Prince Frederick, MD – The Calvert County Commissioners have opted to use money in reserve to plug a gap in the proposed fiscal year (FY) 2016 operating budget, local government officials reported.
A press release dated April 29 stated the board, “unanimously directed staff to proceed with taking the proposed FY 2016 budget to public hearing using existing fund balance that will close the current budget gap of $5.6 million. The decision ensures there will be no new tax increase and prevents county staff reductions, furloughs or layoffs.”
Calvert County Administrator Terry Shannon told The Bay Net that most of the reserve money—$4.4 million— is from a component designated “unassigned,” popularly known as the “rainy day fund.” The other $1.2 million is from “assigned” fund balance.
“We still have healthy reserves,” said Shannon (pictured), who explained the current fund balance at the end of the current fiscal year is expected to be $52.9 million. Approximately $12 million remains in the Rainy Day Fund.
During open session discussions on the county’s budget situation, concerns were raised that opting to use reserves to balance the budget would negatively impact Calvert’s excellent bond ratings. Shannon said rating agencies constantly monitor the county. “I believe bond raters will see it [$5.6 million] is a small percentage of our budget,” said Shannon, who added that the portion of the money will be used for expenditures considered prudent use of reserves. That includes the $1.2 million, which will be used for funding other post-employment benefits (OPEB).
The massive construction project underway at Dominion Cove Point is also regarded as a plus to bond-raters. “It’s the largest project in the state’s history,” said Shannon, who added Wall Street regard’s Dominion’s liquefaction project will provide a financial boost for Calvert County and the State of Maryland.
While the determination to use reserve funds to balance the budget staves off the possibility of county government furloughs and layoffs, it will not reverse the board’s decision to cut funding to Calvert County Public Schools (CCPS) by just over $1 million, reducing the allocation to the state-mandated maintenance of effort level. The Calvert County Board of Education has delayed a vote on its proposed FY 2016 budget until early May due to the commissioners’ decision.
Additionally, Shannon confirmed the commissioners are likely to hold the same discussions about how best to balance the budget next fiscal year since the current forecast shows a looming deficit in FY 2017.
Shannon stated the commissioners made their decision Wednesday, April 29 during an administrative function. The county government press release stated the decision was unanimous.
The Calvert County Commissioners will present their proposed budget at a public hearing scheduled for May 19. A decision on the budget is tentatively scheduled for June 2.
Contact Marty Madden at marty.madden@thebaynet.com