SALISBURY — Wicomico officials got a grim picture of the county’s fiscal health this week with a presentation on Tuesday that was long on problems and short on solutions.
Wicomico, like most other jurisdictions, has been battling shrinking revenues, a declining tax base and a vanishing workforce while the cost of providing essential services continues to increase.
On Tuesday, county consultant Wayne Strausberg presented a rather dire presentation of the state of Wicomico’s fiscal health to the County Council.
“We’re looking at a budget gap of $3 million to $7 million in the coming year and that concerns me deeply,” he said. “We’re now going to be entering a situation where we really start to look at cutting core services.”
Strausberg explained the county’s fiscal situation is tied directly to declining property tax revenue, an issue faced by practically every other jurisdiction, but in Wicomico, the decline is even more pronounced.
“Any discussion about fiscal trends in Wicomico County has to begin and end with the property tax yield,” he said. “One thing we never envisioned is the steep decline in property values. We never predicted it would collapse. Now, we’re looking at a five-year climb out of that collapse if it started today, but there is no indication the decline is over yet.”
Strausberg pointed out Wicomico County’s assessable property tax base is among the lowest on the Eastern Shore and in Maryland. For example, the county’s per capita assessable base is currently $75,880, second only to Somerset at $67,039. By comparison, neighboring Worcester County’s is $399,566.
“This is the basis for 50 percent of our revenue, and yet we’re the second lowest on the Eastern Shore and probably the third lowest in the entire state,” he said. “When you look at these numbers, it really grabs your attention.”
According to Strausberg’s figures, the real property yield per capita in Wicomico is the lowest among the Eastern Shore counties at $576. Somerset is the second lowest at $603, while Worcester is the highest at $2,790. Naturally, it follows that the total county budget allocation per capita in Wicomico is also near the bottom. For example, the total county budget per capita in Wicomico is currently $1,573, second only to Somerset at $1,486. Worcester is the highest on the shore at $3,517.
Similar numbers bear out in several other key indicators. For example, Wicomico’s appropriation per student is $3,491, which is seventh lowest among the eight counties on the shore. Worcester is the highest at $11,209. Similarly, the cost of county services per capital in Wicomico is $1,050, the lowest on the Eastern Shore. Kent County is the highest at $2,452, with Worcester close behind at $2,046.
Strausberg explained Wicomico County, like most jurisdictions, derives most of its revenue from two major sources — real property tax and local income tax. In Wicomico, 78 percent of the county’s revenue comes from those two major categories, with 46-percent coming from real property taxes and 32 percent coming from local income tax.
By contrast, Wicomico County’s annual budget expenditures are based in two major categories including education at 48 percent and public safety at 31 percent. With declining property taxes and income taxes, the county has already been forced to cut its budget considerably over the last few years, from a high of $132 million in 2008 to just over $108 million in fiscal year 2012.
While the county has been able to walk a thin line between shrinking revenues and being able to provide essential services to its citizens, even tougher choices will have to be made in the near future including further cuts to the big two, education and public safety.
“If we have continue to take further cost reductions, the only meaningful place to look for them is in these two places,” he said. “You’ve gone about as far as you can go in other areas.”
While county officials will be forced to look at essential services for further cuts, increasing spending for capital projects and roads will likely not even be a consideration.
“Your deferred infrastructure needs already total $33 million, including $12.5 million in county roads needs alone,” he said. “We’re not going to be able to make any significant dent in our back-logged capital projects and infrastructure.”
Strausberg said the county must evaluate its needs versus its tax capacity, or the ability of the citizens to meet the tax burden.
“The citizens shouldn’t pay any more than what is needed to fund their essential needs and expectations from their government,” he said. “What can the citizens and businesses afford. There is an obvious limitation on that. Short of that, we need to ensure we’re being efficient and effective stewards of the money.”
Council members listened attentively to the presentation and said increasing the tax rate to meet the demand would be a difficult proposition.
“I am very concerned about where we stand with the fiscal health of this county, but there is no silver bullet,” said Councilwoman Stevie Prettyman. “Being in the seat I’m in, and listening to everybody, I can’t ask the citizens to do more. It’s going to take everybody at the table for us to sit here and get through another budget. It’s going to be very difficult.”