This morning I attended a meeting for the “media” about the Spending Affordability Advisory Committee’s Report for the Fiscal Year 2021. In that meeting was Howard County Executive Calvin Ball, Howard County Government Staff (Sameer Sidh, Scott Peterson, Holly Sun), members of the Spending Affordability Advisory Committee, Howard County Times Reporter Ana Faguy and me (Scott E) representing Scott E’s Blog.
A little while after the meeting the following press release was released:
Today, Howard County Executive Calvin Ball released the Spending Affordability Advisory Committee’s Report for the Fiscal Year 2021 (FY21). The Committee is tasked with making recommendations to the County Executive on revenue projections, General Obligation bond authorizations, long-term fiscal outlook, and County revenue and spending patterns.
“As we approach the FY 2021 budget process, I encourage all residents to read the Spending Affordability Advisory Committee Report to understand the challenges and limitations as a result of our growing expenditures and slowing revenues,” said Ball. “I appreciate the time and effort of all the members of the Spending Affordability Advisory Committee and the important insight they provide to our budget process.”
The Committee reviewed the revenue projections and expenditure requests for FY21 and beyond. Based on these presentations, the Committee determined that Howard County revenue growth is projected to average 2-3% over the next few years but that expenditure requests are considerably outpacing that growth. County government’s revenues are based on two primary revenue streams, property (49%) and income taxes (41%), which together account for 90% of General Fund revenues.
The full report includes the following sections:
- Projected General Fund revenues for the upcoming fiscal year;
- Recommended new county debt (General Obligation bonds) authorization;
- An analysis of the long-term fiscal outlook including multi-year projections; and
- Other findings and/or recommendations that the Committee deems appropriate.
Potential fiscal challenges in Howard County for FY21 include slowed wage growth, declining development, minimizing tax base, and legislative changes. For these reasons, growth at slower than historical rates are likely to continue during the next two to three years. Based on the economic and fiscal challenges facing the County, the Committee recommended continued caution in both expenditure growth and additional debt authorization.
The full report can be read online here.
The meeting this morning gave me an opportunity to ask some questions that not only helped me understand the report a little better but will help me in my articles about financial topics in the future on the blog.
There is a lot of information shared in the 24 page document. Here are some “KEY SOLUTIONS” in the report provided by the committee:
- Tackle revenue options: The County should continue to explore tax options and conduct annual fee reviews to cover actual costs and maintain critical service needs in the operating budget. Local tax options are limited, especially following multiple revenue enhancement actions taken in 2019-2020. Moreover, approximately 90% of the County’s General Fund revenues are generated from property and personal income taxes. The County’s personal income tax rate of 3.2% is already at the maximum level allowed; and the property tax rate, including the fire tax, is the second highest in the state. The County also needs to effectively balance resource needs with the management of its tax burden.
- Prioritize and balance service needs: With limited growth in revenues, the County must evaluate, prioritize, and realistically address the various service needs. Education has been and should remain the top priority for the County. However, as the County prioritizes education, it must not compromise other services needed by the community. For example, the County’s 65+ population has grown 3-4 times faster than student enrollment and total population growth, respectively, and is expected to double in two decades. After all, this County is a “full-service” jurisdiction and must provide resources to households without students; services to those in need;
- Prioritize capital needs and bring them more in line with fiscal reality: The Committee urges the County to carry out comprehensive long-term capital planning. This includes:
- evaluating and determining the feasibility of maintaining, renovating, and repairing existing infrastructure while also addressing whether it is practical to initiate new capital projects;
- balancing service needs, in collaboration with key stakeholders, and bringing total requests (in FY 2021 and also out years) closer to fiscal reality;
- analyzing and fully accounting for the operating budget impact of capital projects, including staffing and operation and maintenance costs; and
- continuing to examine previously authorized bonds with a focus on identifying opportunities to close out or reduce the scope of lower priority projects to free up bond capacity.
Again…there is much more in the 24 page report but I thought those bullet points above gave some good context to what is in the report. An important point to remember in the report is the following:
A multi-year revenue and expenditure model developed by the Budget Office suggests that General Fund revenues will likely grow an average of 2.3% in the successive years through FY 2026. This does not account for the potential recession or the impacts of federal and state policies.
On page 11 of the report under “Howard County Public School System (HCPSS) Budget and Balanced Needs” I found this part interesting:
The Committee continues to urge HCPSS to develop a budget request that acknowledges the financial realities in the County. All County departments and agencies are required to submit budget requests that reflect current fiscal realities and HCPSS should not be exempted. The Committee recommends that the HCPSS prioritize their needs and find innovative solutions to live within the available funding sources while continuing to deliver quality services with enhanced accountability and efficiency.
It would be easy to say that the HCPSS budget request sent forward by the Howard County Board of Education this year did not “acknowledge the financial realities in the County”…Howard County Board of Education Sends Forward A Budget Request That They Know Will Not Come Close To Being Funded For FY2021.
I will have more on this report and the FY2021 budget in the near future…for now I just suggest taking a look at the report and the projected outlook and recommendations from the Spending Affordability Advisory Committee. These items will be discussed in the upcoming FY2021 Howard County Government Budget process.
On a lighter note…Did you see that I got the memo on wearing a purple shirt to the meeting today (see what color shirts the County Executive and I are wearing)? Total accident…but a funny one this morning.
Also…You never really realize how grey/white your hair is until you see photos of yourself from behind (see the 2nd photo in the article above).
Thanks to Howard County Government for allowing me use of the photos from the meeting in my article today.