Calvert Commissioners Consider Tough Options to Balance Budget

Faced with a deficit in FY 2016 and beyond, Calvert County Commissioners consider four options to balance the budget – the use of fund balance, tax increases, furloughs, and reducing staff.

As reported by Southern Maryland Newspapers Online,

With the use of fund balance for one-time expenses, the county faces a $3,016,898 deficit in fiscal 2016. Without the use of fund balance, the deficit is $6,488,798, said Joan Thorp, deputy director of the Department of Finance and Budget.

To deal with the challenges, Thorp said, 10 days of furloughs, or unpaid time off, for all staff would mean a deficit reduction of $1.69 million in the coming fiscal year. It would be the first county furlough in history.

Another option would be to reduce the workforce, but there are regulations dictating which employees can be laid off.

The last option Thorp presented was “revenue enhancements,” or tax increases. Hejl said the property tax in Calvert County has not been increased since 1987. During this time, the median household income in Calvert County was about $30,000.

By increasing the income tax rate from the current 2.8 percent to 3 percent, it would result in revenues to the county of $2.3 million the first year and increase to $4.5 million the second year (the first full year). By increasing the real property tax rate from the current 0.892 per $100 of assessed value to 0.992 per $100 of assessed value, it would result in more than $11 million in increased revenues to the county. On a home valued at $275,000, this increase would mean an increase of $269 per year in real property tax, according to Tuesday’s presentation.

County Commissioners plan to hold a budget hearing on May 19 and adopt the FY 2016 budget on June 2.

The staff recommended budget for Calvert County can be found on the county website.

Washington County Bond Issuance Takes Advantage of Lower Rates

Washington County Commissioners have approved the issuance of $45 million in general obligation bonds to finance new projects and refinance existing debt. As reported by the Hagerstown Herald-Mail,

The five-member county Board of Commissioners voted to authorize the sale of bonds, not to exceed $44.9 million. That amount includes up to $15.4 million in “new money” toward infrastructure, public facilities, environmental and educational projects, as well as administrative issuance fees, according to Lindsey A. Rader, bond counsel for the county.

The county plans to refinance as much as $29.5 million in current debt to take advantage of lower interest rates. County Administrator Greg Murray said “the county could potentially save about $1.5 million in interest by refinancing past general-obligation bonds from 2005, 2007 and 2008.”

2015 End of Session Wrap Up: Finance and Procurement

This post summarizes the status of finance and procurement bills that MACo took a position on during the 2015 Regular Session.

Energy Efficient Outdoor Lighting Fixtures: HB 336 would prohibit State funds from being used to install or replace a permanent outdoor luminaire unless specified energy efficient lighting requirements are met. These new onerous requirements would apply to public works contracts of $500,000 or more, or to those funded with 50% or more in State funds.

MACo opposed the bill objecting to its mandatory nature and stating that it would limit qualified bidders and place more onerous requirements on the counties, increasing the costs of local contracts funded partially with State dollars.

FINAL STATUS: The House Health and Government Operations Committee voted the bill unfavorable.

MACo Testimony on HB 336

Contractor Occupational Safety and Health Plans: HB 404/ SB 279 would require a prospective bidder or offeror for a public works project over $100,000 to submit a public safety plan and an attestation that the plan meets certain requirements as part of the procurement process. The bill also requires the Department of Labor, Licensing, and Regulation (DLLR) to develop a safety and health calculation worksheet and rating system, and enforce the bills’ many new requirements.

As these bills were nominally the product of a workgroup that MACo participated in during the interim, MACo supported the bills with amendments to address additional concerns. Amendments offered would have increased the threshold to $1 million to better target higher risk projects and lessen the effect on smaller contractors, removed a requirement that a safety plan be submitted to a procurement official as part of the selection process, clarified that the completion of the safety questionnaire and additional safety measures do not impede work on a project, and protected local jurisdictions from any deficiencies in safety plans or safety-related issues that may occur at a worksite.

A Senate Finance Committee workgroup was appointed to work through concerns and amendments offered on SB 279, and MACo’s amendments were accepted. However, members still had reservations. The House Economic Matters Committee did not assign HB 404 to a subcommittee.

FINAL STATUS:  Both bills were voted unfavorable in their respective committees, the Senate Finance Committee and the House Economic Matters Committee.

