(4/1) There will be no tax increase for Emmitsburg town residents this year despite potentially dramatic reductions in revenues, Mayor Jim Hoover predicts.
Hoover will present the proposed Fiscal Year 2010 budget to the town commissioners in May and does not intend to include any tax increase. However, recent actions under consideration in Annapolis could make that more difficult.
"This year's budget will come in leaner than last year's budget for the same reason last year's budget was lean. The projected revenues are just not there," Hoover said in an interview with The Emmitsburg Chronicle.
Lower house values also serve to lower property tax rates, which in turn lowers revenues to the town. But Hoover said even with those foreseeable reductions, he believes he can keep the budget lean enough to avoid an increase.
A significant challenge to his plan, however, is coming from Annapolis.
Hoover recently received an email from the Maryland Municipal League (MML) reporting that the Maryland House Appropriations Committee is targeting highway user fees to help the state close its budget deficit.
In other words, the state plans to "take $102 million in local government highway user revenues for the State's general fund in each of the next two years," according to a bulletin published on the association of city and town government's Web site, www.mdmunicipal.org/.
The reduction, according to the bulletin, would likely result in a roughly 30 percent reduction in Fiscal Years 2010 and 2011 revenues that normally go to the towns and municipalities of Maryland. The league further predicts the change in formula would mean that municipalities would likely
not receive any of the transportation stimulus money.
"If the formula (for determining revenues to the towns) stays the same then we will all feel the same pain," Hoover said. "But if they change the formula then the state benefits. The state is trying to recoup its losses on the back of the municipalities."
That will make the job of managing the town's budget even more challenging for the mayor and town commissioners, he said. The effect on Emmitsburg residents would primarily be seen in a reduction in service and projects. Things like road resurfacing or even playground equipment replacements
would have to be cut back.
Residents probably won't notice the town doesn't replace a pick-up truck this year, Hoover added, but the town will likely have to buy it at a higher rate next year because they can't afford it now.
And reduced revenues from declining home values and a reduction of interest the town is earning on money in the bank won't help either, he said.
"Best thing to do right now is to see if we can ride out the storm for a year or two. But if the state modifies the formula for revenues to its benefit, and if we see lost revenues…, then we'll have to see," Hoover said.
Fortunately, this year's budget is doing well, Hoover announced at the March 2 town meeting.
Due to unanticipated expenses, such as replacing a server and a town radio used to communicate with emergency services, a couple of categories came up a little short, he said. But the mayor predicts there may actually be a small surplus at the end of the fiscal year on June 30.
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