ELLICOTT CITY, MD – Today, Howard County Executive Calvin Ball released the Spending Affordability Advisory Committee’s (SAAC) Report for the Fiscal Year 2023 (FY 2023). The Committee is tasked with making recommendations to the County Executive on revenue projections, General Obligation bond authorizations, long-term fiscal outlook, and County revenue and spending patterns. To read the full report, click here.
Howard County has weathered significant economic impact of this pandemic in part due to our fiscal responsibility and prudent management. However, there are still challenges on the horizon. I appreciate the time and effort of all the members of the Spending Affordability Advisory Committee and the important insight they provide to our budget process. We face critical decisions about our shared priorities as a community in the upcoming budget cycle, and we look forward to using these SAAC recommendations as a blueprint for our budget choices over the next few months.
The report highlighted some of the long-term fiscal challenges Howard County is facing. Requested funding increases in FY 2023 by all agencies and entities supported by County government is equivalent to 250% of projected revenue growth. Funding requests for capital projects for FY 2023-2028 are approximately $20~$25 million higher than projected new debt capacity over the same period. All entities, including HCPSS, should prioritize needs and develop annual and long-term plans based on fiscal reality and focus on results rather than the amount spent. The Board of Education’s FY 2023 budget proposal requested a County funding increase to HCPSS of $129.1 million in FY 2023, more than 1.7 times the total projected revenue growth available to support all public services in the County.
During the last two months, the Committee has listened to more than two dozen presentations by multiple entities, agencies and experts on economic outlook, revenue projects, capital needs and operating budget requests. Based on such information, the Committee recommends:
- Developing a budget below projected General Fund revenues of $1.28 billion, excluding one-time resources, for FY 2023.
- New authorized GO bonds in FY 2023 total no more than $65 million.
- A revenue projection of 3.4% growth on average during FY 2024-2028
In the report, the Committee urged elected officials to make hard choices in collaboration with stakeholders to match expenditures with resources and develop a balanced and sustainable budget. Key recommended strategies include:
- Limit above-MOE-level funding to HCPSS
- Use one-time funding only for non-recurring expenditures or to generate long-term savings
- Balance service needs as a full-service county
- Explore revenue options while managing tax burden and county competitiveness
- Promote the commercial base
- Increase county fund balance to 15% or more
“The SAAC is pleased that many past committee recommendations have resulted in greater financial discipline, however, we continue to caution that county ‘needs vs wants’ are challenges layered with increasing uncertainties, among them inflation, interest rates, and a changing employment landscape,” said SAAC Member Barbara Lawson.
"The SAAC took to heart the warning inherent in S&P’s rationale in assigning this year’s AAA bond rating - as they acknowledged the strength of past fiscal prudence and highlighted the County’s charge to ‘continue to monitor and adjust as they prepare for potential anticipated multiyear revenue loss,’” said SAAC Member Ellen Giles.
"With the continued maturation of our County, and the related transition from rapid to moderate growth, it is critical that we remain focused on both short- and long-term revenue growth projections to ensure that we are able to meet the growing needs of our citizens in a fiscally responsible manner,” said SAAC Member Steve Hunt.
“Howard County has economically survived the worst of the pandemic, but there are still long-term challenges such as a slowdown of multi-year revenue growth,” said SAAC Member Todd Arterburn.
Howard County’s strong fiscal management was recently affirmed with a AAA Bond Rating from all three rating agencies, Moody’s, Standard & Poor’s and Fitch. Additionally, Howard County has grown its policy reserve from $5 million in 2019 to more than $30 million today.