Budget Director Steven D. Powell urged the County Commissioners yesterday to prepare five-year plans for operating budgets as they now do with capital budgets -- advance planning they'll need as Carroll receives less and less from the state and federal governments.
"We need to look at where we are likely to be going" in light of diminished local revenues and an increasingly "tenuous" relationship with state and federal agencies, Powell said.
"We'll be operating on a different [revenue] base," Powell said. "We still have a couple of lean years to get through."
The county's first priority, Powell told the commissioners, is to pay the interest and principal on money it has borrowed.
After that, however, there is no agreement about how to split the remaining revenue between the school board -- which accounts for more than 50 percent of local spending -- and the departments and agencies funded or partially funded by county government.
Powell asked the commissioners to develop a general consensus with "broad policy implications" to determine which departments get first claim to the remaining revenue in the next five to seven years.
"Revenues will drive our expenditures," he said. "We have to stay within our revenue projections and make sure we are getting the biggest bang for the buck."
The way to do that, Powell said, is to develop performance measures for departments and agencies, including human services, economic development, public safety, corrections, recreation and parks, citizen services, the community college and the library.
Commissioner Donald I. Dell called Powell's proposal "a great idea," saying it will give the commissioners direction about how to run the county.
"I've been trying for four years to have something like this happen," he said.
"It seems like we have always been reacting. We need to know about the revenue stream and balance that with the needs of the departments. Fiscally, this should make us a lot stronger as administrators in the county."
Powell said that given the volatility of the economy, a five-year plan would probably last no more than a year and a half before needing a "correction." A five-year plan "would not be etched in stone and probably won't be etched in clay," he said. "It would be "a work in progress."
Although the revenue picture is beginning to stabilize after "the rather tumultuous years since 1991" when the county sometimes had to revise its budget eight or nine times within a year, it will never return to the double-digit growth common before 1990, Powell said.
Under even the most optimistic forecast, anticipated revenues are lower than in the mid-'80s, Powell said.
Revenues from new development -- which since 1991 had been growing at an annual rate of 6 percent to 7 1/2 percent -- are expected to dwindle to 4 percent or 5 percent because of the county's new growth controls, he said.
The rate of growth in the property-tax assessment base of existing development has stabilized at an annual rate of 3 percent to 4 percent, Powell said. Property taxes account for 50 percent of county revenues.
Local income taxes, which account for 30 percent of county revenues, "are beginning to recover a bit," Powell said. The anticipated annual growth in local income tax revenue has leveled off at a rate of 4.25 percent after having dipped as low as 1.5 percent, he said.
Prior to 1991, the annual growth in revenue from local income taxes had risen to 13 percent.
Changing demographics are contributing to the new income tax revenue projections, Powell said. In 1990, 20 percent of the population had incomes under $20,000, and 25 percent had incomes over $50,000. Today, 14 percent have incomes below $20,000, and 47 percent have incomes above $50,000, he said.
As a result of the higher incomes -- and the fact that developers are now building most new houses in the $200,000-plus range -- the formula for assessing the cost of residential services has changed, Powell said.
In 1991, the county paid $1.22 in services for every $1 it received in residential property tax revenue. But because of the increased percentage of higher incomes and the number of more expensive houses being built, the amount paid for services has fallen to about $1.15 for every $1 of revenue, Powell said.
Pub Date: 9/17/96