The Queen Anne’s County Budget and Finance Office recently presented its preliminary FY 2012 end of year financial status report to the Commissioners. The report included details about the state giving a one-time increase in the distribution of income taxes to many of the counties. Queen Anne’s share of the income tax came in at $4.9 million over budget, with total revenue over the budget by $5.4 million, said Finance Director Jonathan Seeman. However, he said the concern of many counties is that next year the exact opposite could happen and the increase in this year’s distribution of income tax could be offset by a decrease below budget in the current year (FY 2013). “The economy is not showing a lot of job growth, therefore we do not anticipate continued significant gains in income tax revenue,” said Seeman. Additionally, property tax revenue is expected to continue to decline for at least the next fiscal year.
The county had a fund balance of $5.6 million at the end of FY 2011, well below previous levels. In FY2012 the county is currently projecting a surplus of $7.2 million, made up of the $5.4 million primarily from income tax plus $1.8 million as a result of county savings. These figures are projections at this point, and will not be final until the County’s audit is completed. The Commissioners enforced tight fiscal controls on departmental spending, producing the additional savings that contributed to the surplus. This resulted in a total year end county fund balance of about $12.8 million; however, a minimum of $7.5 million of that amount is necessary to reestablish the county’s rainy day fund. That fund had fallen below required levels as a result of the recession and can now be returned to a healthy level.
A government’s rainy day fund is set aside to protect against economic downturns and unforeseen natural events. A rainy day fund is a necessary component of a county’s financial management strategy. After the re-establishment of the rainy day fund, the remaining $5.3 million also represents a hedge against unforeseen economic circumstances, or some portion could be used for one-time expenses such as capital projects. Fund balances should not be used to pay for ongoing operating expenses of the government.
“This demonstrates this Board’s absolute commitment to sound fiscal management,” said Seeman. “The Commissioners have made it a top priority to take the actions necessary to establish a structural balance in the county budget, and to ensure long term financial sustainability.”
To view the entire budget presentation online go to http://www.qac.org/Docs/Finance/Budget/September2012.pdf