Tuesday, March 10, 2015

Howard County FY2016 Spending Affordability

If the title of this blog post somehow attracted your cursor - Congratulations!  You are a hyper-local policy wonk!  Please contact your County Council-person for a personalized copy of the Howard County Charter.

Anyhow, a very important document was published by the Howard County Budget Office last week called the "Spending Affordability Advisory Committee Report - FY2016".  The SAAC is charged with evaluating short and long term revenues and expenditures to provide recommendations on how the County should manage spending and raise revenue.  This is not an audit as much as a high level policy document drafted by citizen leaders to provide recommendations to the County Executive.

It is important to note at the front end that the turnover of the SAAC between executives was probably on the magnitude of 40% - remarkably low in light of the change in party affiliation.  I applaud the County Executive for seeing the benefit of having continuity in membership so as to make the recommendations the focus over the constitution of the recommending body.  Had the County Executive swapped out significant members of the committee, we would be left to wonder whether any recommended course correction was due to the ideology of the membership over the facts on the ground.  I also have the highest respect for each and every member of the committee whom I know and trust their recommendations.

With that as a foundation, it is important to recognize that this is a fundamentally pessimistic report that may be summarized with the following paragraph from the report:
This slowdown in revenue growth is partially attributable to one-time factors such as the impact on income tax reconciliation figures of the significant drop in capital gains between 2012 and 2013 because consumers realized capital gains in advance in anticipation of a “fiscal cliff”, but also is attributable to a slowdown in personal income. Personal income in the County grew by only 1.5% in 2013. And, while property taxes continue to show signs of recovery, the overall General Fund revenues are anticipated to realize only moderate growth in the near future. Reductions in the State aid based on the Governor’s proposed budget and the unknowns surrounding Federal government spending levels that impact Federal grants and/or employment of County residents working directly or indirectly for Federal agencies pose additional constraints on revenues.
And while "moderate growth" in common usage is not a concerning descriptor, the recommendations that follow regarding what should be considered show the severity of our current situation.  No bell was left unrung.

  • Authorize up to $90 million in bonds
  • Create an Ambulance Fee
  • Special Event Charges for police at "for-profit" events (read "Merriweather")
  • Increase Transfer Tax
  • Maintain Storm Water Remediation Fee (i.e., Rain Tax)
  • Increase property tax (1 cent for every $100 in value)
  • Limit education funding to Maintenance of Effort
  • Place hold on Other Post Employment Benefits (OPEB) payments
  • Reopen collective bargaining with Police and Fire to delay 4% pay increase
  • Shift new county employees from defined pensions to 401K retirement accounts
  • Limit use of unspent fund balances (recommends spreading unspent balances over numerous years instead of budgeting it for the year that follows)
  • Privatize fleet operations
The Committee also identified a number of future challenges, including the Wynne Case, that should be considered when evaluating future expenses.

Let me repeat that these are recommendations to the County Executive and not policy prescriptions set out by the same.  Any one of these recommendations would likely set off a political firestorm in isolation, but taken collectively they look like a minefield.

That's all for today.  Have a great Tuesday doing what you love!