(4/09) The State of the County is reflected in the County budget. While most people do not find budget deliberations particularly exciting or interesting, in reality the budget is the most important task of the County Commissioners. The budget reflects the community’s priorities and the direction of the county for the upcoming year.

County and State fiscal woes are front and center news. The state of the national and global economy has impacted all of us, individually and collectively. Many people are worried about job security and the loss in value in investment and retirement accounts.

Many people have reduced spending, which is pushing consumer confidence and the economy further and faster into a downward spiral. The economy has impacted all levels of government creating an increased demand for essential services while tax revenues have declined. Many state and local governments are facing current and projected budget deficits.

Frederick County Government is no exception. Frederick County is well positioned as compared to most jurisdictions across the nation. As part of the Washington metropolitan region, Frederick County is part of one of the strongest regional job markets in the Country. Frederick County has an unemployment rate that is well below state and national averages. Frederick County was also awarded a full rating step upgrade in its bond ratings last summer, reflecting the county’s good overall management, strong fiscal stewardship, steady growth in reserve funds, and overall financial stability with a steady emergence of a diverse and vibrant employment base.

The federal expansion at Fort Detrick will add 1,425 new jobs over the next few years, the National Cancer Institute and SAIC are constructing new offices off base, and a regional insurance company, Banner Life, recently announced its intent to relocate its headquarters and 400 jobs to Urbana. The commercial job base in Frederick County continues to expand even in this down economy.

The improved bond rating resulted in an exceptionally low interest rate on the county’s recent $79.3 million bond sale to finance numerous capital improvement projects including schools, the community college, water and sewer, roads, bridges and libraries, translating into substantial savings to taxpayers due to reduced interest costs over the life of the bond issuance.

Due to declining tax revenues, the county commissioners have cut $12 million from the current budget (FY’09) and are working aggressively to close a projected $37 million shortfall in FY ’10. While property tax revenues remain stable, the overall revenue of the county has decreased due to a decline in income taxes, recordation taxes, highway user revenues or gas taxes, and investment earnings. Overall, the County’s budget will be 3.3% smaller in FY’10 than in the current budget year. Spending is being reduced to offset the anticipated decline in revenues to create a balanced budget.

In balancing the budget, the county has tried to minimize impacts to essential services and avoid employee layoffs. The County has shifted $10 million in cash from the capital improvement plan to the operating budgets for both FY ’10 and FY’11 deferring road maintenance, HVAC projects, and some library, school, and general government projects.

The County Commissioners have also instituted a hiring freeze, adjusted healthcare contribution rates, reduced spending in fleet, travel, and non-capital purchases and eliminated the county picnic and service award ceremonies. All agencies have been asked to submit 3% and 5% budget reductions for consideration. The County’s fiscal health is closely linked to the fiscal stability of the State of Maryland.

The State is facing a significant deficit and several shifts of state funding responsibilities to the counties have been proposed including requiring county governments to pay for the State property assessment office, though the management of the office would remain under State control. The State is also dipping into a reserve of local income tax revenue created to provide funds to pay back to taxpayers who may file an amended return for a three-year period.

The State is not only utilizing this local income tax reserve to balance the State’s operating budget, it is requiring county governments to repay these monies over a ten-year period. These two state budget decisions shift a cost of $3.0 million to Frederick County taxpayers.

There has been tremendous discussion in the state legislature about shifting all or a portion of teacher retirement or pensions to county governments. This mandate would create an instant $25.0 million bill for Frederick County Government to pick up. This "shift and shaft" approach does not cure the underlying budget problem; it simply mandates a different level of government to pay the bill.

Several Frederick County delegation members are actively advocating for this shift in responsibility without advocating for the funds to support it. Frederick County has a projected $461 million operating budget for the upcoming fiscal year. Approximately half of this money is allocated to the Board of Education to support K thru 12 public education. The elected members of the Board of Education are responsible for determining how this money is allocated among educational priorities.

The County Commissioners do not have line item control over the Board of Education budget. Citizens often complain to the County Commissioners about specific Board of Education expenditures or policies and want us to "over-rule" or "change" the decisions. With rare exception, this is not within our ability to control. Since we have an elected school board, citizens should express their concerns directly to the Board of Education members.

The county governments are required by state law to "maintain" funding to local school boards and thus have limited ability to reduce local funding for education unless enrollments decline. The County also provides approximately $14.6 million to Frederick Community College, $9.3 million to Frederick County Public Libraries, $40.3 million to the Sheriff’s Office for both law enforcement and corrections, $18.9 million for Public Works, with the majority allocated for Highway Operations, and $5.3 million for support to County Parks and Recreation.

The bulk of county spending reductions have to come out of non-education related funds and other legally mandated programs. During times of fiscal stress, the demand for county services actually increases. The County has seen a significant increase in the use of public libraries and our park and recreation programs. Workforce services have seen a dramatic rise in people looking for employment, seeking assistance with job training, or help with a resume.

Animal Control has unfortunately experienced some recent incidences of people dropping off large numbers of animals, or worse yet, abandoning them along the side of a road. Frederick County employees are very committed and are working hard to provide exceptional service to the public often with a reduced staff due to the hiring freeze. Please consider thanking a county employee for their hard work and service to the community.

The State of the County remains strong even in fiscally challenging times. The County Commissioners are dedicated to providing essential services to our citizens in a cost effective and efficient manner. Our budget will be balanced and we will continue our mission to provide services and infrastructure to maintain that special quality of life we all enjoy in Frederick County.