Mixed Signal!

(3/2010) Is the economy in recovery? Has the recession ended? Have we hit the bottom?

The state of the economy is a full of mixed messages. There are signs in some areas that the economy is recovering while there are signs in other areas that the economy continues to be distressed. Housing starts seem to be up, unemployment has fallen slightly, but there is fear of commercial foreclosures and bank failures. The mixed signals create a lot of uncertainty.

While the federal government is busy printing money to balance its budget and provide stimulus funding, state and local governments are facing massive deficits. Tax revenues have fallen significantly in all areas. Income taxes, sales taxes, recordation taxes have declined dramatically and property taxes are falling due to declining assessments. Budgets are being slashed and unfortunately it only appears to be the beginning of tough budget years for local governments.

In Frederick County, we are facing an almost $30 million deficit for the upcoming fiscal year , FY '11. This follows a reduction in the current year operating budget of 9% versus the prior year. Many programs were cut around the edges, highway and road maintenance accounts were cut, capital projects deferred, and some reserve funds were hit. Education has been held harmless and has actually experienced a slight increase in their budget due to stimulus funding. These reductions to the county budget to date have gone largely unnoticed by the general public.

The County Commissioners have been working on reducing our budget by going through each and every program with our budget office, division directors, and department heads. We are reviewing every areas of our budget searching for millions of dollars of reductions. Since almost 60% of our budget is funding to public education which is largely off limits for cuts due to state laws, major reductions have to happen in other areas of the budget including public safety, libraries, parks, and public works. The reductions in services will be noticed by the public and citizens will begin to question the wisdom of the choices.

The County Commissioners have no plans to raise taxes or fees. The budget will be balanced entirely by reducing spending. It is the wrong time to even consider raising tax revenue when many of our constituents are already experiencing the impacts of the economy on their personal household budgets. We will live within our means.

Citizens should expect service reductions and the total elimination of some programs. The County Commissioners expect to introduce the budget in mid-March and will hold public hearings in April and May. The budget should reflect the values, priorities and needs of the community. Nothing is more important than where we spend our tax dollars. Thus, citizen input is critically important to assist in identifying the priorities and values of our community.

The capital improvement program, which is entirely separate from our operating budget, has also experienced a deferral of almost $200 million in projects. As the county revenue declines, so does our ability to support debt. The county has deferred schools, roads, branch libraries, park development and even some maintenance projects due to fiscal constraints.

While the economy will recover, there is uncertainty as to when. Most economists agree that the recovery will be slow. In county government, we are predicting that our revenue picture will not begin to recover or improve until 2015. We will thus change our focus to maintaining existing infrastructure and providing essential services.

So, what can you, the resident/tax payer do about this? Pay attention, get involved, let us know how you feel! Public input will make a difference in our budget process. Stay tuned!