Eastern Shore Delegation Breakfast. June 21, 2014

Transcription

1 Eastern Shore Delegation Breakfast June 21, 2014

2 LARGE COUNTIES 6/21/2014 2

3 6/21/2014 3

4 t 4rth Qtr 2013 latest data available 6/21/2014 4

5 6/21/2014 5

6 6/21/2014 6

7 6/21/2014 7

8 Stabilized 6/21/2014 8

9 6/21/2014 9

10 10

11 Wicomico Economic Summary June 2014 Stabilized, but not recovered - Business activity as measured by Sales and Use Tax receipts has improved nearly continuously from September 2011 through May 2014 standing at 24% below the pre-recession level. Employment for county citizens grew strongly for 26 months from November 2010 through December It then declined for 12 consecutive months through December of 2013 forcing the FY14 revenue estimate write-down. As of April 2014 the trend is flat, but FY15 budget target remains attainable. The number of taxable recordation transactions has begun to improve but remains below levels prior to Revenue from the recordation tax is down $3.8 million from the peak in FY06 and is now at 2003 levels. The net taxable real property base declined 18.7% from the peak in FY11 (roughly $1.3 billion); the base is expected to grow by 2.8% from FY15 to FY16 (data provided by the State Department of Assessment and Taxation). Income tax revenue, even after a tax rate increase of 0.01%, is down $5.5 million from peak in FY08 now at 2005 level. Personal property taxes have been the focus of policy decisions designed to stimulate local economic growth. In FY14, the county began a five year phase-out of personal property taxes on business inventory and through State legislative action decoupled the overall personal property tax rate from the real property tax rate. These two initiatives have slowed the growth in revenue from personal property taxes which are now at the levels before 2002: however these changes have been budget neutral since inception. Total revenues from taxes in fiscal 2015 are where they were in 2006, which is roughly $3.8 million less than the peak tax revenue year of FY08. 6/21/

12 12

13 Tax History Summary FY Constant Yield Contant Yield to Tax Rate Levied Tax Rate Levied Tax Rate Year-over- Year Change Revenue Cap Maximum Allowed Tax Levy difference from Cap Allowance $ $ $ $ $ $ $ $ $ $ $ $ $ $ FY $ $ (0.0090) FY $ (0.0020) $ $ (0.0230) (0.0270) FY $ $ $ (0.0060) FY $ $ $ (0.0160) FY $ $ $ (0.0320) FY $ $ $ (0.0510) FY $ $ $ (0.0610) FY $ $ $ (0.0670) FY $ $ $ (0.0550) FY $ $ $ (0.0050) FY $ (0.0284) $ $ (0.0400) FY $ $ $ FY $ $ $ FY $ $ $ Taxes and Rates may be described as follows TAXES have gone down twice since the revenue cap was implemented, FY03 and FY12. The tax RATES declined for 8 consecutive years from FY02 to FY10; but TAXES went up in all of those years, except FY03, because the levied rate was greater than the constant yield rate. The tax RATE stayed the same from FY10 to FY11, but TAXES went up because the flat rate was more than the constant yield rate which had gone down because the assessable base went up. Taxes increased in FY13, FY14 and FY15; that s three consecutive years since the tax decrease in FY12. The tax RATES were increased year-over-year in FY12, FY13, FY14, and FY15: that s four consecutive years since the unchanged rate in FY11. 13

14 Focus on Economic Development Tax Policy FY15 Personal Property Tax Rate set cents LESS THAN what it would have been without the General Assembly s approval of decoupling: businesses are able to save roughly $850K in taxes. FY15 is second year of 5 year phase-out of business inventory tax. Very rough estimate of cumulative savings to businesses is $1M (FY14+FY15). Personal Property Tax Exemption on Manufacturing Equipment is now automatic: streamlined, more business friendly environment. Increase in PP Tax rate of 3.48 cents made these progrowth initiatives slightly revenue positive for FY15 6/21/

15 Focus on Economic Development Proactive Investments FY15 Funded 2 grant programs dedicated to stimulating the construction of single family homes: $387,000 business incubator programs to help new businesses: $157,000 FY15 Funded Henry S. Park Complex improvements to match state grants to further position the county for national and regional sporting events: $1 million to match state grant of $1 million FY15 Funded Wicomico Youth & Civic Center improvements: $1 million to match state grant of $1 million FY14 Funded Wicomico River Multi-Use Terminal Facility Study with John C Martin Associates LLC, Maryland Port Authority Consultant: $53K split 50/50 with Maryland Department of Business and Economic Development FY14 Funded study on providing water service to regional airport; will seek State and Federal grant opportunities. 15

16 Legislative Initiatives & Concerns for /21/

17 Return of HUR #1 Priority HUR was the foundation of Roads budget through FY09 Routine operations now funded by General Fund tax revenue. The property and income tax base cannot support transportation infrastructure renewal costs 6/21/

18 Impact of Dollar and Human Resource Reductions FY15 plan is under development 6/21/

19 Restoration of HUR is our #1 Priority The income tax and property tax revenue cannot sustain the roads infrastructure without detracting from core services such as Education and Public Safety $14 million is a rough estimate for Wicomico County in FY15 based on registered vehicles in county: current allocation is $627K. 6/21/

