Property Value Decline Results In $10.3M Loss
SNOW HILL -- Falling property values mean Worcester County will be losing $10,378,202 in revenue in fiscal year 2013. Unfortunately, county officials expect several more hard years before the area sees a positive financial turnaround.
Finance Officer Harold Higgins gave a presentation during the County Commissioner’s meeting Tuesday on how revenue has changed in Worcester in the past and where it will likely head in the future. Higgins called the revenue drop since 2009 “the largest decline to date.”“The effect of this downturn cannot be minimized,” he said.
From a peak of approximately $169 million in 2009, revenue coming into Worcester has plummeted to about $151 million in 2012 and will likely continue to shrink to about $141 million in 2013 and $135 in 2014, where it is expected to stabilize for 2015. The majority of the hit comes from decreasing real estate values in the area, most notably from those in Ocean City, where a property re-assessment was recently conducted.
Lower property values equal less revenue through property taxes coming into Worcester. However, while the taxes are technically lower, Higgins explained that residents won’t likely see much, if any, savings and could actually end up paying more due to falling Homestead Tax Credits. Those credits were put in place when the real estate market was booming to defend property owners against dramatic assessment increases and keep taxes stable.“You had protection against that rising market value,” said Higgins.
Now that Worcester is on the other side of the hill dealing with falling market values, those credits are quickly being eaten up with the result of owners being forced to foot a higher percentage of their actual property tax.“We’re chopping away at that allowance each and every year,” said Higgins.
Homestead Tax Credits will drop from $7,254,116 in 2011 to an estimated $1 million in 2015.
Besides a decline in revenue, the commission was warned about possible expenses that Annapolis could pass along to the county level, such as teacher pension and retirement costs.
“Legislatures continue to make it clear that this may occur in the future in whole or in part,” said Assistant Finance Officer Phil Thompson, who estimated fully covering pension and retirement would cost Worcester about $8 million annually.Higgins didn’t attempt to sugarcoat the situation the county is facing for the next few years.
“You can’t get blood out of a turnip anymore,” he said.
Though Higgins’ presentation was scarce on good news, it at least failed to surprise the commission, as they’ve been operating under the assumption that things would get worse before they get better.
“It is what it is,” said Commission President Bud Church. “We’re going to have to live with it. It’s going to be a challenging year. It’s going to be a challenging couple of years.”
Commissioner Louise Gulyas said that Worcester should eventually begin a financial recovery, but probably not until the end of the decade.“We’re probably not going to have a good year until 18,” she ventured.
Commissioner Judy Boggs felt the same and pointed out that even once revenue begins to start flowing back, there will still be “lag” in terms of projects delayed and payments owed that the commission will need to bring in line.