SNOW HILL – Just five months into the fiscal year, county staff is projecting that the Worcester County budget is already short and next fiscal year will see more reductions in county revenue, which is projected to drop by as much as $9 million.
“I’ve never seen us miss on a projected versus an actual budget. We’re short about $1.5 million,” said Worcester County Treasurer Harold Higgins.
The current county budget includes $123.7 million in property tax revenue, but the actual property tax revenues this fiscal year are just $122.2 million.
A similar revenue decline came to light last year in early fall. At that time, the Worcester County Commissioners mandated a 3-percent cut for all county departments just to get the county through the fiscal year.
This year, the county once again needs to make cuts, Commissioner Virgil Shockley said. County departments may not have much left to trim, though.
The commissioners did not discuss a response to Higgins’ news at this week’s meeting.
Commissioner Bud Church, newly elected president of the commissioners, said that he and the rest of the commissioners had just seen Higgins’ presentation at the meeting Tuesday. Church said he would meet with county staff this week to discuss courses of action.
“The strategy is going to be lean and mean. Run it like a business,” said Church. “We’re going to try to prevent layoffs. We’re going to try to prevent furloughs. We’re going to cut what we have to cut … what it takes to get through this year we’re going to have to do.”
Shockley said the $1 million that the county has set aside to handle a possible negative legal judgment against the school board could take care of part of the shortfall, since the school board has a surplus of nearly $1 million.
“I don’t see why we’re not taking that money back,” said Shockley. “We need it to finish the year out.”
“We’re going to look at that million dollars,” said Church.
The county will meet with school officials in the near future in preliminary budget discussions, he said, and the lawsuit money will be part of those talks.
The school board surplus, Church said, might be needed for another purpose.
“Every year we have had to supplement their budget with additional utility costs,” Church said.
The fiscal year is not even half over, and the revenue gap could widen, especially if the state of Maryland makes more cuts, officials cautioned.
The revenue picture will be worse next year, and county staff and elected officials have been informally predicting leaner times since last budget season.
The current property reassessment underway for Ocean Pines and northern Worcester County shows a 20-percent reduction in the value of that area’s assessable property base.
In fiscal year 2010, county property values overall were projected to be assessed at $19.3 billion, but actually came in at $19 billion, a gap of $272 million. The fiscal year 2011 projected assessable base had fallen to $18.2 billion from the previous year, but the recent updated fiscal year 2011 assessable base will be worth just $18 billion, meaning property values will be $177 million less than projected.
“The declining value is what it is. You carry that for the next three years,” said Higgins.
County staff are now projecting that property tax revenues for the next fiscal year will come in at $119 million, compared to the earlier projection of $120.2 million.
“I think we’ve hit rock bottom. Things are looking better,” Higgins said.
Recent upticks in recordation and transfer tax should minimize shortfalls, according to Higgins.
On the down side, Higgins spoke of an anomaly he has never before seen in 14 years of working on the county budget: reductions in county property tax revenues through tax court rulings and appeals.
“I don’t see that trend stopping in the next six months to a year,” said Higgins.
“You’re going to have to keep us updated on the trends. As we get into the budget process, we’re going to really need to be made aware of changes,” said Church.
Shockley had some suggestions on handling the expected short budget next fiscal year such as not replacing employees who retire. He also said he does not see any raises for county personnel.
“No new equipment. That means for everybody. I mean absolutely nothing. You repair what you got,” Shockley said. “You put money into maintenance and you ride it out.”
The school board, which customarily receives about half the county’s overall budget to run county schools, needs to be given a spending limit before they set their budget, he said.
“We’ll be as fair as we can. Everybody has to realize that hanging on right now is the priority,” Shockley said.