The Washington County Board of Commissioners has settled on a fiscal year 2013 budget that’s about 2 percent lower than this year’s budget.
The total approved budget is $285.2 million, compared to $290.8 million for the current fiscal year. Fiscal year 2013 starts July 1.
The total budget for the coming year is made up of a $239.9 million operating budget — with a general fund staying practically flat — and a $45.3 million capital budget.
The county’s property tax rate will remain at 94.8 cents per $100 of assessed value, where it has stood since 2001.
For a house assessed at $150,000, the property-tax bill would be $1,422.
Washington County Administrator Gregory B. Murray said the county had the lowest-per capita spending among the state’s 23 counties and municipalities for three straight years, but dropped to third in the most recent rankings, based on the fiscal year 2012 budget.
Murray said the county considers education one of its priorities.
In fiscal year 2009, the county increased education funding $1.2 million over the minimum mandatory level, known as the “maintenance of effort” level, creating a new baseline.
The following year, the county added another $1.6 million to the new baseline, which also rose as the school system’s student enrollment grew.
Teacher-pension cost shift
One of the county’s top challenges in the fiscal year 2013 budget was paying for a new shift in teacher-pension costs.
For many years, the state covered the cost of pensions for public-school teachers even though the counties paid their salaries. This year, though, the Maryland General Assembly decided to force counties to start taking on pension costs.
A cost-sharing plan was in the works during the legislature’s regular session at the beginning of the year, but time ran out before the legislature could pass it.
The General Assembly reconvened in May and agreed on a modified plan in which the cost shift is phased in over four years.
It wasn’t until the special session was over in mid-May that the counties knew what their share of the pension costs would be. For Washington County, it will be about $3.1 million the first year and rise to about $4.8 million in the fourth year.
Each year, the new pension costs will be wrapped into the baseline funding level that counties must pay.
On June 5, Murray offered the county commissioners three choices for offsetting the new $3.1 million pension expense — raise the property tax, taper off payments to the county employee pension fund or stop paying for a $3.3 million school-nurse program.
The first two choices were rejected quickly. The third was adopted with the understanding that the school system planned to step in and continue a school-nurse program, although possibly different than the current one in scope and cost.
The cut to that program has turned into a controversy, as the health department has laid off all 76 employees in the program because of uncertainty about funding in the next fiscal year. The school system has not yet come up with a specific plan to continue the health-services program.
Murray said some residents suggested that the commissioners raise taxes and continue paying for the school-nurse program. However, a 5 percent tax hike — about $70 on a home assessed at $150,000 — could prevent someone from getting a prescription or groceries he or she needs.
Capital budget decrease
The county’s fiscal year 2013 capital budget, at $45.3 million, is about 8.4 percent less than this year’s capital budget.
Murray said the county estimates each year how much debt it can afford as a guide to forming a capital-project budget.
For fiscal year 2013, the debt level for capital projects was set at $14 million.
However, the commissioners, at the insistence of their president, Terry Baker, have agreed to use up to $2 million in expected savings from certain projects to cut the debt level to $12 million.
Water and sewer rates will increase in the coming year — 3 percent for the average water user, 2.9 percent for the average sewer user.
Murray said this year’s budget will include a one-time $1,000 stipend for all full-time county employees, after three years in which employees didn’t get any boost in their pay.
In addition, county employees will get a half-step raise starting Jan. 1.
Murray said one of the other important changes this coming year is that the county will direct about $1.6 million to its employee pension fund, which has been underfunded, meaning it has less in assets than in liabilities.
Murray said the county’s pension fund is at almost 80 percent and the new $1.6 million will push it higher.
The $1.6 million is coming from several sources.
The state’s decision that localities no longer have to repay an income-tax reserve will result in a savings of about $614,000 for Washington County.
The county also expects to get about $200,000 because of new increases in the state income tax, about $400,000 because of a larger assessable base and $200,000 because of improving investments.
Another $200,000 will come from reserves, which will be scaled back to correspond with overall spending. Murray said the county tries to keep its reserves at about 17 percent.
He said the $1.6 million infusion to the pension fund is significant for maintaining the county’s AA bond rating. Rating agencies were leery about the county having an underfunded pension fund at the same time counties were taking on new teacher-pension liability, he said.
Murray said the number of county employees has declined through attrition, meaning positions are cut once they become vacant.
The county had 780 employees four years ago and now has 743, he said.