Leonardo McClarty, President and CEO of Howard County Chamber of Commerce – April 2021
Since taking the helm of the Howard County Chamber, I have been fortunate to participate on a host of task forces and work groups. One of the most important has been the Spending Affordability Advisory Committee (SAAC). Created through Executive Order by the County Executive, this committee is charged with:
- Reviewing in detail the status and projections of revenues and expenditures for the County, not only for fiscal year 2022, but also for fiscal years 2023-2027;
- Evaluating future County revenue levels and consider the impact of economic indicators such as changes in personal income, assessable base growth, and other data that the Committee considers applicable; and
- Evaluating expenditure levels with consideration of the long-term obligations facing the County, and the best way to pay for them.
With each passing year, the work of the SAAC becomes more and more vital as revenue growth, while increasing, never seems to grow year over year at the rate of the request and county needs.
This year’s committee saw total projected General Fund revenues of $1.2B in FY 2022, an increase of 2.3% or $26.7M over the FY 2021 budget. While better than some other local governments, this increase pales with expenditure request totaling between $36M and $64M depending upon which education budget Is used (The $36 million projected gap in FY 2022 was updated to $64 million as of March 1, 2021, based on the Board of Education’s Approved FY 2022 budget request, which was released on February 25, 2022, after the SAAC voted on this report). One does not have to be a statistician or economist to see we have some very difficult challenges and decisions ahead of us.
Navigating the Budget Gap
Further exacerbating this financial conundrum is the fact that we generally have three solutions to address these issues. The first of which is raise taxes. However, this is not feasible due to public opinion, the fact the County Income Tax is already at its maximum, our property taxes are the second highest in the state. Taxes aside, you cannot fee your way out either as that is not competitive or realistic. The second area is to monitor and curb spending which is recommended and achievable in the short term. Yet, this is not sustainable as you cannot cut your way to revenue growth. This would also mean forgoing or decreasing public services which is never popular. This leaves us the last solution which is to grow the commercial digest.
Of the three spending affordability recommendations, growing the commercial digest is the one that has the maximum benefit and one that I would argue we must put our energies into. It is also one of complexity as it takes time and happens gradually and steadily. For example, it has been stated that it would take multiple MedStar buildings just to increase the commercial tax digest a percentage point or two and this over a period of five to ten years and not considering other market absorption. This was also pre-Covid.
Growing the commercial base can also be extremely tough when some see any type of development as a community detriment. Most would agree that commercial development that is environmentally insensitive and that does not meet community needs nor reflect community desires is beneficial. When commercial development is smart and meets stated community goals and objectives, the commercial digest grows, the tax base increases, jobs are created, and unemployment rates decrease. In addition, our community benefits as non-profits are supported and many of the services Howard Countians have come to love continue. Equally as important is the fact that departments and agencies requiring increased revenues can see those needs met.
As an organization dedicated to economic prosperity and business vitality, I encourage businesses to join the Chamber as we work with our business and economic development partners to assist our elected officials and policymakers in forging ahead with an agenda that leads to commercial growth and job creation. For more information on the Howard County Chamber membership, please visit our membership information page.