MAYOR AND COUNCIL BUDGET WORKSHOP
FEBRUARY 3, 2020
Mayor Cerino called the workshop meeting to order at 5:00 p.m. In attendance were Councilmembers David Foster, Thomas Herz, Ellsworth Tolliver and Meghan Efland, W. S. Ingersoll (Town Manager), Amanda Miller (Finance), Jennifer Mulligan (Town Clerk) and guests.
Mayor Cerino stated that the purpose of the meeting was to review if the Town was staying in line with the budget for the year. Ms. Miller stated that the Town was where they should be at this time and are ahead overall.
Ms. Miller stated that she tried to project major sources of revenue, such as income tax. She said that the Town has received $270,000.00 to date, having averaged out what was received over the last 5 years and that the Town would be $116,000.00 ahead of the numbers according to what was budgeted, adding that the income tax was a volatile number. She said that she called the State Comptroller’s Office today to try to find out how the figures were computed but did not receive an answer.
Ms. Miller stated that Highway User Funds appear to be behind but the “one time” transportation grant that had been distributed in September went away and she was unsure how those figures were being phased in annually. She said that they have received $233,000.00 but she thought that this was due to timing only and that additional money would trickle in.
Ms. Miller stated that the Town was where it had expected for real estate taxes, but it appears that there could be an extra $100,000.00 if the numbers remained as they were. She said that there were always appeals and new properties that can show up, but she thought what was sitting in the bank would be adequate to sustain the Town until October when the large check is received.
Ms. Miller stated that she emailed Kent County about the last check she received for the Hotel Tax received and initially she was hoping there it was a miscalculation because for some reason the two largest hotels were not included in the quarterly payment. She said that they received close to $99,000.00 already for the year. Ms. Miller stated that she receives a check and a spreadsheet explaining the funding and she does not know how the large hotels could be left out of the check or allowed to pay late. She said that when she hears an answer from the County she will tell the Council what happened.
Mr. Ingersoll stated the distribution of income tax had a formula, but he did not know how it was broken down for County and Town shares. Ms. Miller stated that the income tax numbers change quite a bit and could not be predicted with great accuracy. Mr. Foster stated that he thought that there would be an increase in revenue due to the increase in income tax through the Kent County Commissioners. Ms. Miller stated that it may give a slight increase in revenue to the Town, but it gave a salary decrease to all Town employees. Ms. Miller stated that having a cut in pay for an employee who isn’t getting ahead did not help.
Mr. Ingersoll stated that the Fire Company money as discussed in Mr. Fithian’s article in the Spy was probably a pass-through grant from the State and passed on to each of the firehouses in Kent County in equal amounts. It was not necessarily a donation from the County taxpayers. Mr. Ingersoll stated that the Town donated a substantial amount of money to both the Fire House and the Rescue Squad each year. He said that the Rescue Squad now also collects health insurance to get paid for calls.
Ms. Miller stated that she was waiting for the Red Speed camera funds to drop off, but they don’t seem to be falling too low.
Ms. Miller stated that some expenses in the budget were slightly over but nothing that jumped out at her. She said that the numbers are as expected. Rev. Tolliver asked if they were in a position where they would have to raise taxes. Ms. Miller stated that she did not know what else they were going to do other than raise taxes since the decision was made to keep the Police Department. Ms. Miller stated she thought that taxes would have to be increased unless services were dropped.
Ms. Miller stated that there were some areas that were down in the Police Department, but she did not see a huge savings. Mr. Ingersoll stated that a significant savings were not being shown by not paying Chief Baker. She said that the salaries look higher comparing this year to last but at this point last year there had only been 17 pay periods. The Town is currently at their 18th pay.
Mr. Ingersoll asked how many police officers participate in County operated programs. Ms. Miller stated that she thought there was one detective, and an officer in the Kent County Drug Task Force. Ms. Miller stated that the officer in the Drug Task Force has a dog and a car that has been made undercover.
Mr. Ingersoll stated that another question to be asked was whether there was a working Chief which is why the number of patrol officers was relevant. Ms. Miller stated that if an officer was called to work from the task force, he gets paid overtime. Mr. Ingersoll stated that they should know how many officers were strictly office personnel versus how many were working elsewhere (task force and detective) and how many were eligible to police the streets.
Ms. Miller stated that she didn’t see a salary being saved due to Ms. Legg’s retirement as her salary is committed to her until the end of June and the position will be filled in the next fiscal year.
Mayor Cerino asked why there wasn’t a savings because there were 14 officers budgeted for and there are 12 officers currently. Ms. Miller stated that there were many factors in the way that the officers were paid. She said that they often get paid out for vacation time because the officers don’t take the actual time which could be a scheduling issue.
