You're watching Open Agenda. Here's our
host, Joe Vinosa.
Hi, welcome to this week's episode of
Open Agenda. This week it's all about
budgets, and luckily we have a lot of
people in the house who are going to
talk about the aspects of that. With us
from Fruitland, Miss Trish Melven. Thank
you for being here again. And old friend
Mike Goldberg from Delmar. Howdy, howdy.
Thanks for being here, folks. Um, so
yeah, budget season is upon us.
Um, it is a discussion based on many
buzzwords, um,
projections,
cuts, surpluses, unfunded mandates, and
of course all of this plays out at the
county level in the backdrop of state
issues, and to some extent federal
issues.
Um, so with us uh, this week we have Joe
White who's going to come in, you know,
Joe has a lot of experience in budgeting
as a business owner. He follows
obviously the county issues in a very
intense manner. Um, and he's going to
inform the public a little bit about the
process of the budget cycle,
um, the nature of the budget hearings,
and what regular citizens, regular Joes,
uh, and others can uh,
can and should know about the process.
Um, so if it's okay, um, I'd like to
bring Joe in, and then Mike, can I bring
you back in for segment C, and we'll
kind of talk about your priorities and
your concerns, and sort of what you make
of of Joe's general observations. Sounds
like a plan. All right. All right, we'll
be right back with Joe White in segment
B for Open Agenda.
Hi, welcome back to Open Agenda. With us
in the house still from Fruitland is
Miss Trish Melven. Thank you. Hello. And
our old friend of the show back in
studio with us, Mr. Joe White.
>> Thanks for having me on. Thanks for
coming in.
So obviously with a lot of issues that
are happening in the county, one of the
things that is most important and
affects all of us is the budget, and
once again, it's budget season. It is.
It seems like it's always budget season,
or at least we're talking about it, but
now it's actually here.
And uh, you know, Joe, you've got quite
a bit of um,
not only experience in examining the the
budget, but you know, you go to all the
meetings, you examine these issues in
more depth than I would say most
citizens do.
And I guess the question that we have is
what should Wicomico residents know
about the budget season as it stands
right now as of late April? The main
thing is just understand the process.
And and
going back to my business experience,
this is the one thing I always tried to
keep my management staff on is there's a
process behind it cuz sometimes you're
going to have to make tough decisions.
Sometimes you're going to get some nice
easy victories. But if everybody
understands the process and that's
coming up in May and I I have that
information. Just talking about work
sessions. Now
the County Council is going to have work
sessions with the executive's team
and they're they're open to the public.
There is no speaking part. So I mean you
could just go and watch or you could
watch on PAC 14. They're from 3:00 p.m.
to 5:00 p.m.
And I have the list of dates here.
>> [clears throat]
>> So Monday, May 11th is the first one.
Then you've got a Friday, May 15th.
Again, 3:00 to 5:00 in room 301, the big
room, you know, just like they do.
Plenty of seating.
And then in between the Friday, May 15th
meeting
there's [clears throat] another one on
May Wednesday, May 20th.
There is an opportunity at that point.
There's a regular work or
legislative session on May 19th on a
Tuesday. It's a 10:00 a.m. meeting, but
if you've heard something in the first
couple work sessions
you can go to that meeting during public
comments.
You can
use that time to to to speak to it. It
may even be that you want more
information
cuz the last one they're going to have
and it's kind of penciled in is on
Friday, May 22nd. It's kind of a
wrap-up.
So
as a citizen, you have a chance to go
and put your input in at strategic
times, but you have to understand the
process.
The part that's going to come after that
is there will be a public hearing on the
budget and they'll break them down into
segments of departments. They'll let
people go up there and speak for 3
minutes on each one. Obviously, most
people don't speak on any of them or
they speak on one. You know, it could be
about Board of Education, uh fire
safety, uh police.
Uh obviously, we got the CBA done. So,
so that's kind of
that one's kind of known. But you get to
see how it affects the rest of the
budget.
Then they'll pass the budget
in June. It has to be done by the second
meeting in June.
So, [clears throat]
the this process it is made to play out
in a slow burn because the public needs
to have the same time to digest
information that both the council does
and the county executive. Okay.
