(June, 2010) Hello
everyone - I hope you are enjoying the
springtime and managing to stay dry! For the
Town Council, spring means ‘budget time!’
Review of the Mayor’s draft budget tends to
take precedence in May and June. Revenues from
many income sources are projected to shrink in
the next budget year beginning July 1st. Much
has been made in the press about County budget
cuts as well as decreased State funding for
various programs and a deflating Municipal tax
base. All of these are true and challenge the
Town Council to meet projected budget
requirements.
There is a 4% decline
in the overall General Fund Budget for Fiscal
Year 2011 (FY2011). This is on top of the
previous 6.7% decline from FY2009 to FY2010.
Salaries and benefits for town employees take
up approximately 38% of the proposed General
Fund budget. The contract for three resident
deputies accounts for a further 20%. The
remaining 42% could loosely be described as
‘for the provision of services.’ These do not
include water and sewer services – which are
billed quarterly and managed through
enterprise funds distinct from the General
Fund budget.
It should be noted
that the percentage of personnel costs will
increase when overall funds decrease and cuts
are made in other areas of the budget. Outside
of state pension plan contributions (which
increased 50% from the previous year and are
now more than double the cost when we
originally joined…) other wages and benefits
show only a 1.6% increase and employees are
once again forgoing a cost of living increase.
Despite two years of
decreasing revenues, the property tax rate
will remain at 36 cents per hundred dollars of
assessed value versus a constant yield rate of
35.2 cents per hundred dollars. In my mind,
the constant yield rate made many erroneous
assumptions – including some $200,000 in
income from development related fees that I
just don’t see happening…
While the funding gap
in the FY2010 budget could be absorbed through
the reduction of capital projects such as road
paving, etc., continued decreases in the
FY2011 revenue stream will now also require
the use of some "rainy day" funds to bridge
the gap. The current plan utilizes 12% of this
‘General Fund Balance’ or approximately
$83,000 to fill the 5% budget gap - without
resorting to more dramatic structural changes,
e.g. benefit cuts, furloughs, staff
reductions, or a property tax increase.
As of now, I believe
this is a realistic plan that will get us
through another tough year, FY2011.
Unfortunately, I would expect FY2012 to bring
further revenue declines that will challenge
our creativity. While revenue may decline
another four to six percent in FY2012, I don’t
believe it is responsible to use more than
fifteen or twenty percent of the General Fund
Balance to supplement any single budget year
revenue gap and capital improvements cannot
realistically be put off forever.
The good news is that
our Water and Sewer enterprise funds are well
capitalized and able to support our servicing
and repair needs – with no anticipated
increase to rates in the upcoming budget year.
As always, I
appreciate your feedback so please feel free
to contact me with questions, comments, or
concerns. I promise to reply to every inquiry!
The proposed General Fund budget is available
at the Town Office or on line at the Town
Website http://www.emmitsburgmd.gov
Thank you for your
continued support
Read other articles by Chris Staiger