Howard County Executive Calvin Ball today released the Spending Affordability Advisory Committee’s (SAAC) Report for fiscal 2022. According to the report, spending requests outpace resources amid slower economic growth, with a projected fiscal gap of $64 million between expenditure requests and projected revenues in fiscal 2022.
“We’re facing a challenging economic outlook amid the ongoing pandemic, with a $64 million operating budget shortfall and growing debt service payments that constrain our ability to absorb new debt or fund other operating needs. I encourage all our residents to read the SAAC report to fully understand Howard County’s limitations as we prepare our fiscal 2022 budget,” said County Executive Ball.
The Committee is tasked with making recommendations to the County Executive on revenue projections, bond authorizations, the long-term fiscal outlook, and County appropriations. As previously reported on Conduit Street, County Executive Ball launched the SAAC ahead of schedule in November 2020, providing the Committee additional time to review the unique economic circumstances amid the COVID-19 pandemic.
“The County is at an economic and financial crossroads,” said committee member Dr. Richard Clinch. “The slowdown of population and development growth and a shift of housing to multi-family units means a continuous slowdown in the assessable base and personal income growth. The County has to adapt to this slow-growth environment.”
According to a County press release:
Spending requests outpace resources amid a slower economic growth, with a projected fiscal gap of $36 million between expenditure requests and projected revenues in FY 2022 in the report. The gap is now even larger – at $64 million - based on the Board of Education’s (BOE) FY 2022 budget proposal released on February 25th. If approved by the County Council, the BOE operating budget request would represent an increase of over $50 million over last year’s budget, marking the largest monetary increase on record and the largest percentage increase (8.1%) since FY2008. Capital budget requests for FY 2022-2027 doubled affordable debt level, while rising debt burden resulted in less capacity for new capital improvement programs (CIP) debt authorization in the future.
“We’re in a difficult time,” said Steve Poynot, SAAC Committee Vice Chair. “New fiscal realities and low growth is where we are as a community. Needs have to be defined differently.”
Since November 2020, the Committee has listened to more than two dozen presentations by multiple entities, agencies and experts on economic outlook, revenue projects, capital needs and operating budget requests. Based on such information, the Committee recommends:
- FY 2022 budget be developed based on projected General Fund revenue growth of 2.3% ($26.7 million) over the FY 2021 budget;
- New authorized GO bonds in FY 2022 of no more than $50 million; and
- Using a 5-year revenue projection of 2.2% on average.
In the report, the Committee urged elected officials to make hard choices in collaboration with stakeholders to match expenditures with resources and develop a balanced and sustainable budget. Key recommended strategies include:
- Pausing new CIP projects given the severe debt constraints
- Reducing new debt issuance over the next six years
- Prioritizing annual CIP budget to address maintenance backlog in existing infrastructure
- Balancing service needs as a full-service county especially amid a pandemic
- Funding the Howard County Public School System at the State-mandated level
- Developing a long-term strategic fiscal plan and promote commercial base growth
“The County is at an economic and financial crossroads,” said committee member Dr. Richard Clinch. “The slowdown of population and development growth and a shift of housing to multi-family units means a continuous slowdown in assessable base and personal income growth. The County has to adapt to this slow growth environment.”
Stay tuned to Conduit Street for more information.
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