So, we're looking at a process that has
opportunities for public input, which is
great. Trisha by you, what do you think
about the the whole process? Do you have
any questions or concerns or anything
strike you as we get into budget season?
Well, I do because I'm not real familiar
with the process at all. Um this is
probably my first real exposure
discussion about it. But um it sounds
like each session is uh dedicated to a
specific function or department within
the county.
>> There will be more than one per session.
So, and and they'll usually have one
that's more of a heavy hitter and then
some that are probably a little bit
easier. So. So, if I were to attend and
wanted to understand it, I would like to
have the previous year's budget
and the actuals, you know, the budget
versus the actual and the proposed.
So, how difficult would it be to get
those three pieces of information?
>> Actually, it's not hard at all and I
think that the county government is
doing a much better job. Uh I've seen a
huge improvement over the last year.
I'll give you an example. Uh those
differ that information you're looking
for is comes from the fiscal audit.
And the fiscal audit from FY25
was done virtually on time. I mean it
was a it was a couple weeks late.
The year before it was it was about 3
months late. It actually came out right
as the budget was was being proposed.
About just a short time in between.
But
it's been done back in January. There
was a presentation. You can go on
YouTube and and Google PKS Wicomico
[clears throat] County budget audit.
They didn't they didn't have any
findings that would give anybody
concern. It shows our surpluses. So to
give you an example the the income that
was brought in was $16 million
thereabouts higher than what they had
budgeted for that year. And the
expenditures were about $16 million
lower.
So we added about
$33 million as an operational surplus.
Now not all of that ends up making into
the reserve funds cuz some of that ends
up as carryover on a capital project.
For instance, that stays in that
department.
What's really kind of neat is you can
take that if you go to the county
website, the budget proposal's there.
You can see the budget, the actuals, and
then what the proposal is.
And I know from your business experience
like mine, you've done strategic
planning. And if you're going to do
budget planning in a strategic format,
that's exactly the information you need.
And it's there. It's this is I I I give
them some credit that I think that the
timing of this that things that in the
past some folks have brought up as a
concern have been better. So. If only
everybody's eyes lit up like yours do
when we talk about budgets and and
strategic planning because you know
again it's it's not the most
engaging topic that
quote-unquote regular people
maybe have on their horizon. But it's
one of the most important things cuz it
relates to our county government. I
spoke about this at the at the last
meeting. And and and this is this is
probably one thing that that everyone
needs to at least acknowledge. The state
of Maryland has a huge budget deficit.
You're not going to see it come up this
year, of course it's an election year,
but we we got a update from the
delegates the other day. We're looking
at a 5 billion with a B. Those those
budget shortfalls next year measure in
multiple billions of dollars and can get
close to 5 billion dollars in just a few
years. You just don't fix that by
sending money off to future year budgets
and and funding priorities that get
passed for next year instead of this
year. They're going to have to raise
taxes, and these aren't Council
President Cannon the kind of tax
increases that are biting around the
edges. We expect as a legislature to see
the sales tax raised potentially from 6
to 8%. You are going to see property
taxes, which I think the legislature has
already acknowledged that property taxes
are going up. You're seeing your coffers
increasing. Don't lose sight of the fact
over the next couple three years the
legislature sees tremendous increase in
property tax revenue to the counties.
When we talk about the legislature
passing budgets, they often do it
through the lens of unfunded mandates
and passing those responsibilities down
to you, the local elected officials.
That concerns me a great deal. So it's
getting worse in other words. It's
getting worse. Okay. And you've seen
yourself the issues that Salisbury's
dealing with. Yeah. So it's like being
at a restaurant. You're eating at a
table. This friend's broke. This
friend's not broke, but doesn't have a
lot of extra money.
And you're you're doing well because
you've saved your acorns. You've You've
You've invested wisely.
Who are they going to come looking to
pay that bill?
Mhm. And uh you know, we have about 100
million dollars in surplus right now,
which is
uh you know, over the last 7 years to
build it up that high, 8 years. That's
that's a tremendous feat. You know, a
lot of folks deserve a lot of credit for
that.
But it's only about half as much money
or about as much money as we spend in
half a year. You can blow through it
really quick as well.
>> Yeah, it goes quick.
