County labors to plug hole in budget

High school price at center of debate

Wednesday, May 14, 2008

That’s how much money the county will have in its piggy bank once it covers the yawning $18.6 million hole in the current fiscal year 2008 budget.

Tonight, Charles County’s teachers, school board supporters, real estate agents and citizens will get a chance to tell the commissioners how they want to spend that fat, but rapidly dwindling, fund balance.

Starting at 4 p.m., the county staff will present an overview of the budget, and then, at 4:30 p.m., the county commissioners will open the floor to the public. The hearing will address both the operating and capital budgets.

The operating budget dictates how county employees are paid and what supplies they can acquire.

The capital budget governs which buildings, roads, schools and other projects get built.

County public school teachers started campaigning late last month with a broadside on the Independent’s letter page, calling on the county to use the fund balance to give the county’s teachers a raise.

In an April 25 letter, Bill Fisher, president of the Education Association of Charles County, accused the county of shortchanging a decade-old agreement by the commissioners to fund the school board with 52.4 percent of undedicated county revenues, citing a report commissioned by the EACC.

‘‘Parents, educators and other citizens need to let the commissioners know they expect adequate funding of public schools, and they need to tell the elected board of education members to accurately represent the needs of our students in their budget request,” Fisher wrote.

The report, which the EACC has been circulating to officials and reporters, indicates that the EACC is seeking a 6 percent raise for teachers.

County Administrator Paul W. Comfort shot back last week, accusing the EACC of cherry-picking figures to support their case and arguing that the county has prudently saved up a sizable fund balance to buffer the coming economic storm.

‘‘The county’s conservative treatment of the revenues from the housing market surpluses allow us to have those funds on hand to help us through the lean years and to pay for fixed costs, such as the principal and interest cost on new schools,” Comfort wrote. ‘‘If not for the accumulated savings ... the county resources would have been needed to pay for our fixed costs leaving less money for education, public safety and other government services.”

The operating budget proposal presented by the school board Tuesday indicated that school officials are planning for a 0.5 percent raise for teachers.

The mood was cool between the commissioners and the school board Tuesday, when the board appeared to present that budget.

The commissioners had asked the board last month to review its plans for a new high school in Waldorf and reduce the school’s cost from $97 million to $75 million. Last week, the commissioners publicly chided the school board for not producing the results of their review.

On Tuesday, school board member Charles E. Carrington presented the commissioners with a cost reduction proposal that took the cost down to $86.6 million. The cuts were achieved by raising the building from two to four stories and eliminating interior cinder block walls, a pool, some ball fields, windows and some green building components.

After dropping off copies of the review to the commissioners, Carrington announced that the school board had to resume its own meeting and left Charles Wineland, assistant superintendent for supporting services, to explain the cuts to the commissioners.

The county’s real estate agents may not have a reason to show up tonight. The commissioners agreed Tuesday to axe a proposed 0.5 percent tax on property transfers this year, unless the money can only be used exclusively for school renovations.

‘‘The term ‘tax,’ in these restrictive times, is something I don’t want to support,” said Commissioner Edith J. Patterson (D), voicing a position held by commissioners’ President F. Wayne Cooper (D) and Commissioner Samuel N. Graves Jr. (D).

Commissioners Reuben B. Collins II (D) and Gary V. Hodge (D) said they would vote for a new transfer tax, but only if it were designated solely for school renovations. With the capital budget teetering on balance, there is a good chance the tax money would end up supporting new construction projects.

What remains to be seen is whether the commissioners’ anti-tax stance will carry over to the operating side of the budget. Budget staff has proposed four solutions for balancing the operating budget, two of which would use a combination of fund balance and a slightly increased income tax.

After the state slashed the size of the funding increases to schools, cut aid to counties and increased income tax exemptions for individuals in the past two legislative sessions, Charles officials have been wrestling with how to pay the bills next fiscal year.

Staff has proposed raising the income tax rate from 2.9 percent to 3 or 3.1 percent, raising an additional $1.5 to $3 million in fiscal 2009.

The move would put Charles in the same company as Howard and Montgomery counties, both of which have raised their income tax rates to the maximum allowed by the state.

However, the hike would not be enough to cover all expenses. The county would still have to dip into that $54.7 million fund balance.

Property tax rate steady

It’s the annual argument — are property taxes going up or not? It depends on whether you are referring to the tax ‘‘rate” or the size of your actual tax bill.

According to the state’s definition of ‘‘raising” taxes, any property tax levy by a county that is higher than the previous year’s levy counts as a tax hike, regardless of if the county government changed the percentage of taxes it charges.

This year, the county’s property tax rate is holding steady at $1.026 per $100 of assessed value, but the state has continued to raise the assessed value of properties, meaning the ‘‘constant yield” property tax has gone up by $11 million (9 percent). State law counts this rise in revenue as a tax hike and demands the county hold a hearing on it, like the one being held at 7 tonight, after the budget hearing. So why are state assessments still going up when the real estate market is, by most accounts, tanking? That is a function of the Homestead Tax Rate, which, as it is set in Charles County, means that citizens will see no more than a 7 percent hike for their owner-occupied properties (homes) on their tax bills each year.

Property assessments shot up by double digits during the housing boom of the last few years, and the Homestead Tax Rate prevented the value boom from showing up immediately on tax bills.

Even with property values dropping, most citizens aren’t paying the full tax rate that their assessment would normally demand. Citizens could keep seeing 7 percent tax hikes each year until their assessed taxes and the tax allowed by the Homestead Tax Rate equal out.

County officials believe this might not occur until 2012.

Jay Friess