Minimum wage hike could impact Wicomico budget

Despite lobbying to derail a bill that will boost the minimum wage to $15 an hour, the increase is imminent and could cost Wicomico County’s government $7 million to fully implement.

“We’ve estimated that would be the cost over the period of time for the entire escalation, from the $10.10 an hour up to $15,” county Director of Administration Wayne Strausburg said.

He wouldn’t speculate if it could mean higher taxes for Wicomico County residents, saying it’s too early to know.

“What we are left to do now, when the final (General Assembly) bill comes out, is to figure out just exactly what we are going to do this coming fiscal year and that is what we’re focused on now,” he said.

The wage  hike is increasingly closer to becoming law, he said, adding there are a number of changes to the bill that would raise the wage 75 cents every year until it reaches $15 by 2025.

“The minimum wage escalation in and of itself doesn’t affect just the people who are below the minimum wage,” Strausburg said.

“It impacts the entire county’s hourly payroll scale because you can’t raise the minimum wage employees up to a level that is surpassing other levels,” he said. “You have to treat everybody equitably.”

That potentially means adjusting all county salaries.

Wicomico Human Resources Director Michelle Ennis advised County Executive Bob Culver in a memorandum last month that the increase would result in “an unmanageable salary compression if the entire workforce is not increased approximately $3.12 per hour.”

Currently, the lowest paid county employees are paid $11.88 per hour

To eliminate lower-grade staff from passing mid- to upper-level staff wages, the county would have to raise the entire full-time workforce about $6,490 per person, per year, costing the county around $3.9 million annually, Ennis explained.

It would cost the county an additional $2 million to compensate the part-time workforce under proposed minimum wage laws, Ennis wrote.

Kirwan Commission

“I’m not sure how we can afford that sort of increase, particularly when the county’s revenue cap is capped at 2 percent. Then, look at the state accelerating Kirwan and you will see the impact beginning in 2021,” Strausburg said.

He was referring to The Commission on Innovation and Excellence in Education formed in 2016 to assess education financing and bring reforms to Maryland schools, commonly known as the Kirwan Commission and named for its chairman, former Maryland University System Chancellor William Kirwan.

In January, Kirwan, said the commission needs $325 million to start the program, targeted, during the next decade, at:

•Improving early childhood education.

•Placing teachers in the status of high-ranking careers.

•Forming pathways for colleges and career for students.

•Making certain every student has equal access to education, and;

•Forming a board to oversee accountability.

In his FY20 budget, Gov. Larry Hogan allocated $235.8 million for the initiative.

Concerned about the county’s share of funding the commission’s goals while also paying a higher minimum wage, Strausburg said county officials met with legislators and Maryland Association of Counties officials, explaining the drawbacks of the minimum wage increase.

But the bill came out of the House of Delegates “basically unscathed,” Strausburg said.

“It came out of the Senate Committee relatively unscathed as well. The Senate agreed to give an additional year for everybody to grow into it but it’s going to happen,” he said.

“We have 24 jurisdictions in this state. They are all very different in their economies and population density, in their income. And then you adopt a one-size-fits-all mentality and you make it fairly aggressive.”

Recession concerns

Added Strausburg: “Fifteen dollars an hour is a pretty darned aggressive increase. I don’t see the federal government imposing anything like that. At least not coming to what I would refer to as the consensus of the Senate and the House of Representatives,” he said.

Of further concern is state expectation of a recessionary cycle in 2020, one that has been anticipated, since the last one was 12 years ago.

“We are looking at that and saying that will have a depressing impact on a number of revenue streams, not only for the state but for the county. Pile on top of that the minimum wage increase and the Kirwan Commission and you have a situation that is very difficult to understand or ascertain how we will be able to afford all that,” Strausburg said.

“It isn’t simply the minimum wage. It’s the confluence of all those factors that really, really have our jurisdiction and have the attention of every jurisdiction in the state, particularly the rural counties,” he said.

Meantime, parents in Wicomico County are calling for more county funding in the FY20 budget for public education and plan to speak at the county public hearing on the budget.

That meeting will be on Wednesday, March 20, in the Flanders Room of the Wicomico Youth & Civic Center.

The hearing begins at 6 p.m. and will be broadcast on PAC 14.

Parent Eileen Johnson supports schools Superintendent Dr. Donna Hanlin’s “Imagine! 2022” plan and, with other parents, has formed a group whose members want raises for teachers and county funding for Universal Pre-Kindergarten.

PUSH4Education members posted an online petition to present to Culver. They are trying to garner 1,000 signatures.

Culver, though, said expenses — including the minimum pay increase — will make it difficult to fund those items or Hanlin’s request for an additional $800,000 this year.

The county is obligated to fund an additional $1.2 million for Maintenance Of Effort, plus consider Hanlin’s additional $800,000.

That would be a $2 million increase in all.

“I’m not saying I don’t agree with some of their requests, but at the same time I can’t do that and still run the county,” Culver said.

Reach Susan Canfora at scanfora@newszap.com.

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