SNOW HILL — Worcester County officials this week debated the anticipated shortfall between revenue and expenditures in the proposed fiscal year 2015 budget, taking exception with the automatic inclusion of over $6 million in budget stabilization funds to close the gap.
During an otherwise fairly mundane request on Tuesday for permission to advertise the upcoming Worcester County budget public hearing in May, some County Commissioners voiced their displeasure with the automatic inclusion of budget stabilization funds to close the gap between revenue and expenditures. Budget stabilization funds are a rainy day fund of sorts that provides county officials with a little wiggle room as they deliberate the annual budget.
Going into the current budget cycle, the general fund revenues are estimated to be around $176.3 million, while the requested expenditures total about $184.7 million, leaving a gap of roughly $8.5 million that needs to be reconciled with an increase in revenue, a reduction in spending or a combination of both.
However, some commissioners this week said the information surrounding the budget deficit is not entirely accurate because it includes a roughly $6.4 million transfer from the county’s budget stabilization fund to help close the gap. The budget stabilization fund was created in order to set aside money to help balance the county’s budget in the current and future years as property taxes wane and expenditures for services and payroll increase. While none among the commissioners dispute the use of a portion of the budget stabilization funds in this year or future years, some this week questioned why it was automatically added into the equation before budget deliberations even began.
“When did we decide to put $6.3 million in budget stabilization funds into this budget?” said Commissioner Virgil Shockley. “We never voted to put that in.”
County Administrator Harold Higgins said the budget staffers realized early on some of the budget stabilization funds would be needed to balance the county’s spending plan this year. He said the $6.4 million number was rather arbitrary and could be adjusted as the commissioners work through the budget process.
“We knew we would need it,” he said. “It’s just an estimate. Our intent is to have some level of that in this budget this year.”
Shockley did not disagree with the need for using budget stabilization funds, but said it was not entirely accurate to paint the deficit at $8.3 million going into the process.
“Rather than have the real number, we have a $15 million shortfall,” he said. “It gives us a false sense of what we actually have in money. It’s not $8.3 million, it’s more like $15 million because we have this $6.4 million in budget stabilization funds already in there.”
Commissioner Jimmy Bunting agreed the numbers being floated did not paint a picture of what the county is ultimately facing this year.
“It’s not accurate,” he said. “The true number is actually more like $15 million.”
However, Higgins reiterated the transfer is exactly why the budget stabilization fund was created and that the $6.4 million figure could be altered by a vote of the commission.
“This is the first year and we have to have a starting point,” he said. “We didn’t want to create the perception that we were going into this with a $15 million deficit. There are three things we can do, decrease spending, increase revenue or a combination of both.”
Meanwhile, County Budget Officer Kathy Whited told the commissioners this week keeping the current tax rate at 77 cents per $100 of assessed property value will actually result in a tax decrease for Worcester this year when the constant yield is factored in. The constant yield sets the tax rate at a figure needed to derive the same amount of revenue as the prior fiscal year.
For the tax year beginning July 1, 2014, the estimated real property assessable base will decrease by .9 percent from $14,441,353,721 to $14,315,812,587. If Worcester County maintains the current tax rate of 77 cents per $100 of assessed value, which the commissioners appear to be inclined to do, especially in an election year, tax revenues will actually decline by .9 percent, resulting in a reduction of $966,667 in real property tax revenues. In layman’s terms, if nothing changes, Worcester’s property tax rate will actually decline this year by tenths and hundreds of a percentage point compared to the constant yield, but the difference will cost the county nearly $1 million in lost property tax revenue.
Whited told the commissioners the State Department of Assessment and Taxation (SDAT) sets the constant yield for each county based on the reassessment of real estate in the various jurisdictions, and the constant yield rate for Worcester was certified as .7768.
“The County Commissioners use the $.77 per $100 of assessed value, which will actually be a tax decrease this year,” she said. “If we don’t change anything, we’ll actually lose just under $1 million.”