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Carroll County budget talk turns to what to do about surplus, funding schools, projections of future shortfalls

Carroll County Budget Director Ted Zaleski said a surplus of more than $20 million from fiscal 2021 gives the county an “unusual opportunity” when he presented the detailed fiscal 2022 recommended budget and fiscal years 2022-27 plans to the Carroll County Board of Commissioners on Tuesday.

Zaleski recommended adopting a policy where 5% of the yearly budget would be put into an unassigned fund balance that would give some flexibility in the future. That would mean assigning some $21 million into the interest-accruing fund based on the current budget.

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“I really think this is a good idea,” Zaleski said, noting the money could be used at any point, though it would require authorizing use by reopening the budget process. “Say, the state passed on a cost in the middle of the year you hadn’t planned on. You could turn to this. If revenue is coming up short, rather than immediately cutting expenditures, you could turn to this.”

Commissioner President Ed Rothstein, R-District 5, expressed concern that it could lead to sloppy practices and noted that he wasn’t sure another 5% should be held back from the budget given that the stabilization fund, which is difficult to access, already holds back 5%.

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Commissioner Steve Wantz, R-District 1, likened it, in layman’s terms, to “creating another saving account,” and said he’d rather spend it.

Zaleski used the example of the past year to explain why he thinks such a fund could be so important, noting if things had gone differently and if there had been no federal stimulus, Carroll would likely have come in with revenue significantly below what was budgeted.

“That would’ve meant, because we had no other options, that you would have had to start cutting expenditures in a significant way in the middle of 2021,” Zaleski said. “This would allow you to tap in and use that [unassigned fund balance] and take time to figure out if we need to make ongoing changes.”

Unassigned fund balance talk is likely to continue through the budget process. Zaleski said there several other uses for the surplus, such as on infrastructure, but cautioned it couldn’t be used for anything requiring ongoing funding.

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Also discussed Tuesday was funding for Carroll County Public Schools.

The current recommended operating budget plan calls for the school system to receive $204.6 million, sticking with an agreement to increase funding by 3.13%, which works out to $6.2 million. However, that increase and funding is based on last year’s funding, which was less than agreed upon the previous year.

The Board of Education is proposing a budget in which the county funds an increase of $11.4 million or 5.7%, to be at the level in fiscal 2022 that was agreed upon in 2020. Essentially, the board said at a recent meeting, that since the county’s funding in fiscal 2021 was adjusted down out of fear of what COVID-19 was going to do to revenue, and because things didn’t get as bad as was feared, the previous plan should be put back in place for fiscal 2022 and going forward.

“What it misses is that things have changed for us,” Zaleski said. “We’re looking at about $11 million less [in revenue] in our budget than we had in that plan. We aren’t back to where we were.”

Early in the budget discussion Tuesday, Zaleski presented the commissioners with a slide titled “Core Message.” It noted that a strong projected year-end fiscal 2021 position will give the county one-time opportunities, including strengthening reserves, but also uncertainty about ongoing revenue growth and the impact of the state budget remain, and finally that the county is fiscally overcommitted and will need to work toward bringing plans back into balance.

“Right now, the revenue that we believe will come in over the next handful of years will not be enough to cover the cost of the expenditures we are committed to,” he told the commissioners, noting that it will be difficult to end the budget process with a balanced plan through 2027 but asking them to think about ways toward getting back to a balanced position.

As far as the surplus at the end of fiscal 2021, Zaleski said, “a lot of things worked in our favor. It could have been worse.”

However, he presented another slide trying to give a fuller picture of potential expenditures over the next few years that can’t be fully known at present. Those included a full understanding of costs of transitioning to a countywide fire and EMS system that will include 200 positions, what unexpected costs will arise after the passage of the Blueprint for Maryland’s Future (also known as Kirwan education funding), any lingering affects of COVID-19 on revenue after the stimulus, minimum wage legislation and changes that emerge from the upcoming budget discussions.

Zaleski also noted that the county will receive $36.2 million in federal American Rescue Plan funds. The way this money can be spent is regulated, but he noted some potential uses, including health and economic impacts of COVID-19, lost revenue, broadband, and water and sewer.

“I expect this to be a big topic of conversation for you,” he said.

The scheduled calendar for future virtual budget meetings was also discussed. The budget process documents can be viewed on the county website.

According to a county government news release, throughout March, April and May, a series of virtual budget meetings will be held to develop and adopt the final budget. Agency meetings with commissioners are scheduled for Thursday, Tuesday and April 1. After the commissioners meet with agencies, the board will begin discussing the budget options among themselves to create a proposed budget. The proposed budget work sessions will begin April 6.

Once the proposed budget is agreed upon by a majority of the commissioners, a release of the fiscal 2022 proposal will be held April 27.

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Usually, Zaleski holds a series of community meetings at library branches to review and explain the proposed budget. Due to the COVID-19 pandemic and continued safety precautions, these meetings will not be held. As an alternative, the county encourages all interested residents to watch the presentations online and submit any questions or concerns Zaleski at tzaleski@carrollcountymd.gov.

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A budget public hearing is scheduled to be held virtually at 7 p.m. May 11.

Additional budget work sessions may be held by the commissioners to make any modifications to the proposed budget based on the information received during the public hearing. These work sessions are tentatively scheduled for May 18 and 20.

The fiscal 2022 budget adoption is planned for May 25.

All sessions will be held virtually, televised on Channel 24 and streamed live on the county website. Check the county website or call 410-386-2400 to confirm dates and times.

Open session is available for viewing on the county meeting portal and the county YouTube channel. In addition, all meetings will be replayed on Comcast Channel 24.

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