Op-Ed: Talbot County Budget needs Moderate Growth by Laura Price

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You may be wondering what all this talk is about our property tax revenue cap. What is it and why is this Council or anyone talking about asking our citizens to agree to an increase in property tax? Many years ago, Talbot County citizens voted to put in place a “revenue” cap (not a rate cap) of 2% or CPI-U (consumer price index), whichever is less to protect themselves from being taxed out of their homes due to property values rising so quickly. Talbot County did not have the Homestead Tax Credit which now provides protection and keeps our taxable assessment at a constant level for our primary residences.

Since then, times have changed, most notably, in 2010 when Talbot’s income tax revenues dropped from $31 million to $19 million, nearly a 40% drop in one year! That same year our property tax revenues were just under $28 million and the rate was 43 cents, the lowest in a decade. This was due to our revenue cap law that actually requires lowering the rates during times of increasing assessed values of real property in the County. It had been 55 cents in 2001 and is currently 57 cents in 2018.

I looked over my own property tax bills for the past 15 years. I was surprised by how much my total bill went down from 2003 (.553) to a low in 2010 (.432). My total payment decreased 18%! As a small government, fiscal conservative, I believe in low tax rates, but even I don’t think my property tax payment should go down. I’m happy if it stays the same. Today, in 2018, the rate and amount are almost exactly the same as 17 years ago. Think of all the additional resources that could have been put into our county had our rates simply remained the same. Then maybe we wouldn’t be talking today about this problem.

What else has changed? In 2012, the legislature in Annapolis passed a law that legally requires every county in the state to fund education each year in an amount that never decreases. No matter what happens in the economy or to county revenues or even if we found savings and efficiencies, we may NOT decrease the Board Of Education (BOE) budget ever.

I understand the principle. We all would like certainty in our budgets. We need to plan for the future and no one ever wants to have to live on less, but things change, economies change and tax revenues change. One assumes they will increase enough to meet our citizens’ needs. Sadly, this is not always the case.

So what else has changed? What is so dramatically different that a 1 or 2 percent revenue cap won’t be able to pay for? Education funding is always an issue. Each year the BOE asks for an increase, sometimes reasonable, sometimes staggering, and sometimes the state mandated escalator kicks in (up to 2.5%) but the 2012 Maintenance of Effort law does allow/mandate the county to break the tax cap solely to pay for increases in education funding. The county council has done just that 3 times in the past 5 years. The total property tax rate went up 5 cents per hundred, which is nearly a 10% increase in everyone’s property tax rate. This is not insignificant. This raised $3.7 million in additional property tax revenues, devoted solely to TCPS K-12 expenses. Total education funding is 52% of our budget or $43 million per year; this includes TCPS, Chesapeake College and debt service on county schools.

But these tax increases did nothing to help the other 48% of our county budget, which totals just over $40 million this year. So where does it all go? Public safety, including Sheriff, Emergency Services, Corrections and Volunteer Fire Departments are the largest at $17 million (20%). Even with this funding, Public Safety has significant unfunded, unmet needs to provide our citizens with the services they need and expect. Add in state mandated departments and our court system at $7.4 million (9%) and County functions which include Public Works, Planning & Permits at $5.8 million (7%), Health department at $2.4 million (3%), and our Roads department at $3.3 million (4%), which by the way used to be completely paid for by the state before funding was cut 90% about 9 years ago. That leaves about $4.8 million (6%) to pay for our Library, Parks & Recreation, Tourism & Economic Development and our Social Services and Aging programs. The grand total for FY18 is just over $83 million.

We have been able to provide all these county services within our property tax limits and only one small income tax rate increase in 2012 from 2.25% to 2.4%, after the economy plummeted. As the most fiscally conservative council member over the past 8 years, I have kept a keen eye on the budget and watched our expenditures, keeping them as efficient as possible, while meeting our essential needs.

The good news is our economy has recovered significantly. Our income tax revenues have come back to about $27 million per year, much improved over the $19m we dropped to, but still far from the high of over $31m. With a healthier economy does come an increase in costs, and the same services will cost more.

One of our main issues is keeping up with the costs of Public Safety and Emergency Services. As we have all seen recently, we must have a fully staffed and well equipped Sheriff’s Department to protect us. We need to have a more competitive salary scale because we are losing our most valuable and trained deputies to surrounding counties for better pay. The same thing is happening in our emergency services department. Our Paramedics and EMTs, who face intensive calls every day, are also lured away to nearby counties. With Talbot having the highest percentage of retirees of any county in the state, it is critical for us to continue this as our #1 priority. The request in this upcoming budget is approximately an additional $1 million and over the past decade, we have increased funding 60%; this need will continue to grow and outpace other county services.

At this point our biggest shortfall will be in capital expenses. Currently our annual debt service is about $3.9 million, but we have three big projects coming up quickly. The largest is Easton Elementary School which is currently in the design phase at a cost of $30 million. The debt service on that project alone will be approximately $2.4 million per year. The next project is a new Sheriff’s building. The county moved the Sheriff to our Talbot County Business Center temporarily to make room for a Central Booking facility that will allow law enforcement officers to get back on the road quickly. When that building comes down in the next 3-5 years for the airport, we will need to have a space ready for our Sheriff, at an approximate cost of $12 million, approximately $1 million per year for the debt service. Our Health department was identified many years ago as inadequate and should be replaced. The estimate is $8 million, about $650,000 per year in annual debt service. These three projects will add $4 million to our operating budget, doubling our annual debt service to $8 million. At this time, we have no revenue source to pay for them.

In coming up with a simple and reasonable way to solve our problem, my proposal (“The Price Penny Plan”) would be to do a penny increase per year + our 2% revenue cap and limit it to 4 years to keep the current cap in place. This would allow for some moderate growth in the budget to pay for these items specifically. It would cost the average $350k homeowner a modest $35 and a $1m homeowner about $100 per year. This could generate an additional $3 million plus the natural growth and get us closer to balancing our budget.

The citizens need to decide if they want the county to maintain or increase services and how much, if any, they are willing to pay. I, as your Councilmember, ask your help; to familiarize yourselves with our current budget and the future needs and revenue shortfalls. Let’s all try to figure out together how to move forward to keep Talbot County supported with the essential public services that you, the citizens deserve.

Laura Price is a member of the Talbot County Council

Letters to Editor

  1. Thank you, Councilwoman Price. I appreciate this comprehensive survey of our county’s budget shortfall and revenue cap.
    Your solution is truly “penny-wise,” but doesn’t seem to address the public services shortfall and the loss of our employees to neighboring counties.
    How are other counties managing? Might we afford a few pennies more? I’m presuming the possibility of rescinding our cap at the ballot box is a non-starter, short a disaster?

  2. Hugh (Jock) Beebe says:

    Laura Price is taking a courageous and well reasoned approach. Denial of cost and budget reality has no place in honest effective politics.

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