Last updated 10/01/2006
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Forest Heights Budget and Finance

Under the Town Charter, the Town of Forest Heights is required to maintain a balanced budget, and expenditures are limited to those appropriated by the Town Council.  Furthermore, the Town's books are audited annually and the audit report must be submitted to the State of Maryland. Citizens are encouraged to become familiar with the Town's financial affairs so they can voice informed opinions at Town meetings about financial issues that can affect, among other matters, the amount of taxes they pay and their property values.

As a guide to understanding the Town's appropriations process, we provide a Primer on the Forest Heights Appropriations Process (PDF format 27kb), (HTML format 157kb)

FY2007

FY2006
 FY2005
Commentary:  Technical Errors: Before commenting on the substance of Council Resolution 4-04, we will make note of a couple of technical errors in the resolution. We do not believe these errors invalidate the resolution, although they could cause some confusion on the part of the Town's citizens. First, the resolution's preamble states that "the Constant Yield Tax Rate for the Town has been at its current rate of $0.256 (25.6 cents) since July 2000." This is not true. Adjusting for a change in the way tax rates were defined prior to FY2001,  the Forest Heights Tax rate on July 1, 2000 was $0.232, and was increased to $0.260 on July 1, 2001. That rate of $0.260 was continued through the current year FY2004.

The reference to the "Constant Yield Tax Rate" is also misleading, since the Town is exempt from the State's constant tax yield requirements since the increase in property values from FY2003 to FY2004 resulted in a property tax yield of less than $10,000 for FY2005. Assuming that the Town Council wanted to increase the Town's Tax rate to $0.466, the resolution should have read "Town's Real Property Tax Rate per $100 of assessed value is hereby increased by $0.206 from $0.260 to $0.466." Hopefully, the Town will clarify what it meant in the near future.

With regard to the substance of the tax increase, Forest Heights homeowners will not see an 82% increase in their property tax bill next year, but roughly a 13% increase. The reason is that the Town Real Property tax is but one component of the total real property tax collected by the County. It also includes County, State, Park & Planning, Transit, and storm water drainage system taxes. The exact amount of these other taxes will not be known until after July 1, 2004, but an overall 13% increase should be in the ballpark.

Of the 27 municipalities in Prince George's County, Forest Heights currently ranks the third lowest in combined municipal and county property tax rates. After July 1, 2004 when the new rate takes effect, Forest Heights will move to near the mid-range (16th out of 27) of such tax rates [assuming no changes in other municipalities' tax rates in FY2005]. Comparing Forest Heights with other Prince George's municipalities makes more sense than comparing it with municipalities state-wide because rural towns and large cities such as Baltimore are not comparable with Forest Heights. Municipal and County real property tax rates for Maryland can be viewed by clicking here (PDF Format).

What does the increase mean to the average Forest Heights homeowner? There are 940 improved lots in the Town, which would result in an average of about $230 per lot per year based on an average $110,347 value per lot.. However, 13 of those lots are commercial properties which are valued, on the average, about two and a half times the value of a residential property. Consequently, the increase on residential lots will be slightly less than the average for all lots.

Resolution 4-04 justifies this tax increase on the basis that the streets in the Town of Forest Heights are in dire need of repair; and that Town services are under funded. Many Town citizens agree with the need to improve the Town's streets and services, but the Town Council gave little justification for the amount of the increase other than an assertion that the increase was needed. Section 33-52, Budget Authorizes Levy, of the Town Charter specifies the manner in which the property tax is increased by tying it to the passage of the Town's budget. The Town Council has yet to publish a proposed budget and hold the required hearing on it under Charter Sections 33-44 and 33-45.

In an interview, Councilman Ross (Ward III) who introduced the resolutions at the April 21, 2004 Town Meeting, indicated that the reason for voting for the increase at that meeting rather than waiting for the budget process to be completed was because the Town needed to identify a source of revenue that would come from the issuance of municipal bonds to finance needed street repair. The deadline for applying to participate in the program (see next paragraph) is May 28, 2004.

