From the Desk of
County Commissioner Kirby Delauter
(1/2014) It is my understanding County Executive candidate Jan Gardner is contending that when she left office as County Commissioner in 2010 that she left the County with a balanced budget.
Nothing could be further from the truth.
Here are a few facts I've gathered directly from the finance department of Frederick County Government. When the current Board of County Commissioners began its term in office we found an $11.8 million budget deficit for Fiscal Year 2012 and a $31 million base structural deficit.
The $11.8 million dollar deficit came from two primary sources. An $8 million underpayment to Urban and Suburban Fire Tax districts, and a $2.7 million dollar underpayment to the Countyís "Other Post Employment Benefits System" (OPEB) which includes county employee retirement system. Since the Suburban and Urban Fire Taxes are a separate tax, the shortfall came from the
Fire service expenses being more than the taxes collected. General fund revenues made up the shortfall year after year.
Instead of raising the Fire tax to make revenues equal expenses, the Gardner Board simply took revenue from the general fund to make up the shortfall. This was nothing more than a shell game and a claim that they didnít raise taxes when in fact they were merely stealing from the general fund to offset the Fire Tax shortfall. Voodoo accounting at best, done simply to hide
their inability to deal with reality.
The Gardner Board began to fund the OPEB deficit in Fiscal Year (FY) 2007 by pre-funding about $2.5 million. The original concept was to follow a five-year ramp up (20% per year) over the FY 2008 through FY 2012 time period. The intent was to eventually fully fund the county retirement system. However, this was never followed through on. Instead there were fluctuations in
funding from year-to-year due to budget considerations, with OPEB being under funded by about $5 million in FY 2011.
OPEB expenses grows as more employees retire and since a county employee can retire after twenty years in the system, some have actually retired in their mid/late 40ís. As plan retirees grow, so does the need to fund the increases. Previous boards acted like OPEB was the crazy uncle in the room, they knew it was there but didnít want to deal with it. This current board
deals with issues head on. We requested the numbers and made changes to ensure that the county employees were treated fair and the taxpayers were also treated fair. We made it a priority to address these issues and a lot of unpopular decisions were made.
This Board did not run to win a popularity contest, we ran to fix issues like OPEB that had not been properly addressed by previous Boards. The County pension was about 64% funded when we took office and is projected to be 92% funded when we leave office.
Now as to the "Structural Deficit" - A structural deficit is when expenses exceed revenues on a recurring basis. In simple terms, you and your wife earn $50,000 annually from employment; your mortgage, car payments, credit card payments, daycare and everyday living expenses equal $60,000 - your Structural deficit is $10,000. You either have to cut expenses or find another
revenue source; itís not rocket science.
Being in business I go back to an old saying that is somewhat true but humorous as well. Itís when a business owner sits down with his accountant and the business owner asks the accountant " How do my books look this year?" The accountant gets up, shuts the door and answers, "How do you want them to look?"
In our first year in office we had two different County accountants giving us two conflicting reports on what was actually the "Structural Deficit". In government you can get conflicting answers on what is actually a surplus or a deficit in structural terms. The county budget office relies on projections from two main sources of revenue, the property tax and the income
tax. Both can sway wildly up or down depending on the overall economy.
Another issue on the expense side is unfunded mandates the State of Maryland may throw your way, such as Teacher Pensions, the Rain Tax, and cutting Frederick Countyís piece of the highway user revenues. All of these are unknowns that can swing a budget recommendation wildly in short periods of time.
But, there is an answer that is correct at a certain point in time, and the point in time I reference is when we took office in 2010, there was a $31 Million structural deficit left to us by the Gardner Board. That structural deficit is now history. We addressed it by making some tough budget calls - in short, we balanced the county budget.
Please feel free to contact the County Budget/Finance offices to verify that what I am stating is in fact, true.
Aside from the deficits being a disaster for the Gardner Board, the general consensus within municipalities on Janís tenure was no better, as exampled by the fact her Board was being sued by every municipality in the County over land use issues. Iíll address in next monthís column.
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