20 HUR Distribution Estimate State data Registered Vehicles in county 87,726 State data Gasoline tax rate $ cents per gallon State data Diesel $ cents per gallon web average miles driven per year 15,000 web truck mpg 18 web car mpg 23 Computation assumption Milage used 11,000 assumption tax rate $ to reflect some diesel usage assumption mpg 19 more trucks on eastern shore computation miles driven 964,986,000 gallons used 50,788,737 taxes paid $ 14,068,480 20

21 Fiscal Impacts to the County Generated by the State of Maryland since the start of the Great Recession FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY08-FY15 Cumulative Mandated Expenses - negative is cost to county Support for SDAT functions $ - $ - $ - $ - $ (724,923) $ (755,600) $ (442,018) $ (457,364) $ (2,379,905) Homestead Credit validation fee from SDAT $ - $ - $ - $ (9,593.00) $ (10,797) $ (14,054) $ (18,219) $ (14,441) $ (67,104) Health Department - year-over-year (cost growth)/cost decrease driven by State $ (90,567.00) $ (772,763.00) $ (319,723.00) $ (50,821.93) $ (176,101) $ (252,803) $ (347,749) $ (631,332) $ (2,641,860) Elections Department - year-over-year (cost growth)/cost decrease driven by State $ (30,267.00) $ 79, $ 230, $ (160,533.00) $ (40,284) $ (172,380) $ (337,457) $ (278,728) $ (709,901) Teacher Pension Normal Cost $ - $ - $ - $ - $ - $ (2,173,593) $ (2,755,091) $ (2,719,329) $ (7,648,013) Total Increases in Operating Expenses $ (120,834) $ (693,428) $ (89,310) $ (220,948) $ (952,105) $ (3,368,430) $ (3,900,534) $ (4,101,194) $ (13,446,783) Revenue Reductions - losses Capped Disparity Grant - amount withheld from full formula. FY11,F12,FY13 were capped at the FY10 level of $2,197,041. In FY14 and FY15 the grant was capped at 60% of formula. What is shown is the difference between what was received and 100% of the formula. As a point of reference the full amount in FY09 was $741,624. $ (1,615,958.00) $ (4,162,585) $ (7,168,223) $ (4,435,895) $ (5,494,000) $ (22,876,661) Highway User Revenue - reduction from "historic normal" level of $7M $ 36, $ (729,627.00) $ (6,387,916.00) $ (6,542,429.00) $ (6,687,893) $ (6,464,879) $ (6,377,455) $ (6,373,138) $ (39,526,974) Federal Per Diem for inmates in Detention Center $ (200,823.00) $ (971,882.00) $ (1,394,452) $ (1,376,455) $ (1,399,733) $ (1,411,733) $ (6,755,078) State Per Diem for inmates in Detention Center $ (319,423.00) $ (347,728.00) $ (384,448) $ (262,453) $ (397,858) $ (425,363) $ (2,137,273) Total Decreases in Revenues $ 36,363 $ (729,627) $ (6,908,162) $ (9,477,997) $ (12,629,378) $ (15,272,010) $ (12,610,941) $ (13,704,234) $ (71,295,986) Revenue Enhancements Teacher Retirement Supplement Grant $ - $ - $ - $ - $ - $ 1,567,837 $ 1,567,837 $ 1,567,837 $ 4,703,511 Income tax effect from State deductions change $ 167,000 $ 150,333 $ 133,667 $ 451,000 close IDOT loophole $ 376,000 $ 376,000 $ 376,000 $ 1,128,000 Total Revenue Enhancements $ - $ - $ - $ - $ - $ 2,110,837 $ 2,094,170 $ 2,077,504 $ 6,282,511 Net Effect on the County's ability to fund government functions caused by State Actions from FY08 through FY15 $ (84,471) $ (1,423,055) $ (6,997,472) $ (9,698,945) $ (13,581,483) $ (16,529,603) $ (14,417,305) $ (15,727,924) $ (78,460,258) 6/21/

22 Request restoration of full disparity grant formula. $5.5M 22

23 Mental Health and Addictions Growing Problem Diminishing Resources provided by State Impacting Community Schools Crime Court loading Incarceration cost Will spillover to economy 23

24 Waters of the US Under the Clean Water Act Unwarranted and Unnecessary intrusion by a Federal Regulatory Agency Will complicate State and Local efforts to address already difficult WIP requirements Will drive costs up 24

25 Legislators Discuss Their Priorities and Issues Invite delegation members to vet their ideas for legislative bills/initiatives with local government leadership before formal introduction. Happy to provide fiscal impact analysis and comments. Once a bill is introduced, it can take on a life of its own. 25

26 Airport Water Research and Possible Funding Handout in your package Study completed to identify cost-effective means of providing water service to the airport. Economic Development at the airport will not move ahead without municipal water. Looking for funding partners! 26

27 Community College Collective Bargaining Oppose initiatives to require collective bargaining at community colleges. Expect significant increase in recurring annual funding requirements. New revenue sources would be required to fund resulting cost growth. 27

28 Other Discussion - Questions Thank you