Howard county is fiscally sound but facing challenges, according to the Howard County Spending Affordability Advisory Committee’s report for Fiscal Year 2024.
While the committee’s recommendations typically maintain a tight focus on the upcoming budget cycle, members took a new tack this year by including a recommendation that the county consider a more in-depth look at long-term finances than the time-constrained SAAC is able to achieve.
Among the highlights of this year’s report are a fiscal gap of $120 million and a recommendation to decrease the county’s general bond authorization to $60 million, down from last year’s recommendation of $65 million and last year’s approved capital budget of $75 million.
The fiscal gap is largely influenced by a $112.8 million funding increase requested by the Howard County Board of Education, a 16.8% increase over the prior year, which the SAAC considers unattainable and unrealistic.
One of the Committee’s biggest concerns is a projection of only $72.8 million in total County revenue growth for Fiscal 2024.
It also estimated that preliminary General Obligation bond requests for Fiscal 2024 are three times the County’s historical and projected funding capacity, while multiyear requests for Fiscal Years 2025-2029 are approximately 2.5 times funding capacity.
“All entities, including the Howard County Public School System, should prioritize needs and develop annual and long-term plans based on fiscal reality, and focus on results and outcomes,” the report read.
Cost of aging
SAAC members concluded that despite strong growth driven by temporary factors during the pandemic, the combination of moderate revenue growth in coming years coupled with an increased demand for government services will put long-term pressure on the County’s finances.
Over the past decade, the county has experienced a decline in growth and school enrollment.
“We face another transition as we move toward an aging and more diverse population phase, slowing revenue growth, and the impact of workforce and lifestyle changes in the wake of the pandemic,” said SAAC member Ellen Flynn Giles. “[D]emographic, economic and social challenges are driving the demand for increased community services across the board.”
Meanwhile, Howard County Executive Calvin Ball acknowledged that some of the county’s infrastructure, including many roads, buildings, and pipelines, are now more than 50 years old and in need of major work and in some cases complete replacement.
The Committee urged elected officials to make hard choices in collaboration with stakeholders to develop a balanced and sustainable budget. Key recommended strategies include using one-time funding only for nonrecurring expenditures, balancing service needs, managing the tax burden, promoting the County’s commercial base, and limiting operating spending to no more than a 5.6% increase.
SAAC member Todd Arterburn noted that the county’s Ellicott City Safe & Sound Plan is “enormously expensive,” with costs having increased by approximately $50 million to date.
“We need to ensure that we earmark sufficient borrowing capacity going forward to finish what we’ve started.”
Ball hedged on the question of whether the plan could or should be modified.
“We have been working very closely with our federal, state and private partners to help ensure that we close some of those (funding) gaps,” he said. “We’ve asked for support in our supplemental budget request to Governor Moore.”
Long-term plan
Howard County has a reputation of offering noteworthy amenities and features, said SAAC member Leonardo McClarty, president and CEO of the Howard County Chamber
“These community attributes cause residents to have extraordinary expectations, yet we are reaching a place where our needs and wants will conflict, leading our elected officials and community leaders to have serious debates as to how we grow in the future,” he said.
With waning federal stimulus spending, waxing inflation, and remaining uncertainty in the global economic forecast, the SAAC has recommended that the county develop a financial master plan called “HoCo Dollars and Sense” and based on the HoCo By Design model used for the 2040 General Plan update. The idea would be to look beyond the current situation and annual review and also take into account what’s happening in county plans looking forward for the next 20 years.
“We would see it as something that would be ongoing for the next year, and it would take a considerable amount of time and effort to start to develop that product,” Arterburn said. “We recognize that we are running a sprint every year from December to the end of February and sprinting past a lot of data and information that we’re not necessarily contemplating for the longer term implications. It’s a matter of slowing the pace to make sure we’re not missing anything along the way because we’re moving so fast.”
SAAC member Barbara Lawson said the process of a fiscal master plan would make it easier to have a community debate regarding priorities. “It’s a great way to involve the community in making those decisions and setting those priorities. If accepted, having HoCo Dollars and Sense would be a huge benefit for educating the community about our [fiscal] situation.”