>> So. And and the fear is that in a
situation where we're looking at several
billion dollars of state budget crises,
we're going to need to spend some of
that. Or at least we're not going to be
able to keep it. It's that ugly word,
unfunded mandates.
>> Yeah. Uh and I think the lowest hanging
fruit we're going to see next year, next
spring, is the uh teachers pensions.
>> Mhm. Uh and and and also rolling back
money that's used to reimburse things
like Fruitland Primary. Maybe not
Fruitland Primary, but the next one,
which is White Middle or or another
elementary school. Yeah.
>> Which look,
I'm a fiscal conservative, but you have
to you have to maintain your buildings.
>> Yes. And if you don't think the state's
going to help you with their side of it,
you have to start planning for
>> That's the fact that that's not going to
happen.
>> Well, that's the irony. If you don't
invest in it, you're going to spend more
money. You know, it's like you can tell
yourself, "Well, I'm going to be
fiscally conservative and not fix that
pipe."
But when it breaks, you're going to end
up spending more.
>> the floor, the carpet, you know, the
whole thing. Yeah. Yeah. And the other
thing too, and this will come up in
these sessions, you'll get to hear about
how they're planning [clears throat] on
bonding projects. Yeah. One of the
interesting things, and and again, my
business experience, this is this is
really one of the things that drives me,
is the cost to borrow money is real.
Now, once if you say you got to spend 15
million dollars to put sewer pipes in
the ground.
If you had the money in the bank, you
don't have to pay for the interest.
Which is about double what government
bonds is a good rough estimate, right?
But then if you spend the 15 million and
don't bond it, Yeah. then you don't have
it in the bank in case something
happens. It's terrible.
>> And if we knew what the state of
Maryland would do a year from now, We
could plan. we could plan. Which is what
we would do in the business world. But
we don't know. Yeah.
>> And um I think that it would be really
wise, whatever your political
ramifications are, your your your biases
might be, at least you know why the
decisions were made so that you can make
sure your concerns are heard. Yeah.
Yeah.
Do we have Do we understand the source
of the unexpected surplus and the
unexpected um
decrease in expenses? Well, they
From the financial audit, again, it was
nice to have plenty of time to digest
it. Most of it's coming from income tax.
And now the income tax is what they call
a piggyback tax. In state of Maryland,
you're paying between 5 and 8% of state
income tax, but actually 3.2% of that
>> Is the county. is the county.
>> Right. Um so, the county gets that. Now,
we've seen those those numbers go up
by a lot. We got to remember we're we're
very I In my opinion, we're very
fortunate in this county that we have
the property tax cap because the state
of Maryland has assessed our properties
every, you know, third of us every year
and it's increased it.
But in the county, we have the property
tax cap, which means we can't go more
than 2% above or whatever inflation is,
which is which one's lower. Well, right
now it's the 2% unfortunately.
>> Yeah. Well,
we have to lower the rate and and the
county executive the other day stated
that we're going to lower the rate from
80 cents per $100 of assessed value down
to 77.
Uh with the rising assessments,
assessments grew um 7% but our revenue
can only grow 2% so we are decreasing
the tax rate again this year. We are
going down a full 3 cents on the tax
rate.
And as such, that also means that our
tax rate for personal property is going
down as well because the state law is
you can only have your personal property
tax rate for counties be two and a half
times your real property tax rate. So,
that number is going down as well. It
may even be a little bit lower by the
time the council gets a chance to to
play around with it, but that's a huge
win for this county.
Even if you're a renter, and I'm going
to explain why. The
The property tax is baked into your
rent.
And then the pizza shop down the road
has to pay prop- personal property on
the pizza oven in the pizza shop whether
they own the land or not. So, when you
want to go get a pizza
it the tax rate goes down, that helps
keep I think they call that like
stagflation, right? Where yes,
everybody's doing a little bit better,
but no one's actually doing better. This
is
This is
an opportunity for the government to
actually pull back taxes.
Well, you know, there's an old sort of
expression that so much of economics is
the things you don't see, right? It
might be baked into how we operate, but
you don't actually see it until you feel
it. Until you feel it.
