FY 2010 Budget highlights

Today is the first day of the County's Fiscal Year 2010 spending plan which runs from July 1, 2009 through June 30, 2010. I want to share some highlights of how we are managing your tax dollars.

Unusually tough times

"Austerity" is the word that best describes the FY 2010 budget. The downturn in our economy is affecting county revenues and requires significant spending cuts. This year's $1.18 billion budget is smaller than last year's by more than $30 million. On average, each department's budget is almost 9 percent leaner than last year. The notable exception is the Board of Education whose funding is a little more than 1 percent higher.

These exceptionally challenging times required Anne Arundel County to take unprecedented steps. We eliminated almost all "pay-go" operating funding of long-term capital projects, thereby increasing our long term debt service to pay for these projects. We zeroed out our planned $15 million contribution that was intended to reduce our future liability for retiree health care. We renegotiated union contracts to eliminate more than half of the previously agreed COLA and merit increases. And, for the first time in memory, we dipped into our FY09 "rainy day fund" to the tune of $16.5 million.

Despite these and other reductions, I believe we successfully prioritized spending to maintain essential services while minimizing the impact on the end user. The same thing I wrote about the budget process two years ago holds true again this year: Overall, the budget process was collaborative and it worked well. Although many worthy items were not funded, we did the best we could to balance different objectives with the money available.

Taxes

The FY 2010 budget reduces the property tax rate from 88.8 cents down to 87.6 cents per $100 of assessed value. (The budget reduces the county portion of the tax rate for City of Annapolis residents from 53 cents down to 52.3 cents.) The reduction is required by the county’s property tax revenue cap, which requires the county to reduce the tax rate when rising assessments outpace the rate of inflation. With this tax rate cut, Anne Arundel County continues to have the lowest property tax rate ($0.876) and income tax rate (2.56%) of any of Maryland’s “big seven” largest jurisdictions.

Despite our economic hard times, the Standard & Poors bond rating agency maintained our coveted Triple-A bond rating. This valuable designation will save taxpayers money by letting the county borrow money at more favorable rates to pay for long-term capital improvements. This rating is due in large part to the county’s history of prudent fiscal management and solid, diverse tax base.

What’s in the budget

The budget contained almost no new initiatives. A few items of note include the following.

• In a huge victory for Annapolis families, the budget funds the full implementation of the Performing and Visual Arts (PVA) Magnet program at Bates Middle School this Fall. The County Executive's proposed budget failed to include the $800,000 needed for the Arts Magnet, but the County Council found the money from savings elsewhere in the budget. As I've written before, the PVA is a critical part of the plan to strengthen schools in the Annapolis cluster.
  
• Despite having to reduce Monday morning hours at some branches, I am pleased that the Library system found a way to stay open on Sunday afternoons at the West Street branch and two other regional branches during the school year.
• The budget includes $15 million to improve Bay water quality by funding enhanced nutrient removal of nitrogen and phosphorus at the Edgewood Road Wastewater Treatment Plant. This project is 75% funded by the State's "flush tax" -- our state tax dollars at work.
• The capital budget includes full funding to construct a new and expanded Germantown Elementary School. The new school will open in time for the 2011-2012 school year.
  
• Fortunately, the budget does not include closure of Annapolis Elementary School which was recommended by the County Auditor. The school is one of the last remaining community institutions downtown and is vital to keeping downtown family-friendly.

Revenue and expense summary

Property taxes are the single largest source of revenue for Anne Arundel County, accounting for 46 percent of all revenues. Income taxes are the second largest at 30 percent. All other revenue sources such as recordation and transfer taxes, permit fees and sales taxes account for less than a quarter of county revenues.

Education is the single largest expense for the county. Fifty percent of the $1.18 billion budget goes to the Board of Education. The next largest category is public safety: police, fire and corrections account for 20 percent. The remaining 30 percent of the budget covers all other services from public works to recreation, from the libraries to social services.

More Resources

• County Executive Leopold's proposed FY10 budget documents (final documents will be posted online shortly)
• Board of Education FY10 budget documents