Rick Pollitt’s FY 15 Pre-Budget Message

The way Mr. Pollitt goes about gathering public input in proposing the County’s annual budget is perplexing. This year, he again scheduled the meeting for that purpose on a date less than one week before he is required to submit the budget. And, as usual, the meeting was so packed with students and their parents and teachers as well as school administrators that you would have thought it was a PTA meeting.

It is doubtful that any significant change in the budget will occur after the meeting. A multi page handout discussing and summarizing the budget was distributed, indicating that the budget has already been set in the form that will be presented this week.

That handout gives insights about both the budget and the tax increase that Mr. Pollitt is about to propose, which are truly disturbing, and how he plans to screw the public while running for reelection this fall. Here are some takeaways:

First, some facts –

1. Employment in Wicomico County declined throughout 2013.

2. Regional job trends are flat to down.

3. Wicomico County is 21st lowest out of 24 in overall tax capacity, but has the eighth highest tax effort.

4. The net taxable real property base is estimated to decrease by 2.8% in FY 15 (an 18.7% decline over the past four years).

5. But, because the tax rate proposed by Mr. Pollitt would be increased by 4.7%, there will be about $1 million more revenue from that source.

6. Despite the job and employment situation, income tax revenue is estimated to actually increase somewhat – that’s because the job base is going to pick up according to Mr. Pollitt.

At this point, please sit down if you’re not already seated, and recall that in this year’s budget the income tax revenue was grossly overestimated and the shortfall is being covered by raiding the County’s reserve funds – the Obama/O’Malley method of balancing the budget.

The total expense proposed by Mr. Pollitt for FY 15 – $129,434,069 – exceeds the estimated new revenue, inflated by the property tax increase described above and other sources, by about $6.5 Million dollars, which will be taken from County fund balance, once again. That amount, if obtained by taxes on real estate, would require that the tax rate be raised by about $.12 more above the proposed 4 cent increase – or a total of about 18% higher taxes. By using the County’s reserve funds, Mr. Pollitt’s proposed budget requires only a 4.7% tax rate hike.

Here’s a little-known aspect of the budget. Despite Mr. Pollitt’s whining about the loss of state funding for roads, etc., The County gets a special “disparity grant” that Maryland gives to counties considered too poor to fund their government expenses. In FY 15 it will be $8.4 million – equal to the revenue that would be raised by about 15 cents additional tax rate on real property.

Between that disparity grant and money to be taken from reserve funds, Mr. Pollitt’s proposed budget – even with the 4.7% property tax increase – will be about $15 million more than the true estimated revenue, which includes the increase in income tax receipts that were overestimated by a huge amount last year.

Continued reduction of the reserve fund to avoid higher taxes on County residents in order to fund the budget cannot continue much longer. The handout presented by Mr. Pollitt last week shows that in FY 15 the total unassigned funds will be reduced by more than 23%. But, he has an answer to those who point out that the well will run dry in a few more years at that rate – he says that his economic gurus predict a turnaround in our local economy, beginning soon, that will result in greater tax revenues in future years and (are you still sitting down) that there will be less rapid increase in County spending.

We will explore the “Pollitt Prosperity Plan” soon in another post in the future. In the meantime check out the handout, which he said would be posted on the County’s website and, if you are a glutton for punishment, read the complete budget when it is posted.