Big cuts are likely in store for Montgomery County, as officials try to figure out how to fill a new and unexpected $100 million budget hole.
County officials learned this week that they would receive $85 million, or 28 percent, less in income tax revenue in November than expected. The state collects the county’s income tax and distributes it to the county throughout the year, with November being one of the biggest pay periods.
Chief Administrative Officer Tim Firestine told The Examiner that the budget hole likely would grow this and next fiscal year, making the cash-strapped county’s fiscal situation “dramatically worse.”
“I think you can clearly say it’s going to add about $100 million to our problem this year and maybe a couple hundred million over the two years,” Firestine said.
Past estimates put the county’s budget gap at about $400 million in fiscal 2011.
Firestine said the November numbers showed that the county’s income tax revenues fell by 11 percent from 2007 to 2008. He said the “unprecedented” drop and a lack of financial information from the state to help make better projections explained why the county’s figures were off.
Finance Director Jennifer Barrett said both the state and the county had projected lower revenues, but did not expect the drop to be so dramatic.
“They did their best in terms of trying to warn us, and we did our best in trying to estimate the impact; it just came out much worse than everybody expected,” Barrett said.
The budget blow came a day after the County Council approved $30 million in budget cuts, including buying fewer library books, police uniforms and office supplies, to cope with reductions in state aid.
Officials said there was little doubt a second round of cuts would be needed but had few details of what they might include. Earlier this year, County Executive Ike Leggett said staff layoffs and furloughs might be necessary to bridge a large budget gap, but Firestine said no decisions had been made.
“We may have to start looking at programs that we haven’t looked at before,” he said.
County President Phil Andrews said the grim fiscal news reinforced his suggestion that the county couldn’t afford any pay increases for county employees during the next fiscal year.
The county is in contract negotiations with various unions.
