FY25 Budget Work Session
Originally Published: March 7, 2024
Operating Budget, Board of Education
February 27th’s budget work session saw the review of operating revenues and expenses, as well as the Board of Education’s (BOE) budget. Chief Financial Officer (CFO) Cudmore began the meeting by explaining a discrepancy in the budget numbers. Cudmore said what looked like an additional $14M in funding was not accurate due to a mistake she hadn’t previously noticed.
In FY23, Cudmore explained, the County began being reimbursed from the Other Post Employment Benefits (OPEB) investment accounts. An expense entry should’ve been entered each month showing OPEB beneficiary payouts alongside an offsetting revenue from the investment account reimbursements. Not completing that process showed an artificial increase of $14M in revenue, however the real revenue increase is just $7.9M or 2.6% over last year. Projected future revenue is still down, by $5.1M, but Cudmore said that could be canceled out by interest income from County accounts. Details about revenue sources showed property tax revenue increased by $3M, income tax revenue increased by $5M, recordation tax decreased by $1M due to slower housing market, and a one year increase of highway user revenues by $477K.
Next, talk turned to the property tax rate. Currently, the rate is $0.8478. The Constant Yield, or the rate at which the property tax could be set to maintain the same amount of revenue for the County, is $0.8104. If the property tax rate remains the same, and the Constant Yield rate is not adopted, the County will see additional $5M in revenue because of increased property assessments by the State. Regarding income taxes, the six year average revenue increased 5.77%. The County is currently using 5.25% to project income tax revenue growth. Setting that projection at 5.77% would net the County an additional $780K in projected revenue, however the Commissioners agreed to hold the current projected rate.
Essential Cost Changes (ECCs) are submitted by County departments and agencies when requesting additional funding for new positions, supplies, vehicles, and other needs. The total of all requests is $20.01M, of which only $4.81M is recommended by the County Administrator. A little more than $9.5M of the total is for the Board of Education. CFO Cudmore summarized that revenue exceeds projected expenses by $6.99M; agreeing to the County Administrator's recommendations to fund $4.81M of the ECC requests would leave the Commissioners $2.1M left to satisfy the remaining ask of $15.2M. “The County is at a tipping point where we don’t have enough money for everything that needs to get done,” Commissioner Colvin said. Those needs include increased EMS funding as reported in the recent study, past promises to the State’s Attorney’s Office and St. Mary’s County Public Library to help meet their needs, St. Mary’s County Sheriff’s Office increases, promises to youth sports leagues not to raise user fees, and a recommended county employee pay increase, Colvin reminded the Board.
When asked, CFO Cudmore said an 11.5% employee pay increase would cost $4.5M, while a 3% Cost Of Living Adjustment (COLA) would be $2.3M, and a 1% COLA just $750K. Commissioner Hewitt asked about the total number of vacancies. Cudmore said 26 positions have been vacant for at least two years. Hewitt followed up, asking if those positions were really needed because the work was being done even without the role filled. Cudmore said cutting those positions would save up to $1.5M in salary costs. The total number of vacant positions is 125, the majority of which are sworn officer positions with the Sheriff’s Office. The total value of all vacant positions is $12.5M, of which $8M covers Sheriff’s Office positions. Deputy County Administrator David Yingling explained there are around 20 vacancies in corrections, and there are still 18 unfilled EMT positions the County approved last year for the Dept. of Emergency Services.
Finally, the Board of Education budget was discussed. If you’ve been following the process so far, you’ll know the Board of Education is requesting an additional $9.5M in funding from the County Commissioners. State funding for the BOE is neutral, despite the rising costs of education, because of a wealth-equalization formula which recognizes the County’s ability to enhance tax revenues because of higher wealth as measured by income and property values. The Commissioners are not prepared to fund the BOE’s additional ask. This meeting’s discussion did not change anything.
More updates to come.
