Howard County Executive Calvin Ball has released the Spending Affordability Advisory Committee’s Report for the fiscal 2024. The Committee is tasked with making recommendations to the county executive on revenue projections, general obligation bond authorizations, long-term fiscal outlook, and county revenue and spending patterns.
The report also revealed that the recent inflation and pandemic-driven growth (i.e., federal stimulus) in county revenues is an unexpected, unprecedented and temporary development, and that it cannot be depended upon in the future. As inflation waxes and wanes, and federal stimulus recedes, the Committee expects that the county will revert to historical levels of moderate annual revenue growth and must plan accordingly, given the escalating demand for enhanced government services.
“Howard County, with its recent redesignation of our AAA Bond rating ― a rating so prestigious that only approximately 50 of over 3,000 counties receive ― is fiscally sound, but faces challenges. For example, the county receives competing requests for new projects while there are increasing critical needs for maintaining aging infrastructure, including many buildings, roads, and pipelines ― some are now more than 50 years old,” said Ball. “I appreciate the time and effort of all the members of the [SAAC] and the important insight they provide to our budget process. We face important decisions about our shared priorities as a community in the upcoming budget cycle and beyond, and we look forward to considering these SAAC recommendations during the development of our budget choices over the next few months.”
While the county’s projected revenue growth in fiscal 2024 is $72.8 million, requested operating expenditures growth was $192.4 million, leaving a fiscal gap of $120 million. This gap further exemplifies that the Board of Education-proposed county funding increase of $112.8 million to the school system is unattainable and unrealistic at a time when enrollment remains significantly below pre-pandemic levels, and when there are so many competing priorities in many areas.
On the capital (infrastructure) expenditure side, preliminary General Obligation bond requests received from all agencies for fiscal 2024 are three times the county’s historical and projected funding capacity. Multi-year requests for fiscal 2025-29 are approximately 2.5 times funding capacity.
During the last two months, the Committee has listened to more than two dozen presentations by multiple entities, agencies and experts on economic outlook, revenue projects, capital needs and operating budget requests. Based on this information, the Committee recommends:
● The county’s operating spending be limited to no more than a 5.6% increase for fiscal year 2024, recognizing that this is above historical levels because of inflation and one-time federal spending;
● The county’s bond authorization issuance should not exceed $60 million for fiscal year 2024; and
● The county should commission a long-term spending review which considers both school and general services spending limits based on projected resources as community buildout approaches.
In the report, the Committee urged elected officials to make hard choices in collaboration with stakeholders to match expenditures with resources and develop a balanced and sustainable budget. Key recommended strategies include:
● Use one-time funding only for non-recurring expenditures or to generate long-term savings
● Balance service needs as a full-service county
● Managing tax burden and County competitiveness
● Promote the commercial base
● Develop a sustainable and balanced long-term financial plan