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Wednesday, January 7, 2015

Government budgeting

     So as new administrations take over in Howard County and Maryland we find that budget deficits are larger than projected previously.  Haven't we heard this before?  Seems like I remember Gov. O'Malley's first year as Governor was also dealing with a large budget deficit.  I also remember the tough first budget years that County Execs Chuck Ecker and Jim Robey faced.
     Howard County's FY2015 (July 2014-June 2015) deficit is about 1.2% of its budget and the Maryland deficit is a little over 3% of its budget.  So how do we seem to always get into budget deficits when administrations change?  Budgeting always has one big unknown.  You can know what your expenditures are going to be (with the possible exception of snow removal costs) but it is far harder to predict revenues 18 months down the road.  Somewhat like trying to predict what the stock market will do 18 months from now.  For Maryland and Howard County the government sequester undoubtedly had an impact on local and state revenues.  Both are both heavily dependent on government spending to fund their economies.
     I think there maybe a second possible reason why new administrations face budget deficits.  Outgoing administrations have a harder time saying "no" to budget requests in their last year because they know that the next administration will have to deal with any shortfalls in revenue.  You don't want to alienate any possible campaign contributors by not fully funding programs they support in an election year.
     I am not as familiar with the Maryland budget preparation but I was involved for many years with the Howard County budget preparation when I was responsible for preparing the budget for a county agency.  The process began with a meeting of county employees responsible for budget preparation with the county budget director.  For most of my years that person was Ray Wacks.  You may never heard of Ray Wacks but anybody in county government or an agency requesting money from the county knew who Ray was. Ray had the unenviable job of being the one to say "no" to your funding request.  Some of us used to go to that meeting knowing that the first thing Ray was going to say was that it was going to be a tight budget year with few increases.  The message never changed from "good" economy years to "bad" economy years.  We all knew that this was Ray's way of discouraging us from easily requesting  new money.  He set the tone that we would have to have strong case for new program requests.  My agency was fortunate to be serving a growing demographic group so we able to get many of our funding requests funded over the years.
      In Ray's defense he was one of the smartest people you would ever what to know and the county benefited from his knowledge of projecting Howard County revenues.  Ray had a great historical perspective on county budgets and the pitfalls of wrong projections.  Ray had a lot to do with Howard County's Triple A bond rating. Just for a point of explanation our bond rating determines how much interest the county has to pay on the bonds it issues. to borrow money.  It is a big savings to the county that we can pay such a low rate of interest on the bonds we issue to fund our capital budget. County Execs would come and go but Ray provided the continuity to the county fiscal affairs.
    Ray no longer serves as County Budget Administrator.  Gail Benson is now Acting Administrator.  Gail has long service in the Budget Office and would be a good replacement for Ray.


1 comment: said...

I remember Ray with fondness. I sold him business forms. He was always firm and fair.