The Bel Air TEA Party Patriots

Tony Passaro
203 Rolling Knoll Drive Bel Air, Maryland 21014 (443) 350 - 0520 E-mail: apassaro @ crosslink.net

Marylanders for Fair Property Taxation
Roy Whiteley
516 Walters Mill Road Forest Hill, Maryland 21050-1428 (410) 879-7993 E-mail: mdfairtax@juno.com www.marylandersforfairpropertytaxation.com

As of November, 2009, the writers were privileged to serve on the Harford County Financial Plan Advisory Committee appointed by County Executive David R. Craig. The writers found certain anomalies associated with the information provided to accomplish the assigned policy revision task, which we feel, are not being adequately addressed. We hope to shed light on those items so that they might be looked at in more detail than we have had the opportunity to do. Such scrutiny can only provide confidence that government operations are running smoothly and efficiently or conversely will confirm our superficial observations and conclusions that improvements can be made that will provide millions of dollars in tax relief without sacrificing services. County Treasurer John Scotten ably chaired this 23-person committee. Ten members of his staff competently aided Mr. Scotten. In addition, twelve business, financial, industry, and management leaders served as overseers and consultants throughout the intervening months. Each week, we reviewed, commented upon, and revised the 12-year old fiscal policy employed by Harford County in its daily operations. We found the initial policies to be extremely well written, well administered, and able to stand the test of time. The overall policy statement only required minor revisions and updates to concur with changes in current laws and operating conditions. It can be unequivocally stated that the Treasurer and his staff have and do account adequately for every item within the budget within their purview. However, much to our chagrin and major concern to us as well as others on the committee is the fact that certain items are blindly accepted, tracked, and counted without question as to their need, value, use, or validity. This “bean counting” is being done without regard to fiduciary responsibility, efficiency, good business practices, or an eye toward reducing redundant operations. These oversights cause major drains on the budget as the taxpayers of Harford County are paying about $69 million more than they should for services, equipment, personnel, and operations. These egregious errors in judgment should be addressed as part of the fiduciary responsibility of the Treasurer and the Administration. Just because items exist within the daily functioning of government is not justification for their existence, need or certainly the need for counting them.

The most glaring items noted we feel demand both immediate attention and corrective action are: • Board of Education budget The Harford County Board of Education budget for fiscal year 2009-2010 was 51% of the County general fund appropriations budget. Property owner/taxpayers are directly paying property taxes supplying 50% of county revenues as well as paying income taxes supplying an additional 27% of county revenues plus all other taxes imposed from our daily activities. The County Executive and County Council are limited by state laws as to how much control they have over the funding/spending of this entity. This is an item the Administration, the Council and the Harford Delegation need to fully cooperate on to change current laws and practices to bring them into concert with current economic conditions to establish creditable spending and affordability limits. Management and business practices of The Board Of Education have often been cited as questionable. The Board of Education appears top heavy. Only part of The Board and Administration is elected. Their accountability, management, and business practices appear above reproach and not subjected to regular questioning or outside review. • Board of Education Maintenance of Effort (MOE). The Maintenance of Effort Rate (each county MUST spend no less per pupil in the current budget than it did in the prior budget year) was set several years ago when the State’s economy was booming. Now, in spite of the recession counties are being forced to use an artificially high factor to set their Education Budget spending rate. It stands to reason that since this factor was set when the State had copious revenues it is now too high and must be lowered in this time of scarcity commensurate with the ability of economy to support a fair and sustainable budget. Montgomery County along with several other counties petitioned the General Assembly to have its rate lowered and are asking that the $29 million dollar penalty for not observing the rate be waived. Unbelievably, if a County fails to spend at the MOE level it is subject to million dollar penalties by the State. Seems like when County revenues are not available, the State forces the counties to pay a penalty. Draconian at best! • Redundant Personnel and Services A synopsis report on the attached spreadsheet furnished by the Treasurer’s office identifies several areas of major redundant spending in Harford County. Four entities that comprise our County Local Government, the Board of Education, the Public Libraries, and the Community College all exhibit redundant operations and spending which currently have a total cost of $ 68,782,134. Based on the business experience of the writers, concentrated efforts to effect elimination of redundancy practices within our respective organizations resulted in about 40% savings to the companies. A similar experience for Harford County might easily result in the savings of over $27,500,000 tax dollars.

