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Steve Sachs, right, chairman of the Spending Affordability Advisory Committee, says Howard County has “matured” and has “less potential growth.” County Executive Allan Kittleman is next to Sachs.
Steve Sachs, right, chairman of the Spending Affordability Advisory Committee, says Howard County has “matured” and has “less potential growth.” County Executive Allan Kittleman is next to Sachs. (Submitted photo/Courtesy of Scott Kramer)

In a cautionary tone departing from previous years, an advisory group formed by Howard County Executive Allan Kittleman on Friday urged the county to rein in future spending as growing demands for general county services outpace economic growth.

"While the county appears to be fiscally healthy, there are storm clouds on the horizon," according to the report by the Spending Affordability Advisory Committee, a 23-member group that includes representatives from the Howard County Council, local institutions and citizens.

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To boost revenues, the committee suggested raising the real estate transfer tax from 1 percent to 1.25 percent — a move that would require approval from state lawmakers —and imposing a fee for ambulance services.

Kittleman said he has no immediate plans to raise taxes — a campaign promise — but is open to recommendations of the committee, whose work he lauded.

In his third State of the County address before the business community, Republican Howard County Executive Allan Kittleman touted the county's resiliency and his leadership, which was tested by last year's deadly flood in Ellicott City.

The committee also suggested reining in the amount the county can borrow to $85 million for the second year in a row, $6.5 million less than the level authorized this year. That level does not include a $138 million courthouse in public and private funds to replace an aging building — a project that has stalled for decades and would drive up debt.

Although revenues could increase by $40.6 million in 2018 — an $8 million increase over last year — tepid growth is expected through 2023, the report concluded.

Last year, local lawmakers passed a $1.8 billion county budget. County law requires adoption of a balanced budget.

County officials, local lawmakers, the school system and others must chart a long-term plan for the county's fiscal future, said Steve Sachs, the committee's chairman.

"This is not an attempt to scare anybody or say it's all doom or gloom. This is where the numbers tell us we're going and now is the time use our intellectual capital and be smart about what we do and how we do it," said Sachs, who is executive vice president of a real estate and hotel business.

Calling the report a "reality check," Kittleman said he has no plans to fully fund the school system's record budget request.

The school system's overall $872.4 million request represents a $64 million increase over last year's budget, which at the time sparked contentious back-and-forth between local lawmakers and the school system's leadership.

Howard County Executive Allan Kittleman is turning to the private sector to fund a $139 million courthouse to replace the current 174-year-old historic building in old Ellicott City, a relic of a bygone era struggling with limited space and security for more than two decades.

Kittleman will submit his proposed budget to the County Council next month. The committee encouraged the school system to "acknowledge the limited reality" of revenue growth and consider creative approaches to address burgeoning needs.

"Meeting the full request… will not only crowd out other agencies, but would eliminate available revenue for other services," according to the report.

Timid growth in county revenue could be exacerbated by dramatic increases in the number of residents over the age of 65 and shifts in development from single-family housing to townhouses and apartments, according to the report.

Both demographic changes are expected to reduce revenue and increase county spending. County estimates indicate the aging population will double by 2025, while growth in other age groups remains relatively constant, according to the report.

Howard County is one of the fastest growing jurisdictions in the state and one of only 44 in the country with the highest possible bond rating from major bond rating agencies. A high bond rating signals jurisdiction's fiscal responsibility and often allows it to borrow money at lower interest rates.

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To boost revenues, the committee suggested raising the transfer tax from 1 percent to 1.25 percent and installing an ambulance fee.

Kittleman said the courthouse project would not detract from the county's spending on other capital — major construction — needs.

"No one should be able to say that approving this courthouse means other needs will not be funded," Kittleman said.

Under the previous administrations, debt hovered around $120 million. Kittleman expects debt authorization to be around $95 million next year.

As the county considers plans to replace the courthouse, the county must revisit projects that have on the county's back burner for years.

A growing aging population and dwindling development space could dampen Howard County's future growth, highlighting the need to limit the county's debt amid cautiously optimistic predictions outlined in a report by the Spending Affordability Advisory Committee on Tuesday.

According to Holly Sun, the county's budget director, the county has hit a $56 million backlog for road maintenance over the last decade.

The report also acknowledge federal funding uncertainties could trickle down to the county. President Donald Trump has indicated broad plans to cut $54 billion in federal spending and reduce federal employment, according to news reports.

Other recommendations in the 17-page report including analyzing the county's structural deficit, which happens when the county spends more than it receives, creating a task force to review the transfer tax and retain funding for retiree benefits.

"If we don't start looking things different, a future council and future administrations are going to have a big, big problem because our citizens aren't going to deal with poor roads," Sachs said.

Sachs hopes the report encourages stakeholders to focus on collaboration and communication, not just results.

"This isn't politics. This is about fiscal responsibility," he said.

To view the full report, visit the county's website. All of the group's recommendations passed unanimously.



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