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Contention over proportionate budget cuts

By AMANDA HARRISON

Staff writer

Drum Point’s fourth special tax district has yet to be finalized because of a contention regarding the allocation of funding across the STD.

“It comes down to a difference in the philosophy of how the funds should be used,” said Calvert County Board of County Commissioners’ President Gerald W. “Jerry” Clark (R) in a phone interview Tuesday.

The Drum Point Property Owners Association newsletter states that the BOCC is refusing to finalize the STD agreement and that the BOCC is dictating how STD funds can be spent.

According to a fact sheet from County Attorney John Norris to the BOCC, the BOCC hasn’t been presented the agreement because “it is not consistent with the adopted resolution establishing Drum Point’s [fourth STD], the petition submitted by DPPOA to create the [fourth STD] or the purpose for establishing the district.”

The contention, from both parties, is the allocation of funding across the three accounts of the STD: administration, operations and maintenance, and capital projects.

According to the proposed STD, DPPOA was requesting an annual tax of $166 per lot for the next two years; however, in June, the BOCC approved an annual $150 tax per lot for the next four years.

“There’s no money to fall back on and we’d have to cut back on services,” said DPPOA President Gary Heal.

In a letter Heal wrote to the BOCC, Maryland Attorney General Douglas F. Gansler (D), the Maryland State Ethics Committee and Terry Shannon, the county administrator, “the resolution [the BOCC] passed cut’s [sic] 10 [percent] from our already constricted budget.”

In the original budget given to the BOCC for the fourth STD, administration accounted for 22.3 percent of the budget, operations and maintenance for 20.7 percent and capital improvements for 57 percent.

According to the fact sheet, the BOCC is willing to accept the administration percentage as proposed despite the wish of past commissioners to see the costs closer to 15 percent.

Clark said that the 22.3 percent was agreed upon because it was “working down to that 15 percent.”

When the DPPOA submitted the budget reflecting the $150 tax per lot for the next four years, the reductions were reflected in the operations and maintenance and capital improvements portions, but there were no reductions to the administration portion.

By doing so, the administration category of the budget grew to more than 25 percent of the annual budget.

Because of this, the BOCC has requested the budget be adjusted to reflect the agreed-upon percentages for each category — 22.3 percent for administration, 20.7 percent for operations and maintenance and 57 percent for capital improvements.

“They’ve given us dictums,” Heal said of the BOCC-requested budget adjustments. “They’re demanding we meet a certain criteria of percentages across the three budget sections. In the past, that has fluctuated. ... We’ve never agreed to a percentage, and now they’re saying we must.”

According to Clark, the only issue is the administrative cost because the money is supposed to be distributed over the three categories in a way that is in accordance with the purpose of the STD — to provide funds for improving and maintaining the infrastructure of the roads.

According to Heal’s letter, the STD accounts for 80 percent or more of the funds “need[ed] to run our community.” The funds Drum Point receives from the voluntary DPPOA dues, the State Highway User Revenue funds and covenant fees are restrictive in their use, and “as a result we are forced to rely on the STD to fund our operations.”

Heal said the reduced STD the BOCC gave creates a $28,000 shortfall, which DPPOA asked if it could take out of the capital improvements category or from a portion of the unexpended $2,868,270 from previous STD funds.

But according to the fact sheet, that is “inconsistent with the purpose for which the funds were placed in the reserve account, inconsistent with DPPOA’s petition regarding the expenditure of reserve funds.”

Heal’s letter states that the BOCC’s recommendation is to take the shortfall from SHUR funds, covenant fees and DPPOA dues.

“However, since all of our other income is already committed, we are forced to reduce services,” such as the clearing of rights of way, mosquito control, beach and road patrols and professional services, according to the letter.

“Even with these cuts, we will be in dire straits at the end of four more years,” the letter states.

Heal said it has been suggested to have one part-time employee rather than the one full-time employee, but he said that’s already been attempted and it didn’t work out well. He said it’s also been suggested to change offices, but he said the DPPOA office is already paid for so moving elsewhere would create another cost.

“We’ve already done all the things people are saying we should do,” Heal said. “We’ve cut to the bone.”

Until there is a finalized agreement reflecting a “proportionate reduction” in all aspects of the budget, the STD funds collected from the estimated 1,575 taxable lots in Drum Point will be held by the county, according to the fact sheet.

“If no timely action is taken,” the fact sheet continues, then the law permits that the STD funds be returned to the residents whose property was taxed, “including unexpended funds of the third STD that were proposed to be carried forward to this fourth STD.”

However, Clark said he does not see the unexpended funds being returned because they are in the reserve account for emergency use in the future.

“If they don’t sign,” Clark said, “we would have to make a decision as to how to handle those funds.”

aharrison@somdnews.com