Resolution 4-05, relating to bond financing, would permit the Town to participate in a program run by the Maryland State Department of Housing and Community Development. Under this program, the State essentially pools the borrowing needs of many municipalities and other public entities in the State. This results in less overhead in the bond sale process and improves the rating of the bonds. More information on this program can be found at the DHCD website http://www.dhcd.state.md.us/infra/index.asp.


FY2004
Fiscal Year 2004 began on July 1, 2003 and will end June 30, 2004. The following documents are available:
Commentary: On June 30, 2003, the Forest Heights Town Council approved a budget for FY2004 by a 4 to 2 vote. Mayor Sue McGinnis did not attend the special meeting of the Town Council, which was chaired by then Council President Worthington Ross. Council members Paula Noble and Joyce Beck voted against the budget, while Council members Lynn Smith-Barnes, Sharon Mc Innis, Jerome Corrigan and Worthington Ross voted in favor.

Early in 2004 it became obvious that the budget passed in June 2003 would not cover expenditures through the remainder of FY2004. The Council also discovered that the budget passed in June 2003 was not properly recorded and could not be used as a baseline for an amended budget.

FY2003
Fiscal Year 2003 began on July 1, 2002 and ended June 30, 2003. The following documents are available:
 Commentary: Unlike the previous fiscal year (see below), the Auditor's report showed significant under expenditures for the Police and Public Works Departments. However, the McGinnis Administration continued the practice of disregarding the Town's Charter's prohibition of spending beyond appropriations. We could find no evidence that the Town Council amended the FY2003 budget to validate the excess expenditures.

We also could not find any evidence that the Town properly recorded the FY2003 budget as passed by the Town Council at the June 19, 2002 Town meeting. We thank former Councilwoman Anne Reifsneider for a copy of the marked up budget passed by the Council (these changes should verifiable on the Town's tape recording for that meeting). We also note that the information that the Town provided Town's auditor for the FY2003 audit report did not comply with the budget as passed by the Town Council. Finally, we were unable to obtain a copy of Form F-65, a Supplement to the Audit Report, which is required by the Sate of Maryland. According to Mayor Noble, she refused to approve the Form F-65 document presented by the auditor because it contained incorrect information.

FY2002
Fiscal Year 2003 began on July 1, 2001 and ended June 30, 2002. The following documents are available:

FY2002 Audit Report (PDF format 420kb)
Abstract of FY2002 Form F-65 Supplement to the Audit Report (PDF format 1,250kb)
FY2003 Audit Report (PDF format 350kb)

In the FY2002 audit report expenditures were in excess of appropriations for the following categories (Exhibit D):

Expending public moneys in excess of appropriations is forbidden by Section 33-46 of the Town Charter.

Furthermore, the Town's financial reserves (cash, checking account, CD's and receivables) were drawn down by over $87,000 (comparing the FY2002 audit report with the FY2001 audit report).  The Town's budget for FY2002 authorized only $34,552 to be drawn from the reserves.

In some cases, the excess expenditure was offset by unexpected revenues.  For example, income taxes generated $32,909 more than anticipated in the budget.  The Red Light Program generated $53,701 above the $10,000 in anticipated revenues, and the Police Department received a $16,112 GOCCP grant that was not anticipated.  However, the Charter requires that these unanticipated funds be appropriated before they are spent, which was not done.

Graphic depiction of the beginning and ending balances of the Town's assets, and the Town's revenues and expenses, for FY 2002 (PDF format 61kb), (JPEG format 294kb).

Mayor McGinnis's March 3, 2003 memorandum explaining the letter she received from the Town's auditor (PDF format 300kb), (BMP format 146kb).

Allocation of State Highway Administration (SHA) funds for all Maryland jurisdictions for fiscal years 2003 and 2004. (PDF format).

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