>> And I think the budget cycle in some
ways operates the same way where it
might not be the thing that everybody's
necessarily focused on as a as a hot
button concept, but knowing what's
prioritized, what's not, knowing what's
on the As you said, after the election
you know, it's it's it's the it's the
second term burden, you know, it's like
you you hold you hold the ship together
with prayers, luck, and and gum.
And then after that re-election,
typically is when the budget reality
hits in a more profound way, and I
Especially at the state level. I mean,
so you This was the first year in the
last three that we haven't seen fees
increase or taxes go up in some way,
shape, or form in the state of Maryland.
Uh we're all still dealing with energy
bills that are much higher,
>> [clears throat]
>> but I guarantee you next year it'll be
after the election year, and that that
bill's going to come due, and the folks
here in this county who have worked
hard, we've we've budgeted well to save
up this money.
It's going to be the reverse.
>> Well, and to that point, you know, one
of the
things that has been stated, I think
Josh Hastings has said this a few times
and and several others is part of why
our surplus is the way it is is because
of our disparity grant, which ironically
is money from the state that they give
us because we are a poor county. If the
state cuts or takes that back or resends
it in such a financial crisis,
that surplus goes away. You you lose
most of it if the disparity grant goes
away. But we do know that there that the
disparity grant's not going away for the
next 3 years. Now, they could It is
going to It's going to be a little less
this year. Actually, [clears throat] I
was listening to a Delegate Barry
Beecham. He did a a nice talk
this past week.
And there was a one-time payment last
year in the last fiscal year that kept
the disparity grant up. We're not going
to get that, but the disparity grant
itself is staying the same. But it's
probably going to roll back. They tried
to roll it back a half a million dollars
this year. He was actually able to to
convince them to keep it the same I you
know, through how they work in
Annapolis. But that's what we're going
to be up against next year.
And
this the local issues are going to be
what what hits people the hardest here.
I I I concur. There's concerns that
nationally inflation could reach above
4%, you know, in the years ahead. So, it
sounds like as a small increase in
inflation, it's magnified down at the
local level.
It's magnified because your your small
businesses are feeling it. That's where
you're feeling it first.
You know, I'm a wholesaler.
And when when you take a 4% increase in
wholesale goods, so take a pizza shop
like I mentioned before, and let's just
say flour and oil and cheese all go up
4%.
And and on top of that, their labor also
went up. Their price is not going going
increase by 4%. Their price is going to
have to increase by about 8%.
So now the person who is buying the
pizza isn't paying an extra
small amount, they're paying even more.
Right. This is in also in conjunction
with the rumors are that the state of
Maryland's looking to increase their
sales tax from 6% to 8%.
>> Mhm. So now this pizza Mhm. that I mean
look, we're eating pizza cuz it's quick,
it's easy, and it's kind of cheap.
>> Not anymore. Maybe not now.
>> Yeah. And then consumer spending gets
pulled back.
>> Gets pulled back.
>> And then you get more recessionary
times.
>> spiral.
>> But we want to make sure the state of
Maryland doesn't handcuff us.
>> Yeah. And uh the best way to do that is
to take care of us here regardless of
political party. Well, and that's all
the more important then for us to be
engaged in the budget process. So uh
Joe, thanks for coming in and explaining
it. It's You made it sound so
interesting even though sometimes a
person's eyes can glaze over with the
budget, but
>> Somebody wants to Somebody wants to sit
next to me, I you know, I'm happy to
chat chat with them a little bit about
what they're seeing cuz I've seen it a
few times.
>> Definitely, definitely. Well, Trish,
thank you for hanging out with us as
well.
>> Thanks for coming again, Joe. You're
welcome. And we'll be right back with
our next segment of Open Agenda.
Welcome back to Open Agenda. With us
once again from Fruen, Ms. Trish Melvin.
Hello. And with us from not New York,
Mr. Mike Goldberg.
>> Definitely not New York.
>> I I the accent gave it away a little
bit. Thank you for coming in, sir,
again. Appreciate it.
>> So uh budgets, budgets, money,
taxes, cuts, all the above it would
seem. Um a lot of things are going on.
