At the end of fiscal 2012, St. Mary’s County government had a total of $60 million in unspent funds, much of it already committed by the county commissioners for required reserves or future projects. But $24.9 million was surplus funds the county commissioners could allocate any way they wish.
About $19.6 million of that surplus was carried over from prior years.
In the county budget being prepared for next fiscal year, most of that $24.9 million fund balance is scheduled for retiree benefits for county government and school board employees and forward-funding of building projects to save on bond interest payments.
That leaves slightly more than $8 million that the commissioners can choose to use or hold onto as they finalize a new county budget next month, said Elaine Kramer, chief financial officer for St. Mary’s County government.
Del. John Bohanan (D-St. Mary’s) has suggested the county commissioners could free up some of the fund balance. The $60 million in unspent funds falls into various categories. “Most of those categories — you change your priorities with the vote of the board” of commissioners, he said this week.
Kramer said the effects of the federal sequester on defense workers, a possible base realignment and closure round and the state shift to counties for teacher pension costs make for financial uncertainty through the next few years. “Fiscal ’16 might be the year we know what normal is,” she said.
Having enough dollars in reserves gives the county commissioners the ability to react, she said. The board does not want to raise taxes, she said, and wants to pay down debt. She said of the fund balance, “We’re not about growing it, but when we have it, let’s not use it for recurring expenses and dig the hole deeper.”
Of the total $60 million fund balance, $30.5 million was already committed to the county’s bond rating reserve, 911 radio system project, employee benefit trust funds and $7.5 million to use in case the county needs to build or add infrastructure to support Patuxent River Naval Air Station.
After Hurricane Irene hit in August 2011, St. Mary’s County government was able to forward-fund the storm cleanup by using more than $3 million from the fund balance. Federal reimbursements for that came in later. “We don’t want to be in a position where we have to wait if FEMA is going to help us” after a storm, Kramer said.
Bohanan said, “The fastest-growing county [in Maryland] has got to be making investments to keep up public services. It eventually catches up to you. We’re at the point where we are going to have to be looking at new schools and projects like FDR Boulevard.” The population of St. Mary’s County reached 108,987 in 2012, up from 86,211 in 2000.
The county recommended budget includes more than $15 million in fiscal 2014 for public school projects, including $13.4 million for a new elementary school in Leonardtown, scheduled to open in August 2015.
FDR Boulevard has $6 million budgeted in each fiscal year 2015, 2016 and 2017, but has more money already budgeted. “We’re going to need to move pretty quickly on those things, but you’ve got to be making investments for the future,” Bohanan said. The business community needs to lead the way into economic diversification, he said. “And we’ve become, frankly, overdependent on the good fortunes” of Pax River.
The St. Mary’s County commissioners set aside $7.5 million in the current budget for a “BRAC reserve.” The same amount of money was set aside in 2007, but wasn’t used. Kramer said that money “might be to finish something,” like a state or county road to support Pax River. It could be a sewer project or land preservation to prevent encroachment on the base’s airspace. “We don’t know what it’s going to be,” she said. Retiree health benefits are going to continue to draw significant dollars over the next several years. According to the most recent audit, St. Mary’s County government is obligated to have $79,275,000 in a retiree benefit trust fund and has funded $31,418,000 so far. The board of education is obligated to have $128,798,738 and has funded $17,077,262 so far. Kramer said those obligations are actually debt owed to the trust funds.
The requirement to begin building those trust funds began in 2008, she said, “and there are many [jurisdictions] who are still not funding it.” Every $1 million funded from St. Mary’s County government to retiree benefits in advance, it saves $70,000 to $80,000 in the annual amount needed later, she said.
Forward-funding building projects also saves a similar amount by not having to borrow money from the bond market and make the interest payments that follow.
The commissioners’ budget plan has $10 million available to forward-fund construction projects.