Ms. Miller stated that 42% of the budget should be remaining at this point and there was about 40%. Ms. Miller stated that Chief Baker was paid through October and that Acting Chief Dolgos’ salary is high as an Acting Chief because of his many years of service.
Mr. Ingersoll stated that the LEOPS pension has a program where 32% of each salary is committed to pensions. An officer is also permitted to enter the Drop Program offered by the pension for 1, 3 or 5 years, where the monthly pension he would receive goes into a savings account that is paid out to the officer in a lump sum upon retirement. Ms. Miller stated that the rates for next year’s LEOPS will be 34%.
Ms. Miller stated that even though 14 officers were budgeted they never remained at that figure due to turnover, making 14 a false number. Rev. Tolliver asked what happened to the other 2% leaving them at only 40% rather than 42%. Ms. Miller stated that it was hard to tell where that money went, but said it was likely paid out for overtime. (Ms. Miller did some further investigation into the salaries the next day and found that at this point in FY19 the Town had spent $506,290.28 in salaries for CPD while the Town is at $477,509.62 in current salaries for FY20, a savings of $28,780.66).
Mr. Herz asked what number would heal the Town by cuts or raising taxes. Ms. Miller stated that she said that last year the number should be raised to $.50 per $100. Mayor Cerino stated that $55,000.00 was generated by each cent the taxes are raised. Mr. Ingersoll stated that eventually the Enterprise Zones are going to start generating income, but that was a few years off.
Mr. Ingersoll stated that the tax differential and the great recession hurt the Town badly and said that the Town has aggressively pursued grants and had deferred maintenance. Mr. Ingersoll stated that this year the Council didn’t raise salaries and if this continued, key personnel might leave.
Mr. Ingersoll stated that the Town stayed at a $.37 tax rate for too long and offered many services for that rate. He said that the Town was a bit more comfortable at $.42 but he thought something had to be increased this year, and by more than one cent. Mr. Ingersoll stated that the County collects $2.8 million dollars from Chestertown taxpayers and provide Chestertown nothing aside from schools. He said that if the County agrees to give the Town taxpayers a 5-cent rebate he would suggest that the Town take it. Mr. Ingersoll stated that he thought Chestertown is a town that should be taxing at $.50 to $.70 cents per $100 in order to retain the services that they offer (without a tax differential). Mr. Ingersoll stated that the Council tried to cut recycling last year and a lynch mob showed up to oppose it. He said that the Spy came out with a story about the police department disappearing to the County and the room was full again.
Ms. Efland asked about additional speed cameras in other parts of Town to generate revenues. Ms. Miller stated that the cameras can only be in school zones. Ms. Efland stated that there were many more warnings handed out than there were tickets and suggested that is a way to generate revenue. Mr. Herz stated that he didn’t want to raise fees and fines because that gives the Town a bad name. Mr. Ingersoll stated that all moving violation revenues generated by Chestertown Police Officers goes to the State of Maryland. The only revenue that the Town keeps comes from school speed zones and parking tickets.
Mr. Ingersoll stated that he asked the County repeatedly to make Airbnb’s subject to the Hotel Tax but the County (who collects the tax) is not moving on it. He said that he could not believe that the County did not have legislation where an Airbnb had to be registered. Mr. Ingersoll stated that would generate revenue. Mr. Ingersoll added that there had to be a way to make the County Finance Office work better with the Town, especially when they are holding Town money.
Mr. Ingersoll stated that once the Enterprise Zone taxes begin to come in at the regular rate it will help a great deal.
Mr. Foster stated that without any surprises, the Council will have to speak about a tax increase between 3 and 5 cents. Mr. Foster stated that in Queen Anne’s County residents showed up at every County Commissioner meeting rallying for the tax differential and that the citizens had to speak up. Mr. Foster stated that he has been speaking to businesspeople in Town about the tax differential and he was going to speak to the Chamber of Commerce. He said that people had to be understanding of what is happening with their tax dollars.
Mr. Ingersoll stated that the Town only had two (2) tax increases in 30 years, one was 5-cents and the second was a cent. Mr. Foster stated that the Town could not continue to raise taxes at the rate of 3-cents per year. Mr. Ingersoll stated that there were only 2 increases in 30 years, nobody said anything to him about the two increases. Mr. Ingersoll stated that a penny at a time wasn’t going to improve the budget. Ms. Miller stated that the budget is cut down as far as possible and the Marina is not at a break-even point yet. Ms. Miller stated that she thought it was great to advocate for a tax differential, but the Town should learn to fly on their own and not worry about what the County is doing because it doesn’t sound like they have much give or want to give.
Mr. Herz moved to adjourn the budget workshop at 7:18 p.m., was seconded by Rev. Tolliver and carried unanimously.
Submitted by: Approved by:
Jennifer Mulligan Chris Cerino
Town Clerk Mayor