Havre de Grace Mayor Wayne Dougherty introduced his last budget as the city's top elected official Monday, proposing a $14.5 million operating budget for fiscal year 2016 that would mark a roughly $1 million drop in spending from the 2015 budget.
The real property tax rate would stay the same, at 56 cents per $100 of assessed value, despite a suggestion from the Maryland Department of Assessments and Taxation that it be cut to 55.56 cents – the so-called constant yield rate, Dougherty said in his report on the budget Monday.
Dougherty, who will leave office May 18 and be succeeded by Council President Bill Martin, said the 2016 budget is an "austere" one that has been planned to let the general fund finish with a $1.025 million surplus. Martin was elected by city voters Tuesday to succeed Dougherty, who decided not to seek a fifth term.
Dougherty explained the water and sewer fund is projected to end 2015 with a $1.025 million deficit.
The city is planning merit pay increases for employees, Finance Director George DeHority said, but no cost-of-living increases or other raises.
Personnel costs are expected to go up by $365,000 in fiscal year 2016, but estimated health care and retirement benefits are set to decrease by $130,000. Dougherty said in his memorandum the latter decrease is related to his decision to increase the employees' participation in their health care insurance costs to 15 percent.
The mayor also noted, however, that the work by administration director Jim Newby and others to eliminate any increase in the premiums the city and employees pay for health care insurance is "a remarkable achievement."
"As a result, the city's insurance carrier will absorb the additional administrative fees created by the Affordable Care Act, more commonly known as 'Obamacare,'" Dougherty said in the memorandum. "You should be aware that the initial estimates from our insurance broker indicated the average market increase would be in the range of 12 percent."
The new lodging tax approved by Harford County in January is expected to produce more than $60,000 in revenue for the city, based on county estimates, Dougherty said.
The city's capital program, more than half of which would be grant funded, would be $1.15 million, down by $1.5 million from this year.
The perennially problematic water and sewer fund is expected to start the year with a $1.36 million shortfall, and the budget is expected to reduce it by $335,000 through a debt service fee, as well as projections of increased water volumes and an operating surplus.
Dougherty told the council Monday that rising foreclosure rates, among other ongoing problems, have created "a continued anemic economic environment" but he hopes the city will see growth and development in the near future.
He also noted the city has received an unusually high number of grants in fiscal 2015.
The marine facilities fund is set to start fiscal year 2016 with a surplus of nearly $290,000 and end the year with about $205,000 extra, because of reduced fuel prices and about $25,000 set to be spent on capital improvements to the city yacht basin.
The City Council will review the budget during the rest of May and in early June.
Two new council members also were elected on Tuesday, David Martin and Monica Worrell, and they will take office on May 18 along with the new mayor, who will have the power to make changes in the budget submitted Monday. In addition, Bill Martin, as mayor, will be appointing someone to take his council seat for the remainder of that term until May 2016.