County's Balanced Budget Plan Said to be in Jeopardy

The head of 's budget department told the county commissioners Wednesday that the five-year operating plan they approved last year will no longer result in balanced budgets at the current pace of revenues and expenses.

Carroll County Director of Management and Budget Ted Zaleski told the commissioners they'll have to make some difficult policy decisions to get the county's finances back on track.

Zaleski said that among the factors contributing to the budget problems are lower collections for property tax and income tax, and lower interest returns on invested county money.

Zaleski said that typically he would present the commissioners with a balanced budget option. But this year, he said, the budget department needs direction on what programs can be reduced or eliminated.

"I’m not giving you something that is balanced right now, not for lack of desire or because we ran out of time, it's just the situation we’re facing," Zaleski said. "The choices we have to make are becoming fewer ... We’re being squeezed now. There's not as much flexibility."

Zaleski said that returning to a balanced budget will require decisions about the role of Carroll County government.

"The change we need to make is significant enough that it will mean policy changes," Zaleski said. "Those aren’t my choices to make. Maybe I could do that if I had a clear vision of where the board wants to go and I don’t have that for the five of you collectively."

Last year, the board approved a five-year operating plan with a balanced budget through fiscal year 2017. Zaleski said that due to several factors, if the commissioners did not make changes to the plan they approved last year,  the county could be $24.7 million in the red by fiscal year 2017.

Zaleski said that the county has flat-funded or slightly reduced funding to many programs for several years. He advised the commissioners that failing to fully fund or grow programs across the board will have negative effects in the long run.

"At some point we will have starved everybody," Zaleski said. "Every one of your agencies will be in a poor position to do what they need to do."

Zaleski said that difficult decisions will have to be made, including eliminating programs.

Budget Highlights

What Changed in Revenue?

• Property Tax is 57 percent of budget revenue. Projected assessments are showing a loss in revenue growth in FY13 and FY14 and zero revenue growth in FY15. Assessment projections are expected to rebound slightly in FY16, FY17 and FY18.
• Zaleski said that a further reduction in the property tax rate would make the financial situation even more challenging. "Every penny you go down (reduce the property tax rate) will take another $2 million off the bottom line," Zaleski said.
• Income tax is 33 percent of the budget revenue. Projected numbers are slightly lower, $2.9 million over five years, than what was built into last year's five-year plan.
• The Recordation Tax is 2 percent and interest income is less than 1 percent of budget revenue. Zaleski pointed out that the county's third- and fourth-largest revenue streams account for only 2.5 percent of the budget.

Zaleski said that a quicker improvement in home sales and an increase in home values would help the county's long term financial outlook. The county would also benefit from new construction, higher employment rates, increases in personal incomes and a return of more typical investment interest rates.