A key state grant that Calvert County has received since the deregulation of electric utilities would be eliminated under the 2006 budget proposed last week by Gov. Robert L. Ehrlich Jr.
The proposed budget also allots Calvert the lowest percentage increase in state funds of any county in Maryland -- an increase of 3 percent, compared with an average of 10.1 percent for all counties and Baltimore.
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Members of the county's state legislative delegation said they would fight to restore the $6.1 million deregulation grant, as they successfully did last year after Ehrlich (R) proposed slashing the program. Calvert County's commissioners said losing the funds would be a huge financial blow.
"I don't have a clue what we do," said commissioners President David F. Hale (R-Owings). "The county would have to find $6.1 million in spending cuts."
Del. Anthony J. O'Donnell (R-Calvert) said he is confident that the county's delegation -- including the powerful Senate president, Thomas V. Mike Miller Jr. (D-Calvert) -- would be able to restore the grant.
"We were successful last year," O'Donnell said. "The overall budget situation is much better this year than it was last year. That being the case, I don't see why we shouldn't be able to restore that funding."
The electric deregulation approved by the General Assembly in 1999 reduced the amount of taxes counties could collect from energy utilities. Before deregulation, Calvert County could tax the Calvert Cliffs Nuclear Power Plant at 100 percent of its property value; now the county can collect taxes on only 50 percent of the property value.
Calvert lost $8 million in annual revenue as a result of the deregulation, Hale said. To partially offset the lost funds, the state gave Calvert County a $6.1 million annual grant.
O'Donnell cautioned Calvert and other counties not to become dependent on the subsidies. "This grant process will not last forever," he said. "At some point we're going to have to wean the counties off of this subsidy."
But Hale said that if the state stopped providing $38 million in deregulation grants to counties, it had an obligation to allow the county to increase taxes on Calvert Cliffs.
"That doesn't cost the state a dollar," he said. "They get their goal, which is to take $38 million out of the budget, and Calvert gets our goal of being able to restore our $6 million."
Despite the proposed elimination of the deregulation grant, O'Donnell and other Calvert officials said the county has fared well under the Ehrlich administration. He said the proposed budget does not reflect the $2.3 million in school construction funds or the transportation projects Ehrlich has delivered to the county.
Commissioner Gerald W. Clark (R-Lusby) said the county would not face an immediate fiscal crisis if the deregulation grant is not restored. He said the county has set aside $6.1 million in reserves to fill a budget hole if the state cuts the grant.
"If we lost it this year, the first budget that it would really affect would be the 2007 budget," he said. "We're prepared. . . . The major thing we have to do is not panic."