Howard’s ‘checks and balances’ eyed to bring fiscal stability in ailing economy

Escalating gas prices, combined with soaring energy and grocery bills, have the Ellicott City resident examining her spending.

“All these things don’t translate to more revenue, because you are not getting a raise, so your day-to-day living is more expensive,” Moomaw said.

Her family has turned down the thermostat a few degrees and tries to carpool more, but “it’s hard to see the benefit of the effort we are making,” she said.

Early signs

Just as Moomaw and other residents are feeling the sting of rising expenses, Howard officials are preparing the fiscal 2009 operating and capital budgets with less-than-anticipated state funding and declining county revenues.

The first sign of belt-tightening surfaced with County Executive Ken Ulman’s decision to shut down the GTV television studio to save $500,000.

Then he introduced other cost-saving measures including scrapping plans for a new government campus in favor of renovations to save another $100 million.

Checks and balances

Some residents may be anxious that Howard could follow the state’s lead by increasing taxes and fees while cutting programs.

For now, Ulman has said he won’t push to raise taxes in the upcoming fiscal year.

Howard has “structural checks and balances in place” in anticipation of tough economic times, said Ulman, who approved budgets as a councilman for four years before becoming the county executive.

The county’s “conservative and detailed financial planning” is linked to its multiyear forecasting and monthly monitoring of revenue, said Alexandra Knight, an analyst with financial rating agency Fitch Ratings.

Caps on the number of houses built each year and the increase to residential property taxes also allow Howard to manage the impact of growth and predict revenue.

Winners and losers

Despite these safeguards, revenue from fees and taxes dependent on a slowing real estate market is declining, resulting in some capital projects, such as park construction, possibly being delayed, county officials said.

Core services, including trash pickup, and expenses tied to the running of government, such as salaries and utility costs, must be funded, so programs on the periphery, the GTV station for example, get trimmed, Howard Budget Director Ray Wacks said.

“We tend to fight along the edges, because that is where the new programs are and the changes are,” he said.

Residents shouldn’t feel the full effect of the budget trimming unless the economy continues to get worse, Ulman said.

“My hope is that we can tighten up without cutting services,” he said.

Impact on schools

Less state aid to Howard’s school system is expected to put more of a burden on the county government because nearly 60 percent of the county’s general fund budget pays for education.

Howard’s share of state funding decreased more than $7 million because of the slowed growth of Thornton school aid, according to county officials. Thornton education funding mainly helps pay for teacher salaries.

“There are many programmatic needs that wouldn’t be addressed because of the reduction in state funding,” Superintendent Sydney Cousin said.

For example, the school system, with students from 85 countries speaking 70 languages, must limit the number of teachers for English for Speakers of Other Languages.

Ulman said he recognized residents were likely to be “anxiously watching” and wondering whether there will be more spending cuts in his fiscal 2009 budget.

“It looks like this is going to be, as we release the [budget], a maintenance year, but we are able to fund our priorities,” he said.

Money trail

Where does the money go?

Most revenue in this series primarily goes into the general fund, which covers operating expenses such as police, the school system and snow removal.

The general fund is the most visible part of the operating budget, which funds the county government’s day-to-day operations.

The all funds budget, which includes the general fund, also includes water and sewer and dedicated expenditures, such as agricultural land preservation.

This series also focuses on the capital budget, because some revenue, such as development excise taxes, funds construction projects.

How the money is spent

Fiscal 2008 general fund:

» Education at 59.8 percent

» Public safety at 11.02 percent

» Capital/reserves at 9.2 percent

» Public facilities at 7.5 percent

» Community services at 7 percent

» General government at 2.9 percent

» Legislative and judicial at 2.5 percent

Where the money comes from

Fiscal 2008 general fund:

» Residential and commercial property taxes at 43.57 percent

» Income taxes from individuals at 38.67 percent

» Prior year’s funds at 4.64 percent

» Other local taxes, such as recordation and amusement taxes, at 3.45 percent

» State shared taxes, such as highway users tax, at 2.01 percent

» Charges for services, such as parking meters and boat rental, at 1.4 percent

» Licenses and permits, mainly as part of the development process, at 0.93 percent

» Other, such as interest, at 5.3 percent

Fiscal 2009 budget calendar

» April 1: Deadline for Howard County Executive Ken Ulman to submit proposed capital budget to County Council.

» April 1-11: Ulman makes the final decisions on the operating budget.

» April 22: Operating budget presented to the County Council.

» April and May: Council holds budget hearings and work sessions on capital and operating budgets.

» May 22: Council adopts budget.

Source: Howard County government

smichael@baltimoreexaminer.com