I have some budget-related questions for you that involve a potential tax rate increase, an effort to hire more police officers, our use of COVID relief money, and a summary of budget items impacting Ward 7.
First of all, regarding the schedule, this Monday we are holding a special Council meeting starting at 10AM, rather than our usual 7pm. This is so we can ensure we have adequate time (and alertness!) to go through each of the proposed budget amendments. Once we vote on all of the amendments, the budget will then likely be put up for another public hearing on Friday the 10th (another unusual meeting time with our meeting starting at 5pm, this is because of a conflict we have on the following Monday), before we hold our final vote at either that meeting or on the 27th. So, you will have ample opportunity to comment on the amended budget prior to passage.
Ward 7 budget enhancements
I’ll first start with the amendments that would impact Ward 7. I am proposing around a dozen amendments, and the key ones are the following:
Creating a special project to install a crosswalk on Edgewood Rd near Yachtsman Way and Tallwood Rd.
Enhancing the sidewalk through the Annapolis Maritime Museum’s Moyer Park campus. The existing path is an oyster shell path without any lights. I’ve heard a number of requests to make the path easier to walk on and to install lights. So what I’ve requested is to create a roughly half a million dollar capital improvement project (funded through bonds) to install a smooth surface (ideally permeable) sidewalk in the same location, but then extending it through the parking lot, and to install solar powered lights along the route.
Install a new sidewalk on Bay Ridge Rd adjacent to the Shell gas station and running down the street past the nearby church towards Eastport. Currently there is no sidewalk on that side of the road.
Secure funding for the Truxtun Park Penguin swim team
Eliminating PFAS chemicals from the fire department, protecting the health of our fire-fighters and residents.
Provide funding for a consultant to draft an electric mobility plan for the City’s operations, including transit, as well as other infrastructure needed for residents and visitors.
Tax increase? – Structural deficit – Police recruitment enhancements
The other amendment I want to get your thoughts on involves a proposal to increase the tax rate in order to fund police recruitment enhancements. As you may be aware, we have been having difficulty recruiting enough police officers. I know that some don’t want more armed officers, and I myself am wary of this, but the fact is that our current officers are working double shifts to cover for the vacant positions, which is impactful on their ability to do their jobs and our ability to in turn retain officers. What was negotiated with the Police Union, and recommended by the Police Department, is a 20% increase in police salaries to boost recruitment. I support this enhancement as we need to boost recruitment. However, this 20% increase has a significant cost attached to it: $2 million. Keep in mind we have a current and projected budget structural deficit where our expenditures (primarily staff costs) exceed our revenue. The chart below shows how the red expenditure are greater than the green revenue. Currently, this 20% increase is NOT funded through a tax rate increase.
The plan is to balance our budget and pay for the police enhancement without a tax increase, and instead utilize COVID relief money, and the budget proposes to do this until FY25, at which time that money runs out and we will have to make one of two choices: 1. Cut staff/services to reduce expenditures, or 2. figure out how to generate more revenue by either raising taxes or convincing the State to give us a portion of the sales tax collected in Annapolis.
Regarding #1, I’ve been on the Council long enough to know that we’ve already cut most of the easy things that are available, such as contract services, supplies, and training. The only things left to cut are staff, which also means a reduction in services. We could also look at merging our transit system with the County, and/or merging our police and fire departments with the County. These would take time to analyze and determine feasibility.
Regarding #2, raising taxes, we could increase taxes by 3 cents per $100 of assessed value, which would bring in roughly $2,000,000 in revenue and cost the average taxpayer an additional $110 on their annual tax bill. The downsides of this are obvious, but the upsides are that it would cover the police enhancement and help to address our targeted deficit. If we enhance police recruitment without a way to pay for it, it will catch up with us in two years. We saw this happen years ago when we utilized a federal grant to hire half a dozen new firefighters, and then were left holding the ball when the grant ran out in a few years; hence the 6cent tax increase we passed back in I think 2018.
Regarding the sales tax, I’ve already requested a Resolution asking the State to consider giving Annapolis a portion of the sales tax collected in the City.
So my questions are:
Should we just use the COVID money to balance our budget and pay for this police recruitment enhancement, WITHOUT any tax increase? The good part would be that this gives us two years to try to figure out how to ultimately fund this and fix the deficit with the options I mentioned earlier: cuts or tax increase. The bad part is it kicks the can down the road as far as solving the underlying problems.
Or should we institute a modest tax increase now? The benefit to this is we would then raise the money to fund the police enhancement in a way that doesn't compound and perpetuate the structural deficit. The downside is, well, it's a tax increase and it would cost on average $100 per tax bill.
I’m asking for your feedback because I have not yet decided what to do. I do have an amendment handy that would increase the tax rate to pay for this police increase. Not because I’m sold on the idea, but because we as a Council, and community, need to have a discussion about this. The Financial Advisory Commission also stated that we need to address this deficit. We need a plan to do so and a plan to pay for the police enhancements long-term. These are the things that we need to address and start discussing, which is why I’m contemplating this amendment.
Stay healthy and stay safe,