Havre de Grace city leaders are “holding the line” and keeping property tax and water and sewer rates the same going into fiscal 2021, according to Mayor William T. Martin, although officials are being very strict with their spending now and leaving room for adjustments in next year’s budget, depending on the economic impact from the coronavirus pandemic.
“I don’t really think anybody knows what the financial outlook is going to be, although we’re very confident, as a city, that we’re in good shape,” Martin said during a City Council meeting Monday.
Council members voted 5-0 Monday to introduce Ordinance 1033, setting property tax rates, and Ordinance 1034 setting water and sewer rates for the 2021 fiscal year, which begins July 1. Councilman David Martin was absent as he was fighting pneumonia, according to Council President David Glenn.
Ordinance 1033 sets tax rates at 56.5 cents per $100 in valuation of real property, $1.705 for personal property, plus 4.4 cents on top of the standard real property rate for properties in the Chesapeake Bay Critical Area Taxing District near the shoreline.
The base rate for water will stay the same at $6.20 per 1,000 gallons, and the sewer rate will remain at $9.30 per 1,000 gallons. Capital cost recovery fees, charged to developers to connect to the municipal water and sewer system, will be $5,300 per residential unit for water and $13,200 per unit for sewer, according to Ordinance 1034.
The ordinance also establishes a $30 quarterly service charge for the city’s Infrastructure Reinvestment Program, meant to raise money for debt service on fund borrowed to repair aging water and sewer infrastructure. City voters approved a $15 million bond measure during a special election in February to support infrastructure repairs and new projects.
The city is working to take part in the Maryland Department of Housing and Economic Development’s next Local Government Infrastructure Program bond issuance, which is expected to happen in late May or early June, according to Steve Gamatoria, the mayor’s chief of staff.
The city held the special election in February with the goal of going to the bond markets this spring — pending voter approval. Gamatoria noted, in an email Monday, that “the bond market has been tumultuous since the social and economic lockdown caused by the COVID-19 pandemic.”
“Recent news by [Harford] County, however, signals that financial markets are reopening to government bonds,” Gamatoria added. “Further optimism is being fueled by the focus of the federal government on infrastructure programs, but there has been no specifics to-date.”
The council is scheduled to vote on adopting the rate ordinances during its next meeting May 18. A public hearing was held Monday after the ordinances were introduced, but no one was present to speak.
The mayor encouraged people to contact City Hall at 410-939-1800 or a City Council member over the next two weeks to give their input on the rates, or they can submit comments in writing to be read into the record at the next meeting. People also can give public comments in person during the meeting, although they must adhere to social distancing guidelines.
The council also is scheduled to hold a public work session on the budget May 26, starting at 6 p.m. The meeting will be livestreamed, according to Glenn. All council meetings have been broadcast over the internet since April 20.
City financial picture
Councilman Jason Robertson asked if the property tax rates can be reassessed “at a future date,” since the full scope of COVID-19′s impact on the economy is still unknown. Millions of Americans have been unemployed and businesses have shut down in recent weeks as events small and large have been canceled. Many states — including Maryland — have ordered non-essential businesses to close and enacted strict stay-at-home orders.
The mayor submitted his proposed budget to the council in March and proposed that tax and utility rates remain the same next year.
“The current budget that you have is based on this tax rate [in the ordinance], so if you were to amend it then we would, by necessity, have to amend the revenues in the current budget,” Finance Director George DeHority said in response to Robertson’s question.
Revenues could be adjusted in the separate budget ordinance, scheduled to come out in June, DeHority noted.
“It’s probably going to impact 2022’s budget much more than 2021,” Robertson said of the unemployment picture.
Martin stressed that the council can keep the tax rate the same, or raise or lower it. He said the budget submitted in March is “a fiscally sound budget.”
“I also feel, should revenues not come in as quickly as we need, there is room for attrition in that budget,” the mayor added.
Capital projects can be delayed if needed. The city is currently “in good financial shape,” but it does have a rainy day fund of about $1.3 million “that we have not even come close to hitting yet,” Martin said. The mayor issued a directive to his department heads two weeks ago that they cease non-essential spending and “concentrate our spending on necessary purchases that involve day-to-day operations and personnel.”
“We just want to make sure that, wherever this COVID-19 pandemic takes us, that the City of Havre de Grace will be prepared and that our number one priority is, and always will be, to provide services to our citizens every single day,” he said.
Those services include police, fire and EMS protection, water and sewer service and infrastructure maintenance.
“Right now, we’re hanging in there,” Martin said. “We’re doing OK right now — knock on wood — but it’s very tough to see into the future, so we’re being very cautious with things.”