The plan to pay a $625 bonus this spring to nearly 7,400 Harford County government, sheriff's office and school system employees died an unceremonious death in the Harford County Council chambers Tuesday evening.

Though they lamented the latest turn events that sank the bonus proposal, council members said they were powerless to reverse Harford County Executive David Craig's decision earlier that day to withdraw legislation the council was considering to fund the bonus payments.

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The majority of the council members said they agreed with Craig that the county needs to manage its financial resources to meet new obligations imposed by the state, chiefly the shift of teacher pension costs from the state to counties that was approved in last week's special legislative session in Annapolis.

One member, however, Councilman Dion Guthrie, blasted Craig's decision to kill the bonus and charged the county executive and his staff had mismanaged the whole situation.

Council President Billy Boniface said he understood the tough situation in which Craig and the county were placed. The $5.5 million needed to make second of two $625 bonus payments to employees, as originally proposed by Craig last fall, is about what the county figures it will have to pay as its share of the teacher pension costs in the next budget.

"It's a difficult task, because when the county executive came to us with the plan of doing this split …we didn't know what was going to be involved," Boniface said of the bonus. "Nobody likes to not have to give a bonus, but the only other opportunities to make cuts and reduce in paygo will make reductions in our operating side. The one good thing in this budget is it doesn't include furloughs and it doesn't include layoffs."

He said the current budget schedule, which is set to be changed by the newly proposed charter revisions, does not allow for more time.

"We're kind of up against the eight-ball in getting this done, so I recognize the tough situation the county executive is in," Boniface said.

Conflicting numbers

Councilman Dick Slutzky noted that the "fantastic claims" of $15 million to $25 million for the pension shift's total cost to the county do not seem to be accurate, since now the cost is projected to be $11 million by 2016.

Slutzky, a retired teacher, said the state pension has never played out the way people might expect.

"It isn't that we had one pension system and it operated the way it was supposed to," he said. "It's changed and it's been changed by the state four times, just from my experience being in the pension system."

Kim Spence, county chief of budget and management research, and Treasurer Kathryn Hewitt replied they were just going by what was provided to them by the state in terms of cost estimates.

Guthrie, however, was having nothing of any of it. Both he and Councilman Joe Woods voted against several amendments the council passed Tuesday to the upcoming 2013 budget which shift the money for the employee bonuses to the teacher pension payments.

Boniface clarified that the council was not voting on the three bills to actually pay the bonuses, which had already been pulled by the county executive.

"What you're being asked in these amendments is to take $5.5 million in fund balance and put it toward the budget obligation," Boniface explained.

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$32 million surplus

Guthrie noted how last year Craig said he "miraculously" had a $32 million surplus, from which he was going use $11 million for the $1,250 bonus for each employee.

"What we are now doing is asking employees of the county to give up $5.5 million of their bonus that they thought they were going to get, and we are going to take that and put it in the budget and pay their pensions with their $5.5 million," Guthrie said. "Now because the state obligated the county to pay it, we are now going to obligate the employees to pay it," he said, asking what will happen in 2014 and whether the funding would possibly be taken out of employee salaries.

"I assure you the administration is as unhappy, if not more so, [about the action]," Hewitt replied.

Guthrie said: "Well, they can't be too unhappy, because they are taking $5.5 million away from their employees."

Hewitt explained why the county executive wanted to originally give bonuses to employees, who haven't have raises in going on five years for county and sheriff's employees, four years for school employees.

"Unfortunately, at that time, it was not known we would have this additional expenditure coming from the state," she said. "It's an interesting thing that our half of the bonus bill is about the same as the teacher pension shift. It just happened to be that way. But the money was really created through many sources."

Guthrie asked what ended up happening to the other $27 million that was supposed to be in the surplus.

Hewitt said Hurricane Irene and Tropical Storm Lee affected the general fund by a little more than $200,000, the fire and emergency medical service personnel needed another $400,000 in stopgap funding after they ran out of money, a bill to fund the post-employee health plan that was union-negotiated for post-employees health retirement cost a little more than $1 million.

The county has also added many new paygo capital projects, she said, projects funded from cash reserves, rather than borrowed money.

"We were able to do a larger number of paygo capital projects than in the prior year," Hewitt said. "So there is over $15 million in paygo capital projects. Those items that I just listed to you gives us over $22 million."

The rest will pay for the teachers pension, which leaves about $4.5 million, Hewitt said.

Also, Hewitt explained, "we always have to keep some money in savings that can be used for future budget situations, future paygo, natural situations - hurricanes, natural disasters."

The county also needs to maintain some savings over and above its "rainy day" fund to maintain its AAA bond rating, she said.

Bottom line blues

Guthrie said: "I guess the bottom line here is the administration is much more in favor of projects than the employees who work for the county … To me, it's just extremely poor management."

Councilwoman Mary Ann Lisanti wondered what additional revenues counties will be getting under the new tax package passed in Annapolis last week, citing a briefing from the Maryland Association of Counties that was circulated which suggests Harford's net cost for the teacher pension obligation next year will be only $1.6 million.

