County Orders Vast Spending Cuts

SNOW HILL – A daunting task faces the Worcester County school board and county departments after the Worcester County Commissioners issued instructions this week to cut 3 percent from their operating budgets for the next fiscal year, a task necessary, say the commissioners, in light of the significant revenue declines expected.

“This is a prudent step the commissioners had to take,” said Commission President Virgil Shockley. “Some of the budget cuts may be unpopular to some people but it is important that each department work with the county and together we will get through the economic turmoil.”

While a 3-percent cut in the operating budget assigned to the schools and county departments last year does not sound like much, a 3-percent reduction creates some $5.7 million in savings.

“For the Board of Education, it’s like $2.2 million,” said Commissioner Louise Gulyas.

 Superintendent of School Dr. Jon Andes, when contacted for comment yesterday, said he needed to see the official notification from the commissioners before weighing in.

The commissioners met with the Board of Education on Tuesday to discuss declining revenues, but did not discuss specific cuts, Andes said.

The county schools come away from the budget process each year with roughly half the entire county operating budget.

While the commissioners initially discussed a 1-percent cut, Gulyas proposed a 3-percent decrease, she said, to give a deeper cushion for county finances.

The existing hiring freeze on non-essential personnel will continue, with new hires restricted to existing public safety positions that become vacant. Existing teaching positions would also be filled if a vacancy occurs.

County and school salaries will remain static, with no cost of living adjustment, step increases or any other raise. No new positions will be created.

The commissioners are unlikely to agree to pick up the cost on grants that are up this year. In recent years, the county has had to take over paying formerly grant-funded, after-school programs, for example.

The 3-percent cut should be more than sufficient to cushion Worcester County against declining revenues, said Shockley.

While the County Commissioners’ budget process will not begin until early spring, county departments will soon begin putting together their budget requests.

“They need to know what is expected of them,” said Shockley.

Following this plan should prevent any employee layoffs or furloughs, according to the commissioners.

“The commissioners are hopeful that by taking this action early we will avoid any future layoffs or furloughs. Worcester County residents can continue to feel confident that their local government will use the resources with which they have been entrusted wisely and in a manner that continues to protect the economic health of the entire county,” read a press release issued yesterday at 4:30 p.m.

No one knows how far revenue will dip, or whether the state of Maryland will force further fiscal responsibilities on the counties.

The revenue numbers have flatlined and are declining, Shockley said.

With strong declines of 10 to 15 percent in Ocean City property values during the recent reassessment, Shockley warned that Ocean Pines and Berlin could see the same declines in property values in future years.

Lower property values eases the burden on property owners, but increases the fiscal burden on the county as tax revenues fall dramatically from the previous year’s collection.

The market for new homes and commercial structures has also drastically slowed, if not stopped, so there is little in the way of new taxes coming in to make up for reductions in other areas, county officials acknowledge.

“This is the first time there’s been a decline of assessments since the 1990s,” Shockley said.

Less revenue from transfer and recordation taxes due to the stagnant real estate market add to Worcester County’s fiscal woes.

“I feel it’s going to be a very tight year with low assessments,” Gulyas said. “There’s very little sale of real estate, so the transfer taxes will be low. We’re going to have to tighten our belt buckles like everybody else.”

Shockley said the three-year cycle of reassessments could potentially keep the county in a declining state as far as property tax collections go for the foreseeable future.

“Ocean Pines and Berlin will get reassessed this coming year. If there’s a decline there, then you’ve got the domino effect,” Shockley said.

The county also faces an additional $3.2 million in debt each year for the next 15 years, after issuing $35 million in bonds to finance major renovations and addition work to Pocomoke High School.

The commissioners are adamant that taxes will remain at the same level.

“This is not the appropriate time to raise taxes. Everybody is scraping to put food on the table and gas in the car,” Gulyas said.

Shockley said the state is the wildcard. The county has no way of predicting Maryland’s contribution to the county or whether the state will transfer more fiscal burdens to Worcester County’s shoulders.

“We don’t get much from the state anyhow and we haven’t gotten any figures yet on assessments. We won’t get that ‘til after the first of this year,” said Gulyas.

“We are truly in uncharted waters,” Shockley said.

The decline will not be reversed in a single year.

“We’ve been very blessed and some people have been very spoiled in what they received. The pendulum has swung back,” said Shockley.

Gulyas said it was better to be prepared than to take funding away later.

“We’re going to live within our means …we’re going to take it day-by-day. We’re not trying to panic everybody,” Shockley said. “Our intent is to get out in front of it. If we do this, things are going to be okay.”

“We’ll manage. We’re sturdy people,” said Gulyas.

The press release issued yesterday added the commissioners’ overall sentiment.

“We regret that this action must be taken, but feel that we are left with no alternative in light of current cuts from the state, cuts that may come in the next session of the General Assembly; our own projected flat revenues as compared to prior years; added expenses; and additional debt payment,” it read. “The commissioners’ position is that it is essential that we be proactive in order to address these difficult economic times, and we have directed each Worcester County department and agency to help us to accomplish this goal.”