CHESTERTOWN — For two years Mike Waal — a concerned resident and businessman with a long career in market projections and crafting business plans — has been vocal in sharing his concerns over the effect of The Blueprint for Maryland’s Future, aka Kirwan, on Kent County.
At the May 7 meeting of the Kent County Commissioners, Waal presented his latest findings during a special presentation.
That research revealed an astounding 43.7 million dollar price tag. “That’s the financial impact of Kirwan on the county,” Waal told the commissioners.
Since its implementation the commissioners have recognized it as being a tremendous financial burden on the county.
On May 7, Waal reiterated his concerns, citing a study and report conducted by the Department of Legislative Services in the Office of Policy Analysis published Jan. 2022, “Local Fiscal Impact of Implementing the Blueprint for Maryland’s Future.”
As Waal put it, the Maryland General Assembly knew this would affect the state and its jurisdiuctions dramatically, and so employed their research team via the Kirwan Legislation.
The state would suffer; Kent County specifically.
Waal pointed out that within the document, the department identified Kent County would especially be financially impacted over Kirwan’s implementation period, 2023-2034.
No surprise to the commissioners who have been talking about that since its implementation throughout their budget sessions.
Kent was among just a handful of counties frequently referenced in the document projected to experience the largest percentage of increase during implementation, Waal said. Also Kent’s education spending growth is expected to outpace revenues and the gaps are especially large, the research noted.
According to the report, the number of counties affected by the local share requirement increases from five in fiscal 2023 to 12 in fiscal 2028 and 16 in fiscal 2034, partly due to the phasing up of the Blueprint formulas over the 12-year implementation period.
Another potential burden stems from the inequity of contribution of counties across the state. “Counties that have consistently provided more funding than required by MOE (maintenance of effort or required contribution) are more likely to meet the combined local share requirement without the need for additional local appropriations,” reads the report.
The combined local share requirement exceeding per pupil MOE for some counties is the historical local appropriation trend. Total local education funding effort is determined by dividing total local appropriations for public schools by local wealth for each county. Under the Blueprint, “some counties realize considerable shifts in per pupil effort over the fiscal 2023 to 2034 period. Baltimore City and Caroline, Cecil, Garrett, Kent, and Talbot counties are the local jurisdictions most impacted by the Blueprint in terms of increased per pupil local appropriations relative to local wealth,” details the report.
In Maryland, public schools are funded by a combination of federal, state, and county sources — in Kent that amounts to between 55-60% of the funding, Waal said.
Funding formulas account for relative local wealth (among the 24 counties including Baltimore City) on a per pupil basis, such that the State provides more funding to local school systems in counties with low per pupil wealth. An issue for Kent, Waal said, in that the per-pupil-wealth is not truly indicative of the county’s wealth in every metric of the wealth formula. Kent County is consistently ranked at the bottom of 16 wealth metrics. Another example of Kent County’s wealth is that it ranks last in GDP in the state.
Waal presented to the commissioners charts from pages 10 and 11 of the Local Fiscal Impact of Implementing the Blueprint for Maryland’s Future report; Pre-Blueprint Projections (if Blueprint never existed) and Blueprint Projections (it does exist). Waal looked ahead at the 10-year projection. For fiscal year 2034 Pre-Blueprint Projection school funding would be $24,200,000. With the addition of the Blueprint, that number increases to $31,200,000. A difference of $7 million for just one year (of implementing the plan), Waal said.
Waal said the DLS specifically provided two charts; one without Kirwan, as if Kirwan never existed, no Kirwan Commission, no Kirwan Report, no Kirwan Legislation; and one chart with Kirwan. This cannot be over stressed, he said.
Using those numbers he used a simple spreadsheet to find the cumulative totals and came up with a projected funding total of $301,600,000 with the Blueprint over twelve years, and without Blueprint the projected funding total is only $257,900,000.
Then to find the difference, he subtracted those two numbers, arriving at the $43.7 million number he first introduced to the commission.
He acknowledged this number was different from the $11,700,000 Chief Finance Officer Pat Merritt provided the commissioners at an earlier date. “It is a totally different calculation, and Pat is correct in providing it to the commissioners,” Waal added.
She had subtracted the cumulative total of all the years of implementation with the Blueprint, $31,200,000 from the first year, $19,500,000, which is where she got the $11 million number. That is at the elevated Blueprint funding projections, Waal stressed.