MACo Testimony on SB 279 and HB 404

Open Space Incentive Program: HB 1091/SB 134 would establish an Open Space Incentive Program which would provide counties an annual payment of $250,000 for each unit of open space attributed to State forests, State parks, and wildlife management areas. One unit of open space is the equivalent of 10,000 acres. The payments that counties currently receive from a portion of revenues generated from State forests and parks are eliminated.

MACo supported the bill as it would serve an as incentive to counties to preserve their State forests, parks and wildlife management areas and provide a consistent revenue stream to offset losses in property tax revenues and fund the public services provided in these areas. A program has existed to provide some level of payment to counties with State forest and park lands through revenues derived from these areas, including net revenues from concession operations, but these payments have been reduced significantly over the past several years to balance the State’s budget.

As introduced, the Budget Reconciliation and Financing Act of 2015 again reduced these payments by a projected $2.5 million. However, budget actions would restore these payments in FY 2017 contingent upon the passage of SB 134. To address the bills large fiscal note, SB 134 was then amended to apply only to Allegany and Garrett Counties. These two counties would receive funding through this new program, and other counties would continue to receive payments through the existing program beginning in FY 2017. If SB 134 did not pass, $2.5 million in funds would be restored through the existing program.

FINAL STATUS: SB 134 passed the Senate, but the House Rules Committee did not act on the bill to assign it to a standing policy committee. HB 1091 was heard by the House Environment and Transportation Committee, but no further action was taken. Since SB 134 did not pass, the $2.5 million in funds counties would have received through the existing park revenue sharing program will be restored.

MACo Testimony on SB 134 and HB 1091.

Calvert County to Pursue Reciprocal Preference for Awarding Contracts

Calvert County Commissioners have asked staff to pursue creating a reciprocal preference for contracts awarded through the county’s procurement process. Commissioners made this decision following a presentation by staff on different procurement options.

As reported by Southern Maryland Newspapers Online,

Tim Hayden, director of the Department of Finance and Budget, and Roberta Baker, purchasing officer, gave a presentation to the BOCC Tuesday because of recent concerns and discussions surrounding local businesses and the county’s competitive bidding process. Baker and Hayden presented four options on how the commissioners could proceed, and they ultimately decided on a reciprocal preference rather than a local preference.

In a reciprocal preference, bids from businesses from counties that have a local preference are considered with their home county’s local preference weighed against them. Some counties give preference to local businesses that bid on contracts, which means Calvert businesses bidding in other counties are at a disadvantage when bidding in those counties.

Other options considered included continuing with the current process, which awards contracts to the lowest bidder, and a local preference.

Montgomery’s Finance Director Receives Government Leadership Award

Montgomery County’s Department of Finance Director Joseph Beach has received this year’s Distinguished Local Government Leadership Award from the Association of Government Accountants (AGA).

According to Montgomery County’s press release,

The award recognizes local government professionals who exemplify and promote excellence in government financial management and demonstrate outstanding leadership in enhancing sound financial management legislation, regulations, practices, policies and systems.

Beach’s senior level leadership with the County has included three key roles and spanned 11 years. Since 2011, he has been Director of Finance, after serving five years, from 2006 to 2011, as the Director of the Office of Management and Budget (OMB). Prior to that, Beach was an Assistant Chief Administrative Officer for three years.

“Under Joe Beach’s leadership for the past 11 years, the County has sustained strong financial management and retained its AAA ratings from all three major rating agencies,” said County Executive Ike Leggett. “He has served the County for the past 27 years as an advocate for sound financial management, demonstrating leadership, commitment and initiative. I can think of no other individual who is more deserving of this recognition. Joe personifies the attributes that the AGA is seeking in selecting an individual to receive this honor.”

Click here to read the full press release.

AAA Bond Rating for Harford County Affirmed

Harford County recently affirmed it’s AAA bond rating from all three major bond credit rating agencies.

County Executive Barry Glassman released this statement:

“I am pleased that Harford County’s Triple-A bond rating has been affirmed this week by all three major bond credit rating agencies. These highest possible ratings by Moody’s, Standard & Poor’s and Fitch will keep borrowing costs low when the county sells bonds to pay for capital projects. While noting the challenges of accumulated debt and declining reserves facing my new administration, Moody’s cited ‘proactive management and comprehensive fiscal policies’ in its decision. Standard & Poor’s cited ‘very strong management’ and Fitch noted the county’s adherence to ‘conservative debt management guidelines.’