Obviously
Joe White gave us I think a really good
breakdown of
um the nature of the budget process, the
general schedule, what to expect. And I
guess the question becomes now that
we've had the chance to tease out a
little bit what we're going to see in
terms of the budget cycle and the
process. I guess what I'd like to ask
both of you as as private citizens is
what are your biggest concerns and what
are your own kind of priorities that
you're thinking about as our county
jumps into this process? My biggest
concern is having my money in the hands
of anybody in the government. Okay.
>> [laughter]
>> Okay.
Okay. So
>> giving money and power to the
politicians is like giving whiskey and
car keys to teenage boys, let's face it.
So, the question becomes, locally
speaking, what are your biggest concerns
about tax increases? Well,
>> [sighs]
>> the more they increase taxes, the less
money I have in my pocket. And I think
everybody shares that that sentiment.
And you know, one always has to wonder
what are the real priorities, what are
the real imperatives, you know, with
respect to spending. And of course, you
know, the how how much tax revenue that
we collect in order to support that
spending. You know, historically,
um
governments do not spend responsibly.
Uh
you know, because all they have to do is
raise taxes to make up the deficit,
unlike in the private sector, a
corporation, you know, there
there's going to be jobs lost if
if you know, they're they're they're not
making money, but it doesn't work that
way in government. So, there's not a
good motivation on government to contain
spending or you know, revenue
collection. So, Trish, in your point of
view, um now that Joe has laid out the
budget process and we've talked about
the nature of the state's economic
condition and the county and where it
sits, what are you most either concerned
about or maybe even hopeful about as we
go into next budget cycle in terms of
what our priorities are? Well, I'm most
interested to see
where there's great deviations from
previous year's spending.
>> Mhm. Not more so than the previous
year's budget.
Um
some departments,
perhaps the majority of their
expenditures is salaries.
>> Yeah, usually it is.
>> Others, you know, have more supplies and
equipment equipment involved. So, Well,
I think um you know, one of the
things that we all see is
we all have a sense of what could
happen, and then when we do see the
final numbers, then we start to kind of
like pull back and be like, "Okay, well,
I didn't expect this to be the case or
that to be the case." And you know, it's
interesting cuz like one of the things
that I'm most passionate about obviously
is is public education and Um as
discussed during the public hearing, the
state of Maryland continues to shift
financial obligations from the state
level to local governments, placing
additional pressures on county budgets.
Um but at the same time, I'm really
proud of this budget because we were
able to make record investments uh to
the Board of Education, public safety,
and of course our other
uh county departments.
Um just skipping ahead a little bit. Uh
this just to give you a brief highlight
on some things. This budget fully funds
maintenance of effort as well as the
requested increase of funding to
education. Um in addition, their funding
would include the amount uh to start the
implementation of our school weapons
detection. Um this is going to start
mid-year uh at the board's identified
tier one schools. Uh it also includes
the forward funding for Fruitland and as
well as the capital ask for Fruitland
Intermediate. So, we're really proud of
that. Um you know, as we look toward
the needs of the students, um
workforce development, you know,
shortages are are still a big issue.
It's the classic thing of, you know,
we have services that have to operate,
>> Mhm. but do we have the funds long-term
that can sustain it? And I think to to
Joe's point earlier, I think this year
we can kind of
keep it going, but then the question
becomes what do you look at next year?
And and that's that's actually my
concern is is what do those services and
and budget concerns look like? not so
much now, but next year when we see the
cliff coming. So the the the budget
itself should
be
on paper and
>> [clears throat]
>> an expression of the goals of the
county. Yeah.
Um and and the one way or another. Yeah,
and the and the priorities.
>> And the priorities. And so all that
needs to fit together. What the stated
goals are um and then it needs to be
reflected in the budget. How does this
budget help you reach these goals or you
know, what are your plans? The other
thing I just wanted to say is that uh
Wicomico County continues to meet its
obligations directly and responsibly
despite increasing pressures from the
state and rising costs with associated
or sorry, rising costs associated with
attracting and retaining qualified
employees. This proposed budget reflects
both top priorities of this
administration and the needs expressed
by our residents while also
incorporating a strategic use of fund
balance and a fiscally responsible
approach to managing our current
resources. And to go over a couple other
highlights, I'm going to turn it over to
our finance director.
So the estimated revenue in this budget
is $237 million, which is a $21 million
growth, about 9% growth over last year.
