent, Debra Murray said.

The county has also taken a big hit on interest from investments, she said. In better years, the county has collected as much as $6.7 million in interest from investments, but in fiscal year 2010, it is projected to drop to just $600,000, she said.

Those drops are countered by a projected increase of about 8 percent in property tax revenue.

The county proposes holding the property tax rate at the same level as this year, but most residents' property taxes would increase anyway because of rising property assessments, county officials said.

The delayed impact of the housing boom is still pushing up property assessments because of a cap that effectively spread assessment increases out over several assessment cycles.

The current property tax rate is $0.948 per $100 of assessment.

That rate is higher than the so-called "constant yield" tax rate calculated by the state -- .892 per $100 of assessment -- which would result in the same amount of property tax revenue from existing properties that was taken in this year.

The commissioners disagreed on a staff recommendation for a 3 percent cost-of-living raise for county employees, with Commissioner James F. Kercheval saying that was too high. The commissioners decided to leave the increase in the budget at least until the public hearing.

This fiscal year 2010 budget goes into effect July 1. The commissioners could vote on it as early as May 19.




If you go:

What: Public hearing on Washington County's proposed fiscal year 2010 budget

When: 7 p.m. Thursday

Where: Kepler Theater at Hagerstown Community College




Top 10 general fund expenditures in the county's proposed fiscal year 2010 budget:

1. Board of Education (excluding school nurses) -- $89.6 million

2. Sheriff's Department (includes Detention Center and Central Booking) -- $23.2 million

3. General funds transferred to capital improvement fund -- $18.8 million

4. Debt service -- $13.4 million

5. Fire and rescue -- $10.7 million

6. Hagerstown Community College -- $9 million

7. Nurses for schools -- $3.5 million

8. General operations -- $3.3 million

9. Washington County Free Library -- $2.6 million

10. State's Attorney's Office -- $2.5 million

Figures are as of budget draft two, presented April 28.

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