Monday, May 17, 2010

Local Governments Write Speed Camera Revenues Into Budgets

Cities and Counties in Maryland are currently writing up their FY2011 budgets. Included in many of these are their estimates for speed camera revenues, with widely varying expectations... as well as varying degrees of creativity in addressing the constraints on that revenue.

Under current state law, local governments in Maryland are permitted to collect no more than 10% of their total budgets from speed camera fines "after expenses" -- in other words, if a city has a total budget of $10million they can collect $1million after expenses after all expenses for the program are paid -- with the remainder going to the state treasury. This money is required to be spent only on "public safety". However neither the term "public safety" nor the term "expense" is clearly spelled out, leaving a lot of wiggle room for any town or city which wish to get around those rules and maximize their revenue from this source.

New Carrollton wrote $750,000 of speed camera revenues into their budget, just under 10% of their total budget as coming from speed camera revenues, with the city's total budget increasing by 7.55%. Most of the speed camera money appears to be used to fund police department items, $237,917 for "employee services", 47,320 for "health and life insurance", 24,748 for "retirement pension". $60,550 of speed camera money is budgeted for general police budget items zeroed out of the general fund budget including telephones, uniforms, office supplies & printing, 'Dues & Subscriptions", "Travel & Meetings" "Public Official Liability & Bonding", and "small weapons".

Cheverly appears to be FAR more ambitious. The town wrote $2.8million worth of "fines and forfeitures" into their budget overview, compared to just $258,200 in last year's budget. The difference between the two ($2.55million) comprises about 36% of the town's total FY11 budget. No details were included in this budget overview, but the category "public safety" increased by $334,096, "Public Works" by $483,660, and "General Government" by $1,408,467. The town's budgeted total revenues increased by 58% from FY10 to FY11. Cheverly recently lowered the default speed limit in the town from 25mph to 20mph shortly after they approved the use of speed cameras. One council member's comments about speed camera revenues were recorded in the May 14, 2009 council meeting minutes as "CM Schachter will have questions about how creatively and expansive the Town could be in interpreting the law regarding the expenditure of these funds. Noted that it doesn't bother him one bit to make money to be used for additional public good. Can we lower speed limits around the schools? ". The town's first speed camera location was recently reported to be on the 2800 block of Cheverly Avenue.

Montgomery County has recently claimed that its cameras are now "barely breaking even", despite the fact that it has written $17.2million into its FY11 budget from camera revenues (including 1.1million in "late payment fees" and $270K in "flagging fees" from additional fines imposed on overdue tickets). One thing which has impacted the cameras profitability is that several towns where county-run cameras are placed have started demanding a cut. Before SB277 was passed in 2009, municipalities which did not maintain their own police force were not permitted. Now that this restriction is removed, the county is splitting the camera revenues with Chevy Chase View (distinct from Chevy Chase Village), Kensington, and Poolsville and will pay them $297,110 in accordance with a Memorandum of Understanding reached with those towns to prevent them from abandoning the county speed camera program and starting independent programs that would pay directly into those towns coffers. A similar arrangement is being worked on with the town of Barnesville.

It was reported in the Gazette that Chevy Chase Village predicted a LOSS of $47,000 in FY11, despite the fact that at one time a full 1/3rd of their budget revenues was coming from speed camera fines. This declining revenue has been claimed by some as proof that the program is not really a cash cow. However, it appears that some items which are actually 'items paid for by speed camera funds, a fact which budget documents barely conceal.

Page 3 of the Village's"Detailed Preliminary Budget Report" showed a line item of 134K subtracted from the General Fund Operating Expenses labeled "Shift of costs to SafeSpeed budget". The proposed FY11 budget document explained their 'program costs' as follows : "The FY11 SafeSpeed operating expense budget anticipates camera contract costs of $1,020 thousand and $837 thousand other personnel and operating expense. Personnel compensation is budgeted at $543 thousand (see Table 3 above for detail). Of the $293 thousand included for non-contract operations, $150 thousand has been identified for legal support to both the camera program and public safety initiatives and $50 thousand has been included as potential outlays for streets and other infrastructure expense appropriately charged to this source of funds." Items listed as program costs included $50,000 for "streets, walks, Drains, & Lights", $7,500 under the item "Village Hall" and $9,569 under "public works". Budget documents stated that out of 29 full time positions working for the village, "Three police positions will continue to be financed entirely from SafeSpeed funds. SafeSpeed funds also will cover a portion of the compensation of several other personnel, reflecting time dedicated to this activity." Meaning that well over 10% of the village staff is considered an expense of the program, with $543K out of $2.793million of the city's labor costs (19.6%) paid from speed camera funds. We previously documented some examples of Chevy Chase Village's creative definitions of "Public Safety" items.

It turns out that because of the massive revenues Chevy Chase collected in previous years, it may actually NEED to show a loss in order to avoid running afoul of the 10% rule. According to a letter of advice written by the attorney general's office in June 2009: "It is my view that any funds remaining from the fines collected by a political subdivision at the end of the fiscal year, including fines collected prior to the effective date, in excess of 10% of the total revenues of the political subdivision and after the costs of implementing the speed monitoring system, must be remitted to the Comptroller". In other words, the state wants their cut of the camera revenues, and Chevy Chase Village (being an economically hard pressed municipality which happens to have a median family income 3 times the average for the state) needs to burn up its previous years' camera funds and maximize its declared 'program expenses' in order to avoid paying. ( Kinda like cheating on your taxes, only its the government doing it, and that makes OK.... right? )