No budget gap foreseen in Howard

Property tax revenue will remain flat, Wacks predicts

December 16, 2010|By Larry Carson, The Baltimore Sun

Howard budget director Raymond S. Wacks does not foresee a budget-busting gap between revenue and spending this fiscal year, but he warned the County Council that falling assessments will mean flat property tax revenues for years to come.

He also told council members Monday that after cost-cutting and some improvement in revenues, a feared $19.6 million shortfall last fiscal year was erased by the time the books were closed June 30.

"We did not find $20 million," Wacks said. "Revenues weren't quite as bad as we thought they would be, and we were able to save more."

The county left about 150 jobs vacant and saved across the board, Wacks said.

Greg Fox, the council's only Republican, asked for a list of the cost-saving moves.

"I want to see the things broken out," he said, to see if the cuts could be made permanent.

The county put $3 million of its surplus from the fiscal year that ended June 30 into a fund to help pay the health costs of future retirees, and $850,000 is left as surplus from the $1.4 billion budget.

Still, Wacks declined to say it was even a glimmer of good news. "Things are less worse than they were last year," he said.

Property assessments done by the state are likely to show a further decline of 20 percent or more, meaning that property tax revenue probably will be flat. Since property is reassessed once every three years, that won't change for a while, he said.

"It's a fact we're going to have to live with. It will be fiscal 2015 before any increase could occur," he said.

Still, Wacks said that most of the revenue predictions made last spring when the budget was put together will hold through June 30, and income tax collections are higher than expected.

"Income tax is really the number that makes or breaks us every year," he said. "In Howard County, people with more complex returns often wait longer" to file, he said, and those delayed 2009 returns were higher than expected. Last month, the county got 14 percent more than expected from state income tax revenue distributions, he said.

In July, he noted, statewide collections were up 3.5 percent, "the first time the state was up in a while." Howard is also doing much better on income tax collections than larger jurisdictions such as Montgomery and Baltimore County, he said.

"This doesn't mean everything is fine, but we believe we're not going to have a revenue shortfall this [fiscal] year," he said. "We're not out of the woods, but it doesn't look like we're going deeper into the woods."

If Gov. Martin O'Malley and the General Assembly make further cuts in state aid or shift teacher pension costs to the county, that could cause a severe fiscal strain in the coming year's budget, and Wacks warned that costs are still rising, even while revenues are flat.

"We clearly have a tough road ahead of us," Wacks said.

Still, council members sounded cautiously upbeat after the briefing.

"We're still working through some challenges, but we're in a better place," said Council Chairman Calvin Ball, an East Columbia Democrat.

"It's good news, in that the revenue is headed in the right direction," said Courtney Watson, an Ellicott City Democrat.

Jennifer Terrasa, a North Laurel-Savage Democrat, said the news shows the county has been "well managed in difficult times."

Mary Kay Sigaty, a West Columbia Democrat, said the presentation showed "we can do what we need to do. If what Ray says comes true, I'm going to be calling that good news. We were in a free fall before."

Fox criticized the $3 million for retirees as too little in the face of a growing debt of more than a half-billion dollars.

"We could have been putting money into the [fund] before," he said, noting that the county had been planning to contribute up to $50 million a year.

"Anything is good," Fox conceded," but it's not what the commitment was three years ago."

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