SNOW HILL – A positive financial report from Worcester County’s auditors triggered a discussion of an uncertain future in the next fiscal year among the Worcester County Commissioners, following a decline in the assessable base of the county for the first time in 22 years.
Worcester County saw revenues come in $2.2 million higher than expenses in fiscal year 2009, Chris Hall of TGM Group reported Tuesday morning in Snow Hill.
The General Fund saw a decline of $10 million, leaving the balance at $23 million, a result of expenditures on planned capital projects.
“We continue to fund most of our capital projects on a pay-as-you-go basis,” said Hall, calling that a prudent practice that reduces long-term debt.
The county also created the Other Post Employment Benefits (OPEB) Trust last year to handle employee pension and healthcare benefits.
The county’s financial situation may not be so rosy in the coming fiscal year, Hall cautioned Tuesday morning.
The county’s assessable base, which generates most of Worcester County’s revenue through property taxes, has not declined since 1987.
“There’s never been a year it’s gone backward until the year we’re in now,” said Hall.
The county has a handle on it, Hall said.
Commissioner Virgil Shockley had some doubts whether the county actually has a handle on the substantial commitment it must make to the OPEB trust next fiscal year and in the future.
Shockley has often expressed doubts over the OPEB Trust itself, saying that in the current and near future interest rates will not be high enough to generate the planned return on those investments, which are intended to render the trust self-sustaining in the next decade.
The actual value of the trust, after the Worcester County Commissioners set aside funding for the last three years, is $26 million, but the liability is $36 million, Shockley said.
“We took an aggressive approach in the last three years to start to fund those unfounded liabilities,” said Worcester County Finance Officer Harold Higgins.
The trust needed to be set up, said Hall, because the county would have become liable for larger and larger amounts paid into the benefits fund in the future. Those necessary increases in funding should be generated by return on investment in 10 years through the trust’s investments, however.
Shockley said the question is not whether the trust was necessary, but whether it will work the way planners intended.
Thirty percent of the county workforce will retire in the next five years, Shockley said. He wondered whether the OPEB trust can handle providing benefits to those near future retirees.
That becomes an even larger concern since the OPEB contribution last year, on staff advice, was cut by $3 million, from $15 million to $12 million, Shockley said.
What amount, Shockley asked, would the commissioners need to contribute to the trust in the next budget to keep that fund on track?
How much to contribute to OPEB next fiscal year is a budget issue, Higgins said, and that information will be presented to the commissioners next week.
There is a question this year of whether a contribution to OPEB should be funded at all, Higgins said, or whether it should be funded at a lesser level.
“My recommendation might well be we don’t fund to the A.R.C. [Annual Required Contribution],” Higgins said.
Staff will outline the numbers for the commissioners next week, Higgins said.
County attorney Sonny Bloxom compared the county’s situation with personal budgeting, saying that in bad years, putting aside money for retirement might not be possible when there are other bills to be paid.
Shockley said he did not want to put the county in that situation.
“We can only speculate what’s going to happen at the state level,” Higgins said. “We’ll have a plan and we will give you options.”
Commissioner Louise Gulyas said the county needs to be prepared for the worst from the state.
“We can’t rely on the state because we’ve never been able to,” said Gulyas.
“Our main concern is the state doesn’t know what their problem is and they’re penalizing us,” said Commissioner Judy Boggs.
Commission President But Church took an optimistic tone, saying, “We’re in much better shape than 80 or 90 percent of [Maryland] counties.”
“I’d rather be 100 percent alive than half dead,” Shockley said.
“Our people are a tough bunch. We will get by,” said Gulyas. “We will do what we have to do to keep from going down the tubes.”