"We know the expenditure number, but we don't know how much money they will forgive us," Lisanti said, adding she found it strange that money that would be returned to the county is unknown.

Lisanti said she understands the need for paying the pension obligation but is still skeptical of the whole situation.

"I'm not comfortable that this is the total story, and I think we all agree that we don't know what that is," she continued, "and I'm not sure how we go back and amend the budget for new revenues when they come in and where they come in."

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"In a perfect world, I would like to step back a little bit and have Ms. Moore, our county council auditor, look at this and give us a much more real number, but I don't think we are there at this point due to the budget schedule," Lisanti said. "I do hope that when it becomes more clear what money we will get from local aid, that the administration comes back to the council and we update these estimates."

Hewitt said she is hopeful the additional revenue the state plans to give the county to offset some of the pension cost will come through.

"I promise you that we'll do that [update revenue estimates]," Hewitt told Lisanti. "I think all of us are very frustrated with the efforts we're going through right now."

"Let me assure you that none of us sitting in this room are very happy with what happened," the treasurer added.

HdG Opera House funding killed

The council members also did some more work on the 2013 budget Tuesday in preparation for their final vote on the new budget May 29.

They voted down a request from Craig for an additional $150,000 in outyear paygo funding and $500,000 in other outyear funding for 2014 for a new Performing Arts Theater/Opera House capital project in Havre de Grace.

Lisanti, who represents the city, was the only one to support the funding.

Councilman Jim McMahan noted the center would be on the second floor of the old city hall on Union Avenue and asked how it would be accessible to the handicapped.

Lisanti replied an elevator would be provided.

"It is the position of the city a performing arts center is for everyone's benefit," she said. "We do not currently have a performing arts center in Harford County, it's going to be a long time before we do and this is just a small request for outyear funding."

Woods asked if anyone has talked with the Harford County Cultural Arts Board. Lisanti said she did not know.

Lisanti said this project has already been started, and the second floor renovation is the second phase.

Boniface warned of economic hardships ahead for the county, while saying Havre de Grace is getting its fair share.

"We are going to have a difficult several years ahead of us. We have depleted most of our paygo reserves and I have tremendous concern [about paying for projects]," the council president said. "This may not seem significant, but I think every dollar is going to be significant."

He listed several other projects in Havre de Grace the council has recently approved.

"I don't believe the council has turned its back on Havre de Grace, but this county has a huge problem ahead of us," he said.

Lisanti noted that a planned new equestrian center is at Swan Harbor Farm south of the city, not the Millard Tydings Park in downtown Havre de Grace.

The council did pass amendments to the 2013 budget and appropriation ordinance to add a $725,000 capital project for the Lilly Run watershed restoration project in Havre de Grace, including $150,000 in paygo funding, $75,000 in state funding and $500,000 in other funding.

A memorandum of change also added $250,000 to outyear paygo funding for the project in 2014. Boniface voted against that memorandum.

The council also passed amendments adding an $800,000 water and land trails capital project at North Park in Havre de Grace, to include $300,000 in increased paygo funding and $500,000 in other funds.

Issues with sheriff's building wall

The council also approved an amendment adding a $100,000 capital project to help repair the north wall of the sheriff's building in conjunction with the town of Bel Air's adjoining demolition of the BB&T building on Main Street. The two building's walls have abutted for decades.

Billy Boniface clarified that "we're not going full tilt on this," with regard to the redevelopment of the BB&T site which the town is turning into a public parking lot.

Spence, the budget chief, said the county has concerns with the condition of the sheriff's building in general.

"This building, when they took the bank [BB&T] down, we were concerned," she said, while giving assurances that only necessary renovation work will be done.

"In the piece [of the sheriff's building] that is the missing brick that we can see, is the town of Bel Air potentially also engaged in this process?" Slutzky asked.

Spence said it is, and she has a meeting with Bel Air Town administrator Chris Schlehr to discuss the town's contributions to this project.

Woods said something should be done with the brick wall, such as paint a mural or picture on it, and Spence said that idea has come up with Schlehr. One possibility mentioned by Bel Air officials is a mural depicting agriculture, since the Tuesday farmers market is going to be on the new parking lot once demolition is completed.

"That's one of the things we've discussed," Spence said.

Woods replied: "I think that would be outstanding."

Lisanti disagreed.

"I wouldn't spend too much money on paint," she said. "From what I can see outside, there are structural issues that need to be dealt with in the long run."

Lawyer changes

As expected, the council hired a new lawyer Tuesday, approving the appointment of Melissa Lambert, effective June 11.

Lambert moves over from the county state's attorney's office, where she has been assistant prosecutor in the circuit court division.

Lambert replaces Charles Kearney, who has been the council's legal adviser for more than 14 years but was forced out of the post when the council reorganized its staff earlier this year.

Boniface recognized Kearney and noted he is not leaving because the council does not think highly of his services, but because "it is just not the right time" for him to end his "successful" practice.

Boniface said he appreciated everything Kearney has done for the council.

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