County fiscal outlook tight

Budget chief expects fall-off in recordation tax funds

`Growth probably isn't sustainable'

Md. cuts could affect projected $257 million plan

Carroll County

December 24, 2003|By Hanah Cho | Hanah Cho,SUN STAFF

Despite a boost in revenue from higher taxes and property assessments, the county faces fiscal challenges and uncertainties as it prepares a spending plan for next year, Carroll County's budget director said yesterday.

The operating budget for the fiscal year that begins in July is projected to be $257 million, a 5 percent increase from this year's budget, said Ted Zaleski, director of the county's Department of Management and Budget. Most of the $12 million increase would pay for operating costs for the county school system, he said.

Next year's budget is expected to include a $3.7 million surplus from the fiscal 2003 operating budget and continued revenue increases from the county's property tax and the piggyback income tax. The commissioners raised the rates this year of the county income tax and the recordation tax, which homeowners pay upon settlement.

At the same time, though, the county's budget office expects the growth in the recordation tax revenue to slow, Zaleski said during a presentation yesterday on the county's budget process.

Recordation tax revenue for next year's budget is projected at $13 million, down from the revised revenue estimate of $18.5 million for this fiscal year.

"Recordation growth probably isn't sustainable," he said. "Prudent planning on our part assumes we'll get less."

The county's operating budget for next year also could be affected by uncertainty surrounding the state budget, Zaleski said. The $10 billion-plus state operating budget for the fiscal year that begins July 1 contains a shortfall of more than $700 million, a gap projected to grow to $1.2 billion for the next year.

"What is the state going to do about their deficit?" Zaleski said. "The governor says no new tax in the state level."

If Gov. Robert L. Ehrlich Jr. makes cuts to ease the state's budget shortfall, Zaleski said, the reductions will affect programs jointly paid for by the state and the county, including Carroll Community College, the county's library system and social services.

"It's likely we'll find agencies turning to the commissioners and asking for help," Zaleski said.

As a result, next year's operating budget only maintains the county's current services, he said.

"Right now, as we stand, if the state doesn't hurt us, we can continue to do what we're doing," he said. "If we want to make improvements, there are only a few things we can do."

One is to impose a transfer tax on home sales and transfers of other residential and commercial properties in Carroll County, Zaleski said, a proposal the commissioners made this year.

A 1 percent transfer tax, which needs the General Assembly's approval, would generate about $5 million annually and could only be used for schools, police, fire and emergency services. The commissioners say the revenue is needed to pay for an increased demand for those services to meet county growth.

Zaleski said the county faces other escalating costs in coming years, including implementing all-day kindergarten by the 2007-2008 school year, school construction and renovation projects, the new Finskburg library branch and more parking at the community college.

By early next month, the county's budget department will receive requests from various departments.

Zaleski said the departments were told that they will receive little or no increases in nonsalary expenditures and that they should prepare a supplemental spending plan in case additional money is available.

"We need to proceed carefully," he said after the presentation. "We don't want to build ongoing expenditures on money that's not going to be there."

In March, the county's budget office will make recommendations to the commissioners. A public hearing will be held in May before the budget is adopted that month.

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