SALISBURY — Facing a potential $7 million shortfall created by a state requirement to meet Maintenance of Effort (MoE) funding for the Board of Education, the Wicomico County Council was warned Tuesday not to dip into reserve funds to cover the expense.
“We have to have enough cash on hand to operate,” said Director of Administration Wayne Strausburg.
Currently, the county is sitting on about $30 million in reserves. However, only about half of that is available if the council seeks to tap into the fund to make up for the roughly $7 million gap it faces under the state required MoE, assuming that the counties are hit with the full impact of the proposed fees, something Strausburg stressed is not yet set in stone.
“I’m still optimistic we’re going to get some further relief … I’m optimistic that this isn’t where [MoE] is going to land,” he told the council.
Strausburg called the just over $7 million the county is looking at now a “worst case” scenario.” Even if county advocates in Annapolis can’t dissuade state lawmakers from forcing Wicomico to pay the full fee towards MoE, Strausburg warned against dipping into “rainy day” money to equalize the budget.
“That’s like relying on your lifetime savings to pay incoming bills with no prospects for a new job,” he told the council.
As already mentioned, of the approximately $30 million county reserve, nearly half is already assigned or will be needed as security to pay for day-to-day operations. The remaining $15 million would be quickly eaten up if it was relied on to shoulder the MoE burden, explained Strausburg, who noted that because the MoE fee will be permanent, the reserve could only sustain the county for two budget cycles and would then leave Wicomico without rainy day protection.
The council agreed that the reserve should be left alone. Councilwoman Stevie Prettyman was critical of the state mandate to meet MoE. Stating that it “impounds our citizen’s tax dollars,” Prettyman bashed the bill and questioned its legality.
“I don’t know if that is Constitutional or not,” she said.
Strausburg agreed that the mandate was “an attack on sovereignty” by the state regarding county rights. County Executive Rick Pollitt asserted that, by attempting to make counties consistently fund schools at the MoE rate, Annapolis was actually doing more harm than good, especially for cash-strapped Wicomico.
“It’s one of those things where the cure is worse than the disease,” he said.
Prettyman argued that, as bad as the mandate will be for Wicomico, it will eventually hurt other areas in Maryland.
“In future years, it’s going to have an effect on all of the counties … It’s going to break the counties,” she said. “It’s going to be a domino effect.”
“I think the whole bill ought to be thrown out,” said Prettyman. Because that is unlikely, the council was advised to consider cuts to other county programs or a property tax increase to address the potential $7 million shortfall. Though Wicomico operates under a cap which limits the council’s ability to raise taxes, Annapolis is working on a bill which would allow any county to freely raise property taxes to meet MoE funding for schools, even if that means exceeding the limit imposed by a revenue cap.
The council will find out next week if Strausburg’s prediction that the state will curtail the $7 million requirement comes true. The General Assembly is scheduled to conclude on April 9.