Counties Struggle To Settle Budgets

No Tax Hikes Planned Despite Recession

Slow home sales in Southern Maryland and expected decreases in state funding are making planning for county operations in the next fiscal year difficult, but officials have not proposed any tax rate increases to bridge the gaps.

As Southern Maryland's financial officers work with commissioners to plan for the coming year, they are exploring a number of options: level or reduced spending by county departments, limited hiring, if any, and little to no cost-of-living increases for county employees.

"Everything is on the table," said Wayne Cooper (D-At Large), president of the Charles Board of County Commissioners.

He said he would not rule out a property tax rate increase.

Preliminary budget figures show Charles increasing its operating budget for fiscal 2010, beginning July 1, by 2 percent over the readjusted fiscal 2009 budget. County officials took steps to cut $8.4 million from the current operating budget when they saw recordation taxes from home sales coming in significantly below projections.

Robert C. Farr, supervisor of assessments for Charles, said, "The volume of sales is only probably 40 to 50 percent of what it was even a year before that."

The county's 2009 assessments dropped by 5 percent over the three-year assessed period, but because of the 7 percent cap on the homestead tax credit in Charles, the county will see a 6 percent increase in property tax revenue.

Homeowners' "taxable assessment could still increase even though their gross reassessment value went down," Farr said. When the homes were last assessed, in 2006, the average value had increased by 70 percent, which is still being applied to tax bills.

Property taxes make up 60 percent of Charles's total revenue, said David Eicholtz, chief of budgeting. "Unfortunately, the other 40 percent isn't doing too well," he said.

Charles has pushed some $14 million projects beyond its six-year capital improvement program to save money, a move Calvert and St. Mary's counties officials also have done to varying degrees.

Calvert is plotting how to fill $3 million less in recordation taxes and up to $2.5 million less in income taxes for the coming year, a 4.5 percent reduction in income taxes from the previous year, said Terry L. Shannon, Calvert's finance director. Shannon and other Southern Maryland officials said they expect more reductions to come from the state.

"The difficulty with income tax [is] you really don't know how your numbers look until the fiscal year has actually ended," Shannon said.