Uh on the revenue side though, based on
continued strong growth in income tax,
we are growing our
income tax estimate by $10 million.
Um the expense budget then is balanced.
It's a $237 million expense budget. As
the executive stated, we are funding
MOE, we're funding
um the growth respect aspects that they
asked for above MOE, we're funding the
tier one schools for weapons detection.
So that has a capital impact that you'll
see on the capital budget as well as
having an operational number that is
above the number that they've asked for
for MOE and growth. This is the goals
and the plans. Unfortunately, they to me
they they are developed by the county
executive, essentially by one person.
All departments report to the county
executive. Yeah.
>> [clears throat]
>> Well, I I would imagine there'd be some
collaboration involved.
>> There there there is some degree of
collaboration, but I don't think there's
enough collaboration and that's what has
always concerned me about the way we do
our budgets here. And on the national
level, and we've talked about this
before, that all
budget
all bills to raise revenue originate in
the lower house
of the legislative body. But here it
originates in the executive Executive,
yes. And all that the county council can
do is to reduce the amount
of
that has been budgeted by the executive.
And it is kind of interesting because
that's
essentially how the Maryland system used
to operate where the governor had
extraordinary power to set the budget
and the legislature couldn't do much. So
it's interesting that even the state of
Maryland for all our concerns and
criticisms as far as the current budget
issue, I think it is correct that you
have legislative input on on the budget
as a proactive feature.
>> And it doesn't mean that you cannot have
a shared vision between the legislative
branch and the executive branch. I mean
that would be ideal. [clears throat]
I wonder has there ever been an and I
don't know who could answer this. Maybe
we can get one of the more senior
council members, but it would be
interesting to see if there's ever been
a point in our county's history since
we've had an executive from our
government, if there's ever been an
attempt to have an actual session where
you have the executive and the council
together and talk about what are their
shared budget priorities. I'm guessing
there hasn't been, but it would be
interesting. Again, this is the nature
of checks and balances, but also the
competition between the branches.
>> But this is what Eric Charter lacks and
that's why our system is such a problem
and I think it's going to become more
problematic into the future as revenues
become tighter. I mean, we're we're
looking at a lot of a structural deficit
in our state budget that is going to
trickle down, or I should say not
trickle down to the county level,
unfortunately.
>> Yeah. I think we're going to have some
tough times ahead because I frankly I
don't see any opportunities for a great
deal of economic growth in Wicomico
County. We are not attracting new
businesses. Not at the rate that we
would need to There's no large employers
moving here to replace the large ones
that have left us over you know the last
couple of decades. So it's we're going
to we're going to have some tough times
ahead, I'm I'm afraid.
>> are not unique to our county.
>> No. No.
But how the budget plays out can be
unique in the sense of do we do we
prioritize things that shouldn't be
prioritized or are we not seeing what's
around the corner as far as I think we
often do prioritize things that should
not [clears throat] be prioritized. And
what I consider to be a priority,
somebody else may not.
>> yeah. I mean like on education, I have a
very different view than most people,
you know, And then you got seven council
members plus an executive who are going
to probably have different views.
>> Sure. And yeah. But one of the problems
I also see is it puts the county council
at a disadvantage because they don't
have a financial analyst on on staff.
Right.
Best they can do is the internal
auditor, but she's not going to be
directly involved in budget negotiations
or even perhaps indirectly involved.
>> Yeah. But unless you have an expert who
understands budgets, who understands how
to pick apart the details on any given
line item, and unless those details are
in fact provided by the executive, which
frequently we know they are not, then
how does the County Council make
educated financial decisions when they
don't have the expertise and they don't
have all of the available information?
Well, we're going to see, aren't we?
We've got a budget session that's about
to start and
hopefully we'll be able to
inform the public a bit and hopefully
the public will sort of engage the
process and come out. So, again, we have
several sessions coming up in May.
They're open to the public and hopefully
if people have even half the concerns
or, you know,
priorities that we do, maybe they'll get
them to be addressed. On that note,
thank you both for joining us.
Appreciate it. And thank you for
watching and we will be back next week
with a new episode of Open Agenda.
Experience matters. Integrity matters.
