As the fiscal 2014 budget slowly begins to take shape, the Frederick County Board of Commissioners faces some tough decisions on how to balance the numbers.
Transit issues and the county’s ownership of a nursing home and assisted-living center are expected to factor heavily into the county’s budget decisions.
But one of the main issues hanging over the county’s finances is what to do with the fire tax used to fund the county’s fire and rescue services and volunteer firefighters.
The tax problem — with a looming $12 million projected deficit if it’s not addressed — needs to be the centerpiece of the county budget, Commissioner Billy Shreve (R) said.
“We have hit that fiscal cliff,” when it comes to the fire tax, Shreve said.
The county’s two-tiered fire tax system was established in 2001 by combining the 13 districts that previously existed into urban and suburban districts.
The urban district — with a tax of 12.8 cents per $100 of assessed property value that provides 24-hour fire and rescue coverage — includes Frederick, Emmitsburg, Green Valley, Jefferson, Libertytown, Myersville, Point of Rocks and Urbana.
The suburban district includes Brunswick, Lewistown, Middletown, Thurmont and Walkersville, where residents pay 8 cents per $100 of assessed property. Suburban areas have paid firefighter coverage during the daytime Monday through Friday, with volunteers providing the rest of the service.
Almost 80 percent of the county’s population lives within the urban district, according to a county report.
For fiscal 2014, the urban district’s costs are expected to exceed revenues by $10.8 million, while the suburban district’s deficit is expected to be $1.2 million in the red.
After discussing the issue at an Oct. 25 meeting, the commissioners voted to return at a later date with a recalibrated property tax, and a decision on whether to phase in the changes, or move the expenses into the county’s General Fund.
Commissioners’ President Blaine R. Young said he’d like to deal with the fire tax issue in this budget cycle to avoid addressing it in a campaign year cycle the following year.
He said he thinks a majority of the five-member board agrees that the fire tax needs to be addressed this year.
“This is the big last hurdle to tackle,” Young said.
Young said he favors eliminating the fire tax altogether by moving the expenses into the General Fund and increasing the property tax by 6 cents per $100 of assessed value to cover it, while continuing to cut recurring government expenditures to avoid potential damage to the county’s bond rating.
Moving fire tax expenses into the General Fund would mean the property tax would have to be increased to avoid increasing the county’s structural deficit, according to a county memorandum. Increasing the structural deficit could negatively affect the county’s bond rating.
Young said that would only be true if the county didn’t take other steps to limit its recurring expenses.
He said his proposal would benefit all county residents by reducing their taxes by 2 and 6 cents, respectively, in the suburban and urban districts.
In the past decade, rapidly rising and declining assessment values have made the fire tax a volatile funding source, with revenue declining almost 20 percent since fiscal 2010, according to county documents.
To fully fund current costs, the urban tax would have to be raised to 18.6 cents, while the suburban rate would have to increase to 11.3 cents, according to the documents.
Meanwhile, the lack of money has led to delays in buying fire equipment and apparatus, as well as putting off filling requests from five companies for extra career personnel.
“As demand for emergency services increases each year, a viable and stable funding mechanism must be established to maintain an effective service delivery level for the citizens of Frederick County,” according to a report prepared by county officials.
At the Oct. 25 meeting, Shreve said police and fire funding have to come first, and water and sewer costs close behind, with everything else examined for possible cuts.
“Everything’s on the table,” Shreve said.
Among the expenses targeted by Young is the county’s ownership of the Citizens’ Care and Rehabilitation Center and Montevue Assisted Living Center, which if sold could save the county $4 million to $5 million per year, he said.
Frederick is the only county that runs a nursing home, and it’s time the county seriously considered getting out of that business, he said.
Commissioners’ Vice President C. Paul Smith (R) has said he could be convinced to look at selling the nursing home, while Shreve also has said it’s an option the county has to examine.
The nursing home and assisted-living center moved in June to a $30 million site on Rosemont Avenue in Frederick.