Council gets new look at shrinking surplus

County budget director gives revenue briefing

December 12, 2007|By Larry Carson | Larry Carson,Sun reporter

The growing unpredictability of tax revenue is worrying Howard County's budget director, although the county is projecting a $13.7 million surplus when the budget year ends June 30.

If the projections come true, the surplus would be smaller than the $22.7 million left unspent last fiscal year, but it's still better than facing a shortfall, said county Budget Director Raymond S. Wacks.

The estimates are in sharp contrast to what other local governments are facing in Maryland, Wacks pointed out during a briefing this week for the County Council.

"Montgomery County is projecting a $70 million deficit, and Prince George's and Baltimore City have personnel freezes in force. I am very concerned about the increasing volatility in our revenues," Wacks said - especially in income tax receipts.

He gave members a chart showing estimates of income tax revenues that vary widely from place to place - from a predicted 74 percent drop in Allegany County to a 98 percent increase in Prince George's.

Wacks said more wealthy individual taxpayers are getting extensions that allow them to pay income taxes later each year.

"Taxpayer behavior plays a big role in this. Revenues are coming in later and later. That's another reason to have a surplus," he said.

When he worked in Baltimore City, Wacks said, "we used to joke that the condition of the city's finances depended on how [Orioles owner and attorney] Peter Angelos is doing."

Despite the concerns, Wacks told the council members at the meeting Monday that county property tax revenues are running $14.5 million ahead of projections, while income tax receipts are expected to be up $4.4 million. Those increases more than offset about $4.9 million in lower-than-predicted general budget revenues in other categories. The slowing real estate market put a $4.4 million dent in the estimated real estate recordation revenues.

Real estate transfer tax revenues are predicted to drop $6 million below estimates, but that money is not for general budget use. Under county law, those funds are divided among county schools, recreation and parks, agricultural preservation and housing programs.

Property tax revenues are running well above predictions, Wacks said, because the county's estimates were conservative, and homes that are sold temporarily lose protection from rising assessments, boosting the property tax bill.

Given the uncertainties, he said, "It's not that large a budget surplus. It's a small, reasonable surplus" in the county's locally financed budget of more than $800 million.

None of the five council members disagreed.

"It's much better to have a reasonable surplus than a deficit," said Calvin Ball, an east Columbia Democrat.

Mary Kay Sigaty, a west Columbia Democrat, said "we're fairly lucky" the county had skilled people making revenue estimates.

Council Chairman Courtney Watson, an Ellicott City Democrat, told Wacks "how glad the council is to have you back." Wacks was a county budget official for three decades before retiring and taking a similar job in Baltimore two years ago. He returned to the county Oct. 1.

Reacting to the revenue estimates, Watson said, "For me, it's wait and see. I know we're only six months into the [fiscal] year."

Jen Terrasa, a North Laurel-Savage Democrat, said she thought Wack's briefing was "a good way to start with budget projections."

Greg Fox, a western county Republican, said the first weeks after taking office last year were such a blur of activity, "I can't remember what [revenue projection] was given us. It's good Ray came down here."

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