Notably, Grounds and Facility Maintenance for Parks and Recreation, a major cost item was not included. A total of 486 persons costing about $69 million dollars are employed doing a number of identical jobs and using duplicate employees, tools, equipment, supplies, and services. Add the estimated 40% savings of this redundant unreported effort of Parks and Recreation that might be eliminated and a taxpayer savings could easily increase from $28 to $35 million‼‼ Four identical Human Resources Departments (one for each of the aforementioned entities) employ 49 people. These operate in their own fiefdoms without outside review or control. No coordination of effort between these entities has been noted. A single Human Resources Department serving all branches of Harford County government seems to be a logical solution. One hundred twenty-two Information Technology (IT) personnel operate in two separate and un-coordinated IT Departments. Each area has its own set of different systems and controls. Fortunately, two entities, the Libraries and Community College were wise enough to outsource their IT service saving millions for the taxpayers. Again, a centralized IT system with integrated levels of access by each entity appears to be a cost saving alternative. The same may be true for the County communication systems. Forty-nine Construction Management personnel operate in each of these four entity areas. In addition, twelve Fleet Management personnel operate similar Motor Pool functions for the County. It is strongly suggested that the County consider centralizing and outsourcing the Fleet Management or Motor Pool services for all County equipment and vehicles. This action would most likely save the County millions as the two outsourcing entities have apparently discovered in outsourcing their IT services. The military and most large business have adopted this cost effective “motor pool” mentality and strategy with obvious efficiency and cost savings. It is time for the County to do the same. No centralized procurement system exists. Thirty-two personnel administer this function in their separate areas. The cost effective savings of bulk purchasing and centralized distribution with computerized inventory to track usage and making strategic purchases is obvious and should be employed immediately. By far, the largest noncentralized redundant effort exists in the grounds/maintenance facilities where 486 employees perform the needed work with separately purchased, redundant, and maintained facilities, supplies, and equipment. This does not include the unaccounted for redundancy within the Department of Recreation and Parks. A prime example of viable savings was evident during the 2010 blizzards when school facilities were being plowed without the expectation of schools opening while public transportation routes suffered from lack of adequate equipment and personnel to assure the needs of the public to commute to work, business, or have emergency access when required.

Future Oversight The County Executive and County Council each employ volunteer committees to review and advise their respective entities on various aspects of their operations. An executive spending affordability committee is already in existence . If not already so charged, it should be instructed to look into and oversee such items as are listed herein. Perhaps more effectively, a joint executive/council committee might be formed to perform an oversight of each and every item within the budget and treasury accounts to ascertain its function, need, effectiveness, centralization, redundancy and sound business and fiscal policy. Said committee would be well served if staff with rotating personnel serving staggered terms to insure fresh ideas continually being introduced to the thinking and review process is employed. Harford County Department of Economic Development In addition to the aforementioned items, it is strongly recommended that the Department of Economic Development be “Beefed Up” and directed to more aggressively seek out and recruit companies to locate in Harford County. Such efforts when successful in bringing in these companies would help enhance the Counties tax revenues. The following 3-step program is suggested. 1. Identify potential new businesses: Employ the services of a consulting company and charge them with identifying 75 to 100 desirable companies that need what Harford can provide. Develop a contact program and implement it. 2. Package an attractive, lucrative sales incentive: Develop a series of inducements, tax holidays, favorable zoning, bond issues, set asides, free or low cost land and buildings to entice the companies to relocate some or all of their operations in Harford County. 3. Recruit: Have a high level Harford County Official (Executive, Treasurer) with other prominent Harford County business leaders contact the Chairman of the Board of each of the targeted companies to make sales presentations, in their Board Room, of what Harford County is willing to do to get their company to move some or all of their operations into Harford County. The intention of the aforementioned 3-step program is to raise the Counties tax revenues by bringing in many new green, environmentally sound, fiscally responsible companies to our area. The Harford County Business Incubator: This is a good start, however, it must be publicized, (none apparent yet) and a method of securing Small Business Administration loans through a local bank for business start up loans must be made available. A Business Incubator will provide an excellent environment from which entrepreneurs can operate. This will go a long way towards encouraging the growth of local businesses.