SALISBURY A shortfall in esti-
mated Wicomico County jobs has
created a shortfall in anticipated in-
come tax revenue that county offi-
cials hope to fill by pulling funds
from the Roads Department.
According to Director of Finance
Andy Mackel, income tax revenue
estimates are based on a formula
derived from the statistical relation-
ship between the number of county
citizens who are employed during
the calendar year and the income
tax receipts distributed to the county
during the succeeding full fiscal year.
For example, employment levels in
calendar year 2013 will determine
revenue in fiscal year 2015. Eighty-
one percent of the change in income
tax revenue is explained by changes
in employment, Mackel said.
The income tax revenue estimate
for FY14 was constructed last year
in February. At that time, employ-
ment growth had been strong for 26
consecutive months at 2 percent
per year for a total of 2,076 jobs.
The upward trend appeared to be
moderating, so the FY14 growth
was estimated at 1.1 percent for a
total increase of 540 jobs, which
mirrored the growth rate between
the years 2000 and 2003.
The resulting revenue estimate
that is in the budget today is close to
$42.6 million, which includes the
effects of an income tax increase,
as well as the Wynne tax case loss
of $200,000 that will be recognized
in FY14 and 2012 General Assem-
bly revenue enhancements
The problem is what appeared to
be a moderation of growth rate in
February and March turned into a
steady decline through November
2013. The FY14 budget was based
on reaching a 12-month average of
49,000 people employed by
December 2013, but it appears the
county will end the year with an
average of about 47,600, which is a
miss of 1,400.
Since December 2011, 1,200
jobs in Wicomico County have been
recovered after 3,400 jobs were lost
from June 2007 through December
2011. The key sector supporting job
growth has been education and
health services followed by govern-
ment and leisure and hospitality.
Job losses in construction, finance,
other service and information re-
main a significant drag on recovery.
Mackel furthered, for FY14 a re-
duction in employment of 1,400
translates to a potential loss of
$3.47 million.
The county has spent less than
the budgeted amount for the last 13
consecutive years. The smallest
variance in that time was 1.4 per-
cent, or $1.4 million in FY03. The
largest percent variance was 4.9
percent in FY01 at $4.7 million. The
largest variance in terms of dollars
was in FY09 at $6.1 million or 4.7
percent. The FY14 budget totals
$127 million. A 1-percent variance
would be nearly $1.3 million.
Mackel explained, roads have
been a Special Revenue Govern-
mental Fund, however, due to the
loss of Highway User Revenue the
county must merge roads into the
General Fund beginning with the
FY15 budget cycle.
For FY14, the Roads Department
has been appropriated $6.8 million
from the general fund, which in-
cludes $4.5 million for operating sup-
port, $1.3 million for heavy equip-
ment and $1 million for road mainte-
nance. Roads have a separate fund
balance with a projected value at the
end of FY14 of $2.7 million.
Mackle proposed to amend the
current FY14 Roads budget to in-
crease prior year fund balance by
$2.7 million and decrease the inter-
fund transfer from the general fund
by the same amount, thus depleting
the roads fund balance prior to
merger with the General Fund.
County Executive Rick Pollitt will
not transfer $2.7 million of the $6.8
million appropriated in FY14 from
the General Fund to Roads thus
creating a substantial cushion a-
gainst the anticipated shortfall in in-
come tax revenue.
The Roads Department will contin-
ue with a fully funded operating and
capital budget as appropriated in
June for FY14 enabling the one-time
reinvestment in heavy equipment and
$1 million in road resurfacing envi-
sioned by the FY14 budget.
"We are half way through our cur-
rent fiscal year, am I looking at this
correctly that we need the $2.7 mil-
lion to keep this fiscal year budget
balanced?" Councilwoman Stevie
Prettyman asked.
That is the worst-case scenario,
County Executive Director of Ad-
ministration Wayne Strausburg re-
sponded, but it is still unclear if the
jobs being lost are actually tax pay-
ing jobs or not tax paying jobs.
"We believe it is prudent for us to
have a plan to address a potential
shortfall of that magnitude," he said.
"We certainly would not simply con-
tinue along executing the budget as
appropriated knowing what we are
seeing trending that we don't have a
handle on."
Prettyman pointed out in the past
when revenue sources fell short a
freeze on spending was put in place.
"We put a freeze on capital spend-
ing," Strausburg said. "From an oper-
ational standpoint there is no way to
freeze spending unless you are going
to eliminate work force. ... Nearly 80
percent of our budget is public safety
and education, so we can't get close
to $3 million in cutting operating e-
xpenses unless we are going to begin
to core services."
Another presentation will be giv-
en along with the proposal in legis-
lative form before the County Coun-
cil next month.
Wicomico Job Outlook Leads To Income Tax Shortfall
January 24, 2014
Page 17
The Dispatch/Maryland Coast Dispatch
By JOANNE SHRINER
STAFF WRITER
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