(June, 2010) Hello everyone - I hope you are enjoying the springtime and managing to stay dry! For the Town Council, spring means ‘budget time!’ Review of the Mayor’s draft budget tends to take precedence in May and June. Revenues from many income sources are projected to shrink in the next budget year beginning July 1st. Much has been made in the press about County budget cuts as well as decreased State funding for various programs and a deflating Municipal tax base. All of these are true and challenge the Town Council to meet projected budget requirements.

There is a 4% decline in the overall General Fund Budget for Fiscal Year 2011 (FY2011). This is on top of the previous 6.7% decline from FY2009 to FY2010. Salaries and benefits for town employees take up approximately 38% of the proposed General Fund budget. The contract for three resident deputies accounts for a further 20%. The remaining 42% could loosely be described as ‘for the provision of services.’ These do not include water and sewer services – which are billed quarterly and managed through enterprise funds distinct from the General Fund budget.

It should be noted that the percentage of personnel costs will increase when overall funds decrease and cuts are made in other areas of the budget. Outside of state pension plan contributions (which increased 50% from the previous year and are now more than double the cost when we originally joined…) other wages and benefits show only a 1.6% increase and employees are once again forgoing a cost of living increase.

Despite two years of decreasing revenues, the property tax rate will remain at 36 cents per hundred dollars of assessed value versus a constant yield rate of 35.2 cents per hundred dollars. In my mind, the constant yield rate made many erroneous assumptions – including some $200,000 in income from development related fees that I just don’t see happening…

While the funding gap in the FY2010 budget could be absorbed through the reduction of capital projects such as road paving, etc., continued decreases in the FY2011 revenue stream will now also require the use of some "rainy day" funds to bridge the gap. The current plan utilizes 12% of this ‘General Fund Balance’ or approximately $83,000 to fill the 5% budget gap - without resorting to more dramatic structural changes, e.g. benefit cuts, furloughs, staff reductions, or a property tax increase.

As of now, I believe this is a realistic plan that will get us through another tough year, FY2011. Unfortunately, I would expect FY2012 to bring further revenue declines that will challenge our creativity. While revenue may decline another four to six percent in FY2012, I don’t believe it is responsible to use more than fifteen or twenty percent of the General Fund Balance to supplement any single budget year revenue gap and capital improvements cannot realistically be put off forever.

The good news is that our Water and Sewer enterprise funds are well capitalized and able to support our servicing and repair needs – with no anticipated increase to rates in the upcoming budget year.

As always, I appreciate your feedback so please feel free to contact me with questions, comments, or concerns. I promise to reply to every inquiry! The proposed General Fund budget is available at the Town Office or on line at the Town Website http://www.emmitsburgmd.gov

Thank you for your continued support