SNOW HILL – A spontaneous declaration by Worcester County Commission President Louise Gulyas that most government departments would need to cut 5 percent rather than 3 percent from their budgets due to a projected $11.1 million shortfall was premature and had not been discussed by, or voted on, by the other commissioners.
“We’re asking for 5 percent. We’re keeping the Board of Education at 3 percent,” Gulyas said at Tuesday’s meeting.
Gulyas spoke hastily, before any official vote was taken or discussion held.
Budget decisions must by law be made in open session, unless specifically about personnel, and must be voted on by a quorum of the commissioners.
When asked about the 5-percent cut decision after the meeting, Gulyas said she was not sure about exact procedure, but she felt she had consensus. It was later revealed there has been no public discussion of a 5-percent cut.
Commissioner Bud Church said he had not talked about the 5-percent cut with other commissioners.
Gulyas acknowledged after the meeting that the 5-percent cut she spoke of had never been discussed or voted on by county elected officials. She said they had been proposed by staff to combat the budget deficit.
“These are all recommendations from staff,” Gulyas said.
Her support for furloughs, which Gulyas said would be necessary for staff last week in a telephone interview, also came as a surprise to the other commissioners.
No alterations to salary, hours or working conditions have been discussed.
“Furloughs, are they on the table? We haven’t come to the table yet,” Church said.
“Furloughs, days off, having to let people go, we haven’t gotten that far yet,” Gulyas said later.
Commissioner Virgil Shockley weighed in on the topic, despite the fact it’s not been proposed officially.
“I don’t want to see furlough days built into the budget,” Shockley said. “That’s what you do when you have no choice and you’ve already adopted a budget.”
The commissioners, he said, are not ruling any method of balancing the budget out, however.
“Everything is on the table and I do mean, everything is on the table,” said Shockley. “Am I happy about it? No, I’m not happy about it.”
Without more numbers, Church said no budget decisions can be made.
“We need some input. I need some information,” said Church. “I think it’s premature to discuss anything until we know where we are.”
“Until I get a good set of numbers, I’m not going to scare people,” said Shockley.
No final budget decisions were made Tuesday, Gulyas said. The commissioners, she acknowledged, cannot make firm plans until more solid figures are presented.
“We have to wait ‘til we get the rest of the figures before we can do that. As soon as we get them in, we’ll make the final decisions,” said Gulyas.
Church added, “We need a huge amount of information to put a budget together. I don’t want to run scared ‘til I know what the numbers are.”
More solid revenue numbers will be available Feb. 25.
The only entity suggested to escape potential deeper cuts would be the Worcester County Board of Education, which, if the commissioners follow Gulyas’ statement, would be held to the previous 3-percent reduction.
Gulyas said she would prefer to see the school board cut less than other government agencies because she does not want to hurt the local education system.
Another 2 percent in cuts, if the commissioners vote for deeper reductions, Church said, would take some strong measures for the school system.
“I don’t think they could go another 2 percent without furloughs or lay-offs,” said Church, a former school board member.
That cuts must be made to Worcester County’s budget is not under dispute, the commissioners agree.
With an $11.1 million revenue shortfall looming in fiscal year 2010 (FY10), Worcester County departments must reduce expenditures in the future.
The 3-percent cut mandated in the late November will not make up the difference.
“A 3-percent reduction is not enough. All estimates indicate a 5-percent reduction of expenditures is now required,” said Harold Higgins, finance officer.
“That shortfall may in fact increase,” said county administrator Gerry Mason.
State of Maryland revenues are not set and the Maryland General Assembly has months to run, so that number could be uncertain for some time.
What county staff can say for certain is that revenues from property tax, recordation and transfer tax, investments and state highway user funding will all be down considerably in FY10. Specifically, property, recordation, and transfer tax revenue will be down $7.7 million in the next fiscal year.
Revenue from investments is projected to fall by nearly $1 million.
The assessable tax base has also undergone a reduction.
“We have been in steady growth in the assessable tax base for many years,” said Higgins. “In fiscal 2010, we will see a decline in assessable base, something the county has not seen in modern times.”
The declining market value of property in Worcester County is also unlikely to recover for four or five years, Higgins said.
Income tax revenue will probably fall in the future, Higgins said.
The only FY10 increase in government spending will be debt service payments, a $5.7 million increase, to repay bonds issued for the construction of the new Worcester Technical High School and renovation and additions at Pocomoke High School, staff said.
Worcester County might also have to pick up the tab for the state Department of Assessments and Taxation and could be required to further fund teacher pensions, according to Higgins.
The county cannot depend on additional revenue from the federal stimulus package, Higgins said.
The commissioners instituted a hiring freeze in September 2008 and instructed all departments and the Board of Education to set aside 2 percent of their FY09 operating budgets for possible current year shortfalls.
In November, the commissioners directed departments and the school board to cut 3 percent from their current operating budgets for their FY10 budget requests, including the sheriff and state’s attorney.
The Worcester County budget process will begin in earnest in March.
The commissioners also face a budget shortfall in the current fiscal year, with revenues about $2 million less than projected income.
County departments and the Board of Education were instructed in late summer to set aside 2 percent of their current year operating budgets against an FY09 shortfall.
“If they have done that, then there’s enough money to cover it, probably, or it will be close enough,” said Shockley. “If any department didn’t set aside 2 percent, then they have a drastic problem and it’s their own doing. I have no sympathy with them.”