Howard County's revenue will grow next fiscal year but only tepidly, a panel tasked with examining the county's finances predicted Monday in its annual report.
The Spending Affordability Advisory Committee, a group of 20 appointed citizens and nine government officials, projected that revenues will increase by 1.5 percent -- or about $15.2 million -- in fiscal year 2016, according to the report. Looking further into the future, the group estimated revenue growth will rise to 3.6 percent annually in fiscal years 2017 through 2020.
Next year's lukewarm growth is due in part to decreased aid from the state, federal government spending uncertainty and a slump in fiscal year 2015 revenues resulting from lower-than-expected income and recordation tax collections.
But the committee cautioned that Howard County is looking at a "new norm" when it comes to growth and, consequently, budgeting decisions.
As Howard's last available open space is built out, the county will no longer be able to count on new development as a driver of income and property tax growth and will instead have to focus on improving existing communities and creating higher paid job opportunities, the committee said.
Howard is "still a vibrant and attractive county to new businesses," the report reads, but "the county will need to adjust to a different period of growth, given our present constrained land inventory."
The committee pointed out the high numbers of federal employees living in the county, a concern as federal spending remains unpredictable, and recommended expanding private-sector career opportunities for residents, particularly in the cybersecurity industry.
Committee members also suggested fiscal prudence moving forward, including a reduction in the county's debt authorization from $120 million to $90 million annually.
Committee chair Steve Sachs said Howard's decision to borrow more heavily over the past few years had been a "conscious choice" while interest rates were low. But with $458 million in previously authorized bonds in the pipe already and interest rates expected to rise, the committee felt it was time to scale back.
"It is important to make adjustments now so that the level of new debt taken on is affordable," the report reads.
County officials will travel to New York City later this week to meet with bond rating officials, according to Howard spokesman Mark Miller. The county is among 40 in the country to hold a AAA bond rating -- the highest possible and a mark of confidence that it will be able to pay back all its debts -- from all three bond rating agencies.
Looking to this year's budget, the spending affordability committee proposed a series of options to boost revenues. These include:
• An ambulance fee to support increasing fire department costs. Neighboring Montgomery and Prince George's counties already collect a service fee on ambulance rides, which is usually paid for by insurance, according to the report, which also recommended setting a safety net for the uninsured and others who couldn't pay the fee.
• Charging for police and other county services at special events. Currently, officers policing local events are provided by the county free of charge, according to the report, which recommended developing a tiered system that would continue to offer free policing for local nonprofit events, a small fee for events sponsored by out-of-county nonprofits and a higher fee for events sponsored by for-profit groups and businesses.
• A transfer tax increase of 50 basis points, mainly to support education capital projects. Such an increase would raise an additional $13 million in revenue annually and would bring Howard in line with neighboring counties, according to the report.
• A 1 percent raise in the county's real property tax, which would garner an additional $4.5 million in general fund revenues a year.
Committee members also recommended maintaining the stormwater fee, dubbed a "rain tax" by critics, unless an alternative fee structure is proposed. Mandated stormwater improvements in the county require about $10 million in expenditures next fiscal year, according to the report, which would put more pressure on the budget if the dedicated revenue source were removed.
The committee also highlighted options to control mandated expenditures, such as limiting education funding to maintenance-of-effort levels; placing a temporary hold on Other Post Employment Benefit, or OPEB, contributions; re-opening collective bargaining negotiations to explore delaying a 4 percent pay increase for police and fire union members in fiscal 2016; considering pension reforms, such as introducing defined contribution pension plans for new employees; and privatizing county fleets and other operations.
County Executive Allan Kittleman called the 16-page report, the product of seven meetings held in January and February where committee members heard from economists, county agencies, educational institutions and others, "probably one of the most exhaustive" yet by the spending affordability committee.
He said he will take the group's recommendations into consideration while crafting his own budget recommendations, which are due to the County Council by the beginning of April.
The council must pass a new budget before the current fiscal year ends on June 30.
Councilman Calvin Ball, a Democrat from east Columbia, said he thought the committee's suggestion to revitalize existing communities, such as the Columbia villages, is "critical.
"I'd like to see us look even more at renovation and expansion of existing schools" as a "more cost-effective way" of addressing some funding challenges, he added. The public school system's capital requests are consistently one of the largest components of the county's capital budget, and student enrollment continues to grow. The fiscal year 2016 capital budget request from the Board of Education totals $89.6 million.
Councilman Greg Fox, a Fulton Republican, approved of the committee's tone of fiscal restraint.
"It's unfortunate that past affordability committees and [former County Executive Ken Ulman, a Democrat] didn’t exercise some form of restraint over the past eight years, and continued to spend surpluses" rather than saving them, he said.