Kent County, Maryland Proposed Budget FY2017 Public Hearing June 7, 2016

Highlights  Fiber Optic Network Creating an open access fiber infrastructure Creating an open access fiber infrastructure Connect 54 anchor institutions including public schools, county and town governments, libraries, water & wastewater facilities Connect 54 anchor institutions including public schools, county and town governments, libraries, water & wastewater facilities Project completion estimated by June 2017 Project completion estimated by June 2017

Highlights  Education: Evaluate Sustainability No significant growth expected in FY18 County revenues No significant growth expected in FY18 County revenues Anticipate continuing decline in enrollment Anticipate continuing decline in enrollment Capital needs $1.6M-FY18, $7.3M-FY20/21 Capital needs $1.6M-FY18, $7.3M-FY20/21

Highlights  Education: Ballot Question Are the citizens in favor of increasing property taxes to maintain the current public school configuration? Are the citizens in favor of increasing property taxes to maintain the current public school configuration? Highest property tax rate on the shore (FY16) Highest property tax rate on the shore (FY16) 7th highest per pupil cost in Maryland (FY14) 7th highest per pupil cost in Maryland (FY14)

Highlights  Maintains a strong fiscal position Adequate fund balance of 7.3% Adequate fund balance of 7.3% No new debt issued since 2011 No new debt issued since 2011  No increase in taxes or fees Property tax, income tax, water & sewer rates all remain at FY16 levels Property tax, income tax, water & sewer rates all remain at FY16 levels

Highlights  Enhances the Homeowners Credit Household income for eligibility increased from $25,000 to $30,000 in 2017 Household income for eligibility increased from $25,000 to $30,000 in 2017  Reinstates lifeguards to Betterton Beach  Increases family support through Kent Family Center

Revenues

Property Tax  The fiscal year 2017 property tax rate will remain at $1.022 per $100 of assessed value  Property values are projected to rise slightly by.6% in fiscal year 2017

Property Assessments

Property Tax Revenue

Income Tax  The fiscal year 2017 income tax rate will remain at 2.85% which is 11% below the maximum allowable rate of 3.2%  Income tax revenue is projected to have modest growth of $186,000 or 1.5%

Income Tax Revenue

Revenues

Revenue Changes FY16 to FY17 $46,075,000FY17 Revenue $46,075,000FY17 Revenue 45,677,000 FY16 Revenue 45,677,000 FY16 Revenue $398,000Increase in Revenue $398,000Increase in Revenue $ 186,000 Income Tax $ 186,000 Income Tax 168,000Property Tax 168,000Property Tax 147,000Recordation & Property Transfer 147,000Recordation & Property Transfer (103,000)Other (103,000)Other $398,000Increase in Revenue $398,000Increase in Revenue

Revenue & Expenditures FY09 – FY17

Debt County Water & WastewaterTotal FY12 Beginning Debt 21,647,00019,605,00041,252,000 FY12 Debt Retired Early 02,772,0002,772,000 FY13 Debt Retired Early 1,448,0002,946,0004,394,000 FY15 Debt Retired Early 1,782,00001,782,000 Total Debt Retired Early 3,230,0005,718,0008,948,000 % Debt Retired Early 15%29%22%

Debt Service County Water & WastewaterTotal FY12 Debt Service 2,960,0001,126,0004,086,000 FY13 Debt Service Reduction 0204,000204,000 FY14 Debt Service Reduction 360,000191,000551,000 FY16 Debt Service Reduction 564,000564,000 Total Debt Service Reduction 924,000395,0001,319,000 % Debt Service Reduction 31%35%32%

Expenditures $46,075,000FY17 Revenue $46,075,000FY17 Revenue 51,028,000 FY17 Expenditures 51,028,000 FY17 Expenditures ($4,953,000)Expenditures Exceed Revenues ($4,953,000)Expenditures Exceed RevenuesExpenditures $45,754,000 Recurring 5,274,000Non-recurring 5,274,000Non-recurring Fund Balance Used Fund Balance Used $ 0 Recurring Expenditures 4,953,000Non-recurring Expenditures 4,953,000Non-recurring Expenditures

Fund Balance FY17 Fund Balance Position FY17 Fund Balance Position $8,654,000 Beginning fund balance of 18.3% (4,953,000) Excess of Expenditures over Revenues (4,953,000) Excess of Expenditures over Revenues $3,701,000 Ending fund balance of 7.3% $3,827,000 Target fund balance of 7.5%

Expenditures 2016 Budget Budget2017 Increase/(Decrease) Public Schools 18,078,00017,758,000(320,000) Salaries & Benefits 14,794,00015,025,000231,000 Operating6,714,0006,837,000123,000 Allocations3,706,0003,465,000(241,000) Transfers - Other Funds 1,356,0001,175,000(181,000) Debt Service 1,094,0001,094,0000 Contingency400,000400,0000 Total Recurring 46,142,00045,754,000(388,000) Non-Recurring (Capital) 3,087,0005,274,0002,187,000 Total Expenditures 49,229,00051,028,0001,799,000

Non-Recurring Expenditures Capital Projects Capital Projects $4,500,000Fiber Optic Network $4,500,000Fiber Optic Network 154,000Nicholson Landfill Remediation 154,000Nicholson Landfill Remediation 133,000Library Renovation 133,000Library Renovation 48,000Project Open Space Projects 48,000Project Open Space Projects$4,835,000

Non-Recurring Expenditures General Fund Capital $225,000Equipment – Primarily Public Works $225,000Equipment – Primarily Public Works 84,000Technology Equipment 84,000Technology Equipment 93,000Facility Repairs 93,000Facility Repairs 37,000 Public Safety Vehicle 37,000 Public Safety Vehicle $ 439,000 $ 439,000

Recurring Expenditures Salary & Benefits : $231,000 Salary & Benefits : $231,000 3% salary increase 3% salary increase Betterton Beach lifeguards Betterton Beach lifeguards

Recurring Expenditures Operating : $123,000 Operating : $123,000 Economic development project Economic development project Legal services – preemption Legal services – preemption

Recurring Expenditures Transfer to Other Funds: ($181,000) Transfer to Other Funds: ($181,000) Water and Wastewater Services Fund Water and Wastewater Services Fund reduction in capital needs reduction in capital needs

Recurring Expenditures Recurring Expenditures Allocations : ($241,000) Allocations : ($241,000) ($200,000) Revolving Loan fund established FY16 ( 50,000) Chesapeake College - reduced enrollment 14,000 Library 14,000 Library 10,000 Court Appointed Special Advocacy 10,000 Court Appointed Special Advocacy 10,000 Worton wetland project 10,000 Worton wetland project

Recurring Expenditures Recurring Expenditures Public Schools: ($320,000) Public Schools: ($320,000) ($ 350,000) FY16 nonrecurring expenditures ($ 350,000) FY16 nonrecurring expenditures ( 74,000) Capital items ( 74,000) Capital items 104,000 Recurring operational expenditures 104,000 Recurring operational expenditures ($ 320,000) ($ 320,000)

Expenditures

The FY17 Budget Provides for the creation of the Kent County Fiber Optic Network Provides for the creation of the Kent County Fiber Optic Network Includes no increases in taxes or fees Includes no increases in taxes or fees Includes no new debt Includes no new debt Enhances the homeowners credit Enhances the homeowners credit Focuses on economic development Focuses on economic development Maintains a strong fiscal position Maintains a strong fiscal position