Not only do these ratings affirm our fiscal management plan, they are a reflection on our county employees who work with integrity and diligence in service of our customers, the citizens of Harford County.

Finally, I would like to thank my director of administration and my entire team for their ongoing efforts to find efficiencies and ensure our fiscal stability moving forward. We hope that by taking these difficult but necessary steps, we will emerge in a better position to reinvest in our county workforce.”

Cecil Bond Refunding Yields $2.3 Million in Savings

Cecil County recently issued $35 million in bond refunding saving the county $2.3 million in debt service. From the county’s press release,

“I am constantly looking for ways for County government to reduce costs,” stated County Executive Tari Moore. “This refunding of bonds has allowed us to take advantage of low interest rates to save the people of Cecil County millions of dollars in interest.”

In preparation for the bond issuance, Moody’s Investors Service and Standard and Poor’s reaffirmed the county’s AA bond rating.

MACo Asks Maryland’s Congressional Delegation to Protect Municipal Bonds

US Representative Dutch Ruppersberger of Maryland’s 2nd district has drafted a “Dear Colleague” letter to House of Representatives leadership in support of the tax exemption for municipal bond interest.

MACo is asking all of Maryland’s US Representatives to join the letter, which urges House leadership to maintain the current tax exemption on municipal bond interest. According to the National Association of Counties (NACo), Representative Delaney of Maryland’s 6th district has already co-signed.

Tax-exempt municipal bonds are the most important tool in the United States for financing state and local infrastructure including schools, hospitals, water, sewer facilities, public power utilities, roads and mass transit. As described in a letter from MACo’s President Montgomery County Executive Isiah Leggett to Maryland’s Representatives,

Without a tax exemption for municipal bonds, Maryland’s state and local governments would face greatly increased costs for these essential investments. NACo estimates that in Montgomery County, we would have had to pay $40.2 million in additional interest costs in 2012 if municipal bonds had been fully taxable in the previous fifteen years. These shifted costs to counties would fall primarily upon their main general revenue source – the property tax. This would further burden an already struggling real estate market, and impose a regressive and unpopular tax scheme onto taxpayers.

Read one of the letters from MACo’s President, Montgomery County Executive Isiah Leggett on the importance of municipal bonds here.

Read one of the letters from MACo’s Executive Director urging Maryland’s US Representatives to sign the “Dear Colleague” letter on municipal bonds here.

Howard County Maintains its AAA Bond Rating

Howard County has maintained its AAA bond rating for the 18th year in a row.  AAA is the highest credit rating earned.

According to the Baltimore Sun,

Citing the county’s budget management practices and diverse tax base, all three top bond ratings agencies — Moody’s Investor Services, Standard & Poor’s and Fitch Ratings — awarded Howard a AAA rating.

Credit ratings assess the ability of a government or business to repay its debts. Howard is among 41 counties in the nation, out of more than 3,000, to earn the AAA rating from all three agencies.

The rating will also allow the county to issue debt for capital projects at favorable interest rates, according to a press release.

County Executive Allan Kittleman called the news “an affirmation” of the county’s “sound fiscal management, responsibility and strength.”

To read the full article on Howard County’s AAA bond rating, visit the Baltimore Sun online.

Senate and House Committees Vote Down Safety Plan Legislation

The Senate Finance Committee and the House Economic Matters Committee voted down their respective bills, SB 279 / HB 404, which would have required a prospective bidder or offeror for a public works project over $100,000 to submit a public safety plan and an attestation that the plan meets certain requirements as part of the procurement process. The bill also requires the Department of Labor, Licensing, and Regulation (DLLR) to develop a safety and health calculation worksheet and rating system, and enforce the bills’ many new requirements.

MACo supported the bills with amendments to increase the threshold to $1 million to better target higher risk projects and lessen the effect on smaller contractors, remove a requirement that a safety plan be submitted to a procurement official as part of the selection process, clarify that the completion of the safety questionnaire and additional safety measures do not impede work on a project; and protect local jurisdictions from any deficiencies in safety plans or safety-related issues that may occur at a worksite.

A Finance Committee workgroup was appointed to work through concerns and amendments offered on the bill, and MACo’s amendments were accepted. However, members still had reservations.

The Finance Committee voted the bill unfavorable 6 – 3, with 2 members excused.

The Economic Matters Committee unanimously voted the bill unfavorable.