SALISBURY – A shortfall in the Wicomico Youth & Civic Center budget highlighted a meeting with county officials last week.
In an open work session last week, representatives with Wicomico County Recreation, Parks and Tourism met with the Wicomico County Council to discuss the fiscal year 2020 budget for the Wicomico Youth & Civic Center.
“I’m here this morning to talk about some revenue challenges that we’re facing at the civic center this year and how we anticipate a shortfall in this year’s budget with respect to revenue,” Recreation, Parks and Tourism Director Steve Miller said.
Each year, the civic center – which operates under the umbrella of the county’s recreation, parks and tourism department – receives appropriations from the county to fund salaries, benefits and other expenses and to balance the budget. As a special government fund, the facility also relies heavily on event revenue to make the overall budget work.
But Miller told officials last week that net revenue targets have been increasingly difficult to achieve. And each year, a larger percentage of county appropriations is used to cover employment benefits.
To make matters worse, he said, the civic center will take a financial hit this spring as several events at the facility are canceled or postponed amid the COVID-19 pandemic.
“When you combine those three things – when you have a structural deficit, a difficult year in entertainment and a national crisis on our hands – we’re going to end up with a shortfall,” he said. “That’s why we are here today.”
Miller told officials county appropriations to the civic center had increased 88% since 2006. He noted, however, that a 60% growth in salaries and a 181% growth in benefits greatly impacted how those appropriations are used.
In 2006, for example, 47% of county appropriations funded employment benefits at the civic center. In 2020, 71% of county appropriations funded employment benefits.
“In 2020, 71 percent of county appropriations is now dedicated to benefits while a much smaller piece of the pie is dedicated to covering everything else,” he said. “We are very reliant on our ability to generate revenue because there are very little appropriations to cover our costs.”
Miller noted, however, that generating enough revenue to meet the civic center’s $1.2 million net revenue target remained a challenge. Over the last 11 years, net revenues have ranged anywhere from $850,000 to roughly $1 million.
“We have a structural issue in the Wicomico Youth and Civic Center budget and it’s tied to revenue, particularly revenue that’s tied to events,” he said. “The math just doesn’t work, and it needs to be addressed in some way.”
In fiscal year 2020, Miller said he anticipates a significant shortfall in net revenue, which he attributed to less-profitable shows and postponements or cancellations.
To improve the financial situation, he said, officials have cut down on travel-related expenses, delayed projects and left positions unfilled at the civic center. But Miller explained that department staff did not foresee the impacts of the COVID-19 pandemic.
“We’re a public event facility and right now we don’t have the ability to run public events,” he said. “Three weeks ago, we thought the gap would be around $300,000 in the worst case scenario, and we felt like we could close that gap with the events we had scheduled. At this point I even hesitate to throw out a number because we simply don’t know how long events are going to postpone or cancel, and we don’t know what that impact will be.”
Miller suggested the department could use reserve funds from the recreation and parks budget to account for shortfalls in the civic center budget. He added the county could also lower net revenue targets and increase appropriations to the civic center or increase fees for room rentals, food, tickets and more.
“One of the complaints we hear often is the fees are already too high …,” he said. “By taking drastic measures there and raising, raising, raising, it could have the opposite effect, which is to drive people away.”
Councilman Joe Holloway said he favored Miller’s idea to use reserves from recreation and parks.
“That would be one avenue to take,” he said.
Officials agreed last week to reevaluate the civic center budget ahead of the coming fiscal year. Director of Administration Wayne Strausburg said the review also warranted a larger discussion on the entertainment industry.
“The entertainment industry has fundamentally changed, and I think we have to take a hard look at the civic center model …,” he said. “We want to keep that operating loss as minimal as we can for our taxpayers while maintaining that quality of life asset.”