However, the commissioners need to be aware that each year of implementing the Blueprint comes with an increased price tag. One that is simply unsustainable and unaffordable.
“The whole burden of sustainability of Kirwan (the Blueprint) falls on the taxpayers,” Waal said.
The report acknowledged, “A number of jurisdictions will face fiscal stress at some point in the next 12 years to meet the Blueprint funding requirements. The ability of local governments to manage the additional spending demands will vary based on several factors.”
“For many counties, the projected growth in local revenues over the next 12 years outpaces the required local education funding increases. Education spending growth is expected to outpace revenues in five jurisdictions (Caroline, Kent, Garrett, and Talbot counties and Baltimore City). The gaps are especially large for Baltimore City and Talbot County (1.6 percentage points) and Kent County (1.1 percentage points). This analysis includes income and property tax revenues, which account for 90% of local tax revenues (and much lower than 90% in some jurisdictions); the growth rates for other revenues may vary significantly from the growth rates for income and property tax revenues,” a point Waal was keen to make.
Tax rates and capacity vary considerably statewide and among the five most impacted jurisdictions
According to the report, “Of the five jurisdictions with the largest projected impact on education spending under the Blueprint — Baltimore City and Caroline, Garrett, Kent, and Talbot counties — Baltimore City and Caroline and Kent counties are at the 3.2% maximum cap for the local income tax. This limits their ability (i.e., capacity) to raise additional revenues from the local income tax by increasing the rate (revenues may still increase under the existing rate depending on the income of local residents).”
“Kent County cannot support a real estate tax upwards of $2,” Waal said.
Talbot County has among the lowest income and property tax rates in the State. Talbot is one of five charter counties in the State that have amended their charters to limit property tax rates or revenues. Under State law, counties may exceed the charter limitations on local property taxes for the purpose of funding the approved budget of the local boards of education. Talbot is one of several counties that have utilized this authority since fiscal 2013.
“Caroline County’s tax effort is slightly above the State average, and its education effort is the lowest in the State in fiscal 2023. Talbot County has the next lowest education effort among the 24 jurisdictions and the lowest tax effort in the State. Caroline and Talbot counties’ education effort increases significantly by fiscal 2034 but remains below average. Tax effort in Garrett and Kent counties is just below the statewide average; for both counties, education effort moves from below average to above average over the 12 years,” the report states.
A number of jurisdictions will face significant fiscal stress at some point in the next 12 years to meet the Blueprint funding requirements
The Department of Legislative Services identified five jurisdictions that will have the greatest impact over the 12-year period — Baltimore City and Caroline, Garrett, Kent and Talbot counties. “For four jurisdictions, there is a major impact (at least 5% more than the pre-Blueprint amount) beginning immediately in fiscal 2023. The number of jurisdictions with a major impact grows as the Blueprint implementation phases in, with six jurisdictions experiencing a major impact in fiscal 2028 and an estimated 10 jurisdictions in fiscal 2034.”
For the majority of the state, however, most counties are not projected to experience a major impact, according to the report.
However, Kent remains affected. And there is no solution available to the commissioners without increased taxation, Waal says.
Outside of efforts of the Eastern Shore Delegation and District 36 legislators to repeal or stay Kirwan — efforts that stalled in committee again this legislative session — Kent County can only do what Kent County can do, he said, echoing the same sentiment made by Sen. Steve Hershey to Chamber of Commerce members in April.
Waal expressed that he’d hope there would have been more members of the school board in attendance to hear the numbers he presented. And suggested the commissioners can use that research in the broader scope.
“A good question to ask Governor Wes Moore if he ever returns here is about the $43 million dollar number that equates to an additional $1.32 worth of tax rate increase on top of the average tax rate of $1.22. That’s the difference in our little utopia of Kent County. That’s a big impact,” Waal said. “Those are simply the numbers, and I’m not here to argue about or debate it.”
The commissioners didn’t either.
Commission President Ron Fithian said they would look over the charts presented. “Your efforts are tireless and we sure appreciate it,” Commission member Albert Nickerson told Waal.
Waal encouraged the community to study the numbers as he did. “It’ll tell you how hammered Kent County is going to be over this,” Waal warned.
Most Popular
Comments / 0