When it comes to the economic outlook for Howard County, no news is essentially good news, according to county Budget Director Ray Wacks. And that means the fact that county revenues so far this year are largely on target with projections is good news.
"When you don't see the budget office for awhile ... that means there's no crisis we're facing," Wacks told the County Council during a briefing Tuesday, Oct. 9. The budget director last appeared before the council in the spring.
So far this fiscal year (which began July 1), revenue from property taxes, the largest source of revenue for the county, is about what was expected, Wacks said: $422 million through August, compared to an expected $420.8 million. With such a large revenue stream, Wacks said, "$2 million is not a big percentage difference."
Since the majority of property taxes are levied at the beginning of the fiscal year, Wacks said, the bulk of property taxes are collected during July and August.
Revenue from corporate property taxes, meanwhile, is nearly 16 percent ahead of projections, Wacks said: $14.6 million compared to an estimated $12.6 million through August.
"That's an indicator of economic health, because personal property goes up when business supplies equipment," Wacks said. "In times of economic distress, businesses hold off on replacing equipment ... only when they start to replace equipment do things start to go up."
However, revenue from income taxes is lower than expected: $11.6 million compared a projected $15.6 million.
Wacks said he wasn't "particularly worried" by the decrease. "The formula the state uses is based on prior year's distributions, and last year, we were under — they gave us too little money, and gave us more in November to make up for it," Wacks said. "We were compensated by increasing the formula, so we're getting more money up front and less money in November. ... Our reconciling distributions are lower because they were artificially higher last year."
The personal income numbers look "relatively strong," he said, but there are several unknown factors in play, like the federal budget cuts potentially coming in January.
The bottom line, Wacks said, is that with the exception of the income tax the county is on track financially.
That was good news to the council.
"(Wacks) wasn't gloom and doom today," Council Chairwoman Mary Kay Sigaty said after the meeting. "As we look at the revenue report, we always hope it hits right where we were last year, and I'm glad we wound up exceeding it.
"It's still too early to tell how it will turn out for the year, but I'm not scared about the revenue. It was a decent report."
Tax credit concerns
One concern, Wacks said, is the Homestead Tax Credit. In 2008, the state, fearing the credit was being abused, ruled residents had to apply for the credit by December 2012.
"December 2012 is here, and 64,000 households in Howard County that can get the credit, about 25,000 have not yet applied," Wacks said. "Many of these households are long-term or elderly residents who get these forms from the state who may not understand what they are about, and there it stays."
If a taxpayer is already receiving the credit but does not apply, Wacks said, the full tax will be collected, and people will see their property taxes go up.
"It means a big increase in revenue for us, but I'm worried it's not going to stick," Wacks said, noting that people can apply for the credit a year after the fact.
The State Department of Assessments and Taxation has been sending out reminders to homeowners, Wacks said, but council members urged greater outreach into the community.
"We have that emergency notification system, I would say this is an emergency," Ellicott City Democrat Courtney Watson. "Maybe we can use the text message and email notifications (to alert people)."