BERLIN – Worcester County will face hard economic times in 2009, but the budget stresses are not the only issues facing the county, with the comprehensive rezoning to complete, preparations to make for slot machine gambling and a flat real estate market sending a ripple effect throughout the local economy.
The County Commissioners have been predicting that the 2009-2010 fiscal year will bring even worse economic fortune to the county, as real estate sales and values decline and county revenues, which rely heavily on real estate and property taxes, fall with them.
The county has already asked county departments and the Worcester County Board of Education to reduce budget requests 3 percent below current operating budgets.
“My main concern is the budget and how we’re going to deal with that. I really feel that we’re going to be alright if everybody watches their departments,” said Worcester County Commission President Louise Gulyas.
Commissioner Virgil Shockley agreed the county should fare okay if county departments set aside 2 percent of their budgets, as instructed in August, and if they follow the instruction to cut their operating budgets by 3 percent for fiscal year 2010.
“The state is the wildcard,” said Commissioner Virgil Shockley. “Our departments will do their part. There has to be an understanding we’re all in this together.”
County revenues could be down by as much as $3 million, and new debt for high school construction and additional health care costs should increase the budget another $4.2 million, Shockley said.
Reduced revenues arise from fewer real estate transactions, but, Shockley pointed out, the county’s tax income also goes down when people are out of work.
Another stress on the budget comes from the Board of Education construction lawsuit. The board is appealing a breach of contract judgment of $1.1 million. Where that money will come from if the judgment is upheld on appeal is a big question, Shockley said.
The commissioners have consistently said they will not raise taxes, a stance confirmed by both Gulyas and Shockley this week.
It is too early to discuss lowering the homestead tax credit, a perennial request by taxpayers during every budget season. The homestead tax credit already stands at a low point of 3 percent. Others will ask the commissioners to adopt the constant yield tax rate, another perennially discussed subject, but Gulyas doubts the commissioners would support it.
“I’ve been told assessments are going to be less this year. I think we’re going to have to stay put,” Gulyas said. “Building is down so we’re just going to have to wait. We’re going to have to step back, take a deep breath, and take one thing at a time.”
The commissioners would like to help taxpayers, but need to do more research on how. “I’m leaving all options open,” said Gulyas.
“I don’t see the tax rate going down,” Shockley said.
Without firm revenue numbers, Shockley said he could not guess at a form of relief for taxpayers, though he did say that the easiest way would be to further reduce the piggyback tax. That would have the most immediate effect on taxpayers, he said, but emphasized that he is not suggesting taking that action at this time. Worcester County already has the lowest piggyback tax in Maryland.
The commissioners still have to approve a budget based on lower revenues while maintaining services and protecting employees.
“I don’t want to see anybody furloughed,” said Gulyas. “I don’t think we can do that to staff or teachers.”
According to Gulyas, the public should not notice any change in services.
“It comes down to the health and safety of the citizenry,” Shockley said. “I don’t see the effect being that noticeable.”
“I’m hoping we’ll keep moving along, maybe at a slower pace,” Gulyas said.
Gulyas warned she does not think the economy will take a strong turn for the better until 2012.
County Director of Economic Development Jerry Redden took a more optimistic view of the general business climate in Worcester County. His department is already working with businesses to expand or establish operations in the county, he said, and the manufacturing base should grow in 2009.
Redden said he has been pursuing alternative energy and green technology businesses, from wind energy to solar farms, as well as opportunities for local traders to get involved in retailing that technology to homeowners. Such businesses will be his top priority in the next year, he said.
“The market clearly is saying, I want to go green,” said Redden.
Alternate energy will have to become a priority for the commissioners, Gulyas agreed.
“That’s something we’re going to have to get right on. That’s the way to go,” said Gulyas.
Broadband capacity will extend further through Worcester County, with the Maryland Broadband Cooperative extending broadband cable up Route 113 over the winter and spring. That should be available mid-year.
“There’s no question that IT continues to shape and direct our future,” Redden said.
Worcester County will have a bumpy economic ride this winter, until the government economic stimulus initiatives start to affect the economy in early spring, he felt.
“By springtime, it should lighten up a bit,” Redden said. “As you get further out, it looks even better … Worcester County in general is going to look pretty good.”
While tourism will rebound, Gulyas feels the county needs to diversify the local economy. The county has not yet considered offering tax credits or other financial incentives to businesses, but may soon.
“Down the road, we’re going to have to offer them something to get them here,” Gulyas said.
The comprehensive rezoning, the final section of the comprehensive plan from 2006, should be completed this spring.
“Hopefully it will get the hearings that it needs so we can get that behind us,” Shockley said.
Wastewater will continue to be an issue, with spray irrigation the hot topic. Land for spray irrigation, which had become astronomically expensive, could come down in price.
The commissioners will also keep an eye on delayed road improvements.
“If the state doesn’t have money, when will 589 be completed? When will 113 be completed?” Gulyas asked.
Slot machine gambling is coming to Worcester County, but the details need to be changed, the County Commissioners concluded last month. Much work remains to be done on the issue.
“We still don’t know what’s happening. We haven’t heard anything from the state or [Ocean Downs owner Bill] Rickman, or how many machines there’re going to be at Ocean Downs, or some other site,” Gulyas said.
The commissioners need to meet with the mayors of Berlin and Ocean City, and representatives of Ocean Pines, to create a slots game plan, she said.
“It’s very urgent,” Gulyas said.
The county should have been in the forefront of the slots debate, she said, instead of hanging back after sending an anti-slots letter to Annapolis, to ensure slots in Worcester benefit locals.
Slots gambling is not the answer to Worcester’s money needs, Gulyas felt, with estimates on local slots revenue ranging from a high $12 million to just $1 million.
“Pick a number. I don’t think the slots are going to bring anything. It’ll be minor,” Gulyas said.