Since mid-March 2020, there has been much uncertainty surrounding COVID-19. Initially, our concern was the public health crisis overrunning our health care system. While we seem to have avoided that scenario, we are already experiencing the economic impacts and they will be multi-year.
In a statement last month, the Federal Reserve said “the ongoing public health crisis will weigh heavily on economic activity, employment and inflation,” so the interest rate is going to be held at or near 0% through 2022.
In Maryland, the two-year outlook is similar. Predictions for revenue loss in Fiscal Year 2021 range from $2 billion to $2.6 billion, and in Fiscal Year 2022, the range is $2.5 billion to $3.9 billion. Near the end of June, Governor Larry Hogan proposed $672 million in budget cuts to begin to balance the shortfall.
Many of you have experienced uncertainty in your family budgets since COVID-19 caused a state and countywide shutdown. You have made cuts to your household spending due to a reduction of income or loss of employment. Government should operate the same; after all, our county budget is made up of your tax dollars. During my campaign I promised to only support responsible, fiscally conservative budgets. I intend to keep my word.
In his May 1 budget presentation, the county executive outlined a $1.7 billion budget. His proposed budget included a fund balance (surplus) from the current fiscal year. The use of those one-time funds creates a structural deficit of $24 million. He employed a shell game tactic of using surplus from this year to balance next year’s budget. In simple terms, this means next year we will start off $24 million in the hole, when every indication is that we will still be in recovery.
Traditionally, the county budget is built based on the annual report by the Spending Affordability Committee (SAC). The SAC uses both art and science to predict personal income growth, so that the county executive and county council have a realistic idea of what we can afford. This is important because 35% of our budget is from income tax. Using this method to predict the affordability of the FY2021 budget, personal income growth of 1% would mean this budget is $26 million over affordability. Can we expect even 1% income growth from this year to next or is that overly optimistic?
As I reviewed the budget, I considered the following facts. Over 73,000 county residents have filed for unemployment. A local hospital has furloughed hundreds of employees. Many business owners have had to make the difficult decision to furlough, or permanently let employees go, and some have shuttered their doors forever.
Unnecessary spending on the backs of taxpayers was not an option for me. For that reason, I co-sponsored over 68 amendments with my GOP colleagues to cut money amounting to an $8 million reduction in spending. In a budget of $1.7 billion, the cuts amount to 0.4706%. As an example, one of the cuts was for $2.5 million for employee bonuses, some of whom have a salary of $100,000 or more. While I know that our county employees work hard and have helped to keep our county operating during this unprecedented time, how could we give bonuses when so many of our citizens are out of work or struggling to put food on the table?
These small proposed reductions would have allowed the council to maximize our rainy-day fund and lower the structural deficit, giving us a better start on recovery. Every reduction made by myself and my Republican colleagues, except one for $14,000, failed on a party-line vote.
I believe this budget will have compounding effects on future budgets because it fails to acknowledge the fiscal realities of this economic crisis. We could be forced to deplete our rainy-day fund ($81 million) followed by decisions to reduce staffing, increase taxes or both. While there are many things in the budget that I was pleased to see and support, the nearly $10 million in unnecessary spending prevented me from voting in favor of the budget.
The council now considers an amendment proposed and passed by the Board of Education to shift $750,000 in funds from seven new transportation department positions, into additional mental health positions. The Board of Education may not amend its budget without approval from the county council.
During these unprecedented times, it is imperative that I take responsible actions with your money, no matter how difficult the decisions may be.