Despite the economic impact of the coronavirus, a roughly $9.1 million increase in income tax revenue is projected for fiscal year 2021, county officials told the County Council Thursday.
Chief Administrative Officer Rick Harcum said the roughly four percent increase in income tax over last year might seem overly-optimistic, but added county officials were anticipating much more in income tax revenue before the coronavirus pandemic hit.
"I have to believe you're sitting there thinking, 'the staff have lost their minds,'" Harcum said to the council about the increase.
But Harcum then started an analysis of budgets dating back to fiscal year 2008, showing that the actual income tax revenue that came into the county has, for most years, been higher than what the county has budgeted. That's the product of the county's conservative budgeting practices, he said.
Frederick's diverse economy, ranging from biosciences to healthcare to construction to government and several other areas, should also help the county navigate the coronavirus pandemic, Harcum said. He added that the hospitality/tourism industry, which accounts for about 12 percent of the county budget, was severely impacted—but that the rest of the county's economy should help officials navigate through the months ahead.
Because of the uncertainties in upcoming months, it's possible county officials will come back to the council later this year with a supplemental budget. Council Vice President Michael Blue (R) asked Harcum about the likelihood of that Thursday.
Harcum said that supplemental budget would probably occur in the later summer or early fall months, and depends on how strong the economy rebounds from the effects of the pandemic.
"In normal events we ask the County Council to take action on the budget once a year," Harcum said. "This is going to be more of a stepwise process."
Another part of the process that will impact how the county budgets this upcoming fiscal year is the amount of money officials will receive from the federal government.
The county already set aside $2 million from some of its contingency funds into a new COVID-19 response fund, The Frederick News-Post previously reported. Finance Director Lori Depies said Thursday county officials have spent roughly $971,000 from that fund so far, to pay for personal protective equipment for medical workers and other needs.
The county is also anticipating $45.3 million from the federal government through the "Coronavirus Relief Fund," the News-Post previously reported.
Councilman Jerry Donald (D) asked Depies and others how that money would trickle down to county officials. Depies said state officials are currently holding that money and will distribute it once county officials submit a "business plan" on how they'll spend that money, which is due Friday.
A little more than $22 million is for the county health department's needs due to the pandemic, and the rest will be for the costs associated with the "business plan" county officials submit to the state, Depies said.
She added the guidelines for how the money is spent are broad for both tranches of money.
"Out business plan will include everything from increased expenditures related to the pandemic to technology increases ... they're both pretty broad, so we anticipate the [business] plan to have some broad categories to describe to the state, for use of the funds," Depies said.