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DOCUMENTS


The Tentacle


May 18, 2006

The Sky is Falling! The Sky is Falling!

John W. Ashbury

Well, they've done it. All the gnashing of teeth and crying wolf over the "alleged" structural deficit is over. Now our county commissioners can proceed to adopt another "waste-of-taxpayers-money" budget.

For weeks we have heard that unless the property tax rate is set above the constant yield rate of $.936 per hundred dollars of assessed value, the county faced a massive deficit. To absolutely no one's surprise, Commissioner Jan Gardner lead the charge, armed only with her box of tissues.

At the end of last week, with a little help from their Department of Finance and their own solution - which had been available for weeks - the commissioners suddenly uncovered an additional $6 million, enough to make this "structural deficit" go away.

"How did they do it," you might ask.

Well, it's a combination of eliminating some expenses and a pretty good revision of expected revenues. Here's exactly what they did:

Revenues: Increase Estimated Recordation taxes $1,100,000

Increase Estimated Investment Earnings $500,000

*Increased Development and Permitting Fees $865,000

Total Increased Estimated Revenues $2,465,000

Expenses:

Eliminate Utility Cost Reserve $400,000

Reduce Snow Removal Reserve $250,000

Reduce Estimated Cost for Reclassifications $1,000,000

*Eliminate Sick Leave Incentive Program $93,000

Delay in opening Thurmont Library $602,880

Delay in opening 30 N. Market Street Bldg. $44,250

Total Decrease Estimated Expenses $3,755,130

Total Available Funds $6,220,130

*Less the above two items not accepted by BOCC $958,000

Net Available Funds accepted by BOCC $5,262,130

Less Elimination of Structural Deficit $3,561,345

Available Unallocated Funds $1,700,785

So, now they have another $1.7 million to spend. And at least one commissioner - Mike Cady - thinks the Finance Department has underestimated income tax revenues for next year by at least $10 million, thus setting up another bumper crop of excess fund in the 2007 Fiscal Year budget.

Over the past four years the county has seen budget surpluses totally more than $100 million. This is indicative of our commissioners' - all five of them - willingness to tax citizens more than is necessary. It must be said, in fairness, that the improving economy and a 3 percent unemployment rate aided in creating these huge surpluses.

When they were working on the budget at this time last year, two commissioners wanted to lower the property tax rate in light of a $26 million audited surplus. Unfortunately, none of the other three did, so they voted to spend it all - and then some.

This year, with a $41 million surplus, three commissioners - Mr. Cady, John Lovell and John "Lennie" Thompson - stuck to their guns and lowered the property tax rate to $.936. Commissioners Gardner wanted to set it at $.95 per hundred, which would allow them to spend an additional $3 million, until the latest "found" money came out of the woodwork.

The sadness is that all the hollering about the structural deficit that has gone on for weeks is Chicken Little rhetoric. Haven't these commissioners been watching the national and global economy? It is booming, and unless there is a drastic downturn caused by a natural disaster, or a massive terrorists' attack on American soil, it will take a while for the economy to tank so badly that the Frederick County government finds itself in dire straits.

Looking at the current fiscal year, we find that property tax revenues, after just nine months, have exceeded revenue projections by more than $5 million - $176 million estimated, $181 million received. And this was six weeks before the delinquent tax sale earlier this month.

Income tax revenues - the piggyback tax - were estimated to generate $141 million this year. As of March 31 the county has received $81 million. But this was before the tax return filing deadline of April 18. And income tax revenues always lag, even beyond the end of the fiscal year on June 30. The county expects to receive its last payment from the state sometime in August.

This is why the county waits until October each year to audit the previous year's income and expenses.

The other major revenue source is recordation taxes. As of March 31, the county has taken in $21 million, while only $17 million was budgeted; again, an increase above estimates.

While dire predictions are being made about a precipitous drop in these fees next year, in actuality any reduction is likely to be minimal - if at all.

Thousands of interest-only loans will be converted to regular mortgages, causing new recording fees to be paid. And while the average price of housing across the country is showing signs of decline, that is not the case in Frederick County. They are not rising as fast as they did a year ago, but they are still going up.

And we can't forget that some of those loans will be foreclosed, thus causing sales of the properties, generating additional recordation fees.

All the talk about the structural deficit increasing as the years go by is all just political rhetoric. The commissioners - should the economy tank - have the ability to increase revenues in a growing number of ways. And they can do a little each year to prevent shock waves like the BGE electric rate increase that hits in July. They could also reduce spending, an unlikely occurrence.

And another thing that none of the poor-mouth politicians want to mention is the county's set aside. By state law the county must put 5% of its operating budget into a little nest egg. During the fiscal year the commissioners are allowed to dip into that reserve to meet unexpected emergencies.

In the budget for Fiscal Year 2007, starting July 1, the commissioners must set aside more than $20 million.

It is an election year and political rhetoric will pollute the air - more so than an unfiltered coal-fired electricity generating plant. Cutting through all the hype is going to be difficult, especially when sitting officials try to bamboozle the public to get re-elected.

Jan Gardner is just a prime example, one among the many. She, however, should adopt Mark Hoke's philosophy.

When the retired bird colonel was a commissioner and lost out on a vote, he dropped his opposition and supported the decision of the majority - publicly and privately. He lost the vote and was willing to accept it. Ms. Gardner isn't. She is proving once again that she is a poor loser.

And that is sad - for any politician.



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