Funding Decisions for Bennett Middle School
December 21, 2011
Much of our community is engaged in a discussion to replace the Bennett Middle School, a project which would already be under construction, except for a collision with the worst economic recession since the Great Depression., The recession has had a crippling affect on the financial strength of the Wicomico County government. There is great concern that this will continue for some time to come. Adjusting to continuously declining revenues over the past three years, the county has shrunk the size of its workforce and furloughed remaining employees, significantly decreased the level of county services and increased user fees for many of the services remaining. What has been most objectionable to many county residents has been our inability to adequately maintain our roads system, to adequately fund public education, or to fund capital infrastructure, of which 80% is dedicated to school projects.
With the hope of jump starting the project, a community forum was held at BMS on December 13th, at which the Board of Education and its staff, the County Executive and his staff, the County Council and interested citizens gathered to assess the project’s current status and to identify what is needed to put the project back on track. Director of Facilities Planning for the school board, Brian Foret, was the principal speaker.
Mr. Foret gave an informative presentation, clearly laying out that the projected cost of the school is $75.3 million, which through value engineering and cost shifting, will be a savings of $3.8 million from the previous estimate. Of the total project cost, the county will pay $42.8 million and the state will pay $32.5 million. All of the county portion will come from sale of capital improvements bonds.
Subsequent to the December 13th meeting, the Daily Times published an editorial in support of the project; in so doing it erroneously gave readers the impression that the state will pay 96% of the BMS project cost, sdding that it should be an easy decision for the county to pay its small share. Using Mr. Foret’s figures, it is clear that the cost to county taxpayers will be much more than 4%; it will be more than half of the total cost. Whatever percentage it may be, the school will cost Wicomico County $42.8 million.
We agree with the newspaper that building a school is an investment in the future of our community. The County Council still has the concern and it should be everyone’s concern, that if we borrow the money to build BMS, the principal and interest payments won’t add so much to our annual budget to make the county less able to fund the schools operating budget and the budgets of other essential county services. Many county residents argue that these are already unacceptably under funded.
On Tuesday, December 20, 2011 the County Council held a public work session on the BMS project, at which Mr. Foret and Mr. Bruce Ford, Comptroller for the Board; Dr. Frederickson, Superintendent; other Board staff and members of the Board of Education; County Executive, Pollitt and his staff, including Finance Director, Andrew Mackel; met with the County Council. The purpose of that meeting was to determine if, when, and how the county could afford to pay for its share of the project, whether the county would have to borrow all of the money, could the cash flow needs of the project be such that the county could spread the borrowing over several years and will the state money be available when it is needed to meet project cash flow needs.
The County Council asked Mr. Mackel about the county’s current bonded indebtedness and how much will be paid off over the next few years. He said there will soon be relief from bond issues that will be paid off. The Council asked Mr. Mackel about revenue projections and what tax rate he would anticipate the county would need to fund the BMS project. Mr. Mackel responded that he thought the current tax rate would not support funding the BMs project, as well as level funding for other operating expenses, but that the Constant Yield Tax Rate, or the tax rate allowed by the Revenue Cap would both support level funding for current expenses, the BMS project and funding for some other smaller capital projects, or some other budget increases. The Constant Yield Tax Rate and the Revenue Cap Allowed Tax Rate would represent about a 5.4 and 7 cent property tax increase next year respectively.
We asked what other capital projects will be coming in the years when borrowing for BMS would be needed and afterward. Mr. Foret responded that there are school capital needs of an additional $40 million, or so, in the queue for the years after the Bennett Middle School.
On January 25th the Maryland Board of Public Works will decide whether to fund the state’s share of the next round of BMS funding. Approval will depend on whether the county commits to fund the project next year. County Executive, Rick Pollitt committed to ask Dr. David Lever, Director of the IAC which recommends state funding for schools, to intercede on behalf of the county for a grace period before the BPW meeting to allow the county to make a decision.
While all the answers are not in yet, the County Council expects to have answers to the remaining questions for its next meeting on January 3, 2012. The difficult decision for the County Council will be whether to commit to an increase in the property tax rate of 5 to 7 cents now for next year, so the BMS project may proceed, without knowing what else will be required in next year’s operating budget and without knowing whether revenue for next year may decline more than expected. Committing to increase taxes months ahead of the next year’s budget being prepared is without precedent in this county and carries considerable risk.
Wicomico County Council
Joe Holloway
Council President