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.

Follow Steve Bohnel on Twitter: @Steve_Bohnel

Steve Bohnel is the county government reporter for the Frederick News-Post. He can be reached at sbohnel@newspost.com. He graduated from Temple University, with a journalism degree in May 2017, and is a die-hard Everton F.C. fan.

(13) comments

LibertyLost

"It has recently become clear that the State wants to establish a reimbursement model for the 19 counties with populations under 500,000 people. Not only does this model treat counties differently, it costs critical time in putting these dollars to work in our community to help people. The reimbursement model will require smaller counties to forward-fund expenses, something many counties will find difficult - if not impossible - to do. Smaller counties will be unable to stand up programs to accelerate testing, to purchase needed PPE, and to support local businesses without having the flexibility to plan a program and to know there will be reimbursement. Rural and suburban counties need the same flexibility as the larger urban counties to meet the unprecedented needs of our communities.

All county leaders are committed to accountability and to following the federal guidelines. We are always accountable for the use of taxpayer money." From May 1, 2020 letter to Hogan. https://www.mdcounties.org/DocumentCenter/View/4216/MACo-Ltr-to-Gov-Hogan---CARES-Funding-to-All-Counties

fnpzwack

County officials: Despite economic downturn, income of county residents expected to increase significantly

^This headline would have been equally accurate, and equally conveyed the same situation. FNP is trying to stir the pot. And based on some of these uniformed comments, I would say it worked.

TomWheatley

Perhaps, but we know the number of residents increased thus bringing in more revenue. I agree with your comment per pot stirring.

elymus43

The county expects $45M from the government. Then why is there any talk about a tax increase??????? If the county does not live within the budget, then the voters need to put people in office that will change that....................

FrederickFan

The county does live within it's budget. There is no tax increase. The newspaper has gone downhill. The people who write the headlines apparently can't read.

TomWheatley

The title in today's print edition is "Four percent income tax hike expected".

Even with the reduced options for the length of titles and articles in the print editions, I would respectfully submit that the title is very misleading. The State and local income tax rates are not going up by 4 percent. With a gain in population, one would expect the amount of money coming in from the income tax to increase. It may even go down with the virus complications, but overall, more people means more incoming tax which is then used to cover the costs of the increased population. You remember that myth of how 'growth pays for itself' ?

micky

It's great that the guvment keeps rolling while the rest of us scramble for the scraps !!

benedictus

Is the article simply trying to say that, while keeping the same income tax rate, the county expects that an increase in residents’s income will result in more tax revenue? If so, the title sucks.

FrederickFan

The headlines often seem like they are written without reading the article!

DickD

It is not your income, it is your property value that is going up. Still, the title does suck!

Frayou

So will the County give tax surplus back or reduce the rate?

MD1756

The county doesn't really have a tax surplus when you consider all of the incompletely funded infrastructure needs. If they have a "surplus" they should fund more projects on the list or better fund their impact on state pension plans.

Greg F

Tar, feathers and rides out of town on rails really needs to see a revival. Whomever is suggesting this gets the first dose.

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