Montgomery County’s income tax collections were 25 percent lower in January than the county’s number crunchers projected, meaning the county could be facing an even bigger budget gap than the $608 million deficit currently projected.
Income taxes owed to the county are collected and distributed by the state on an almost monthly schedule. The county was surprised in November when its projected distribution that month was $85 million, 28 percent lower than expected.
The lower-than-expected revenues led County Executive Ike Leggett to propose a $70 million budget cut that included reducing bus services and laying off bus drivers. Leggett also asked department heads to suggest ways of cutting up to 20 percent of their budgets to bridge the projected $608 million budget gap for the new fiscal year that starts in July.
The county also lowered its revenue projections in November to better reflect what the real numbers might be.
But the new projection was still off in January by $6.8 million, leading lawmakers to worry that the county’s budget woes might get worse.
“There’s still a great concern that we don’t know the magnitude of the problem we’re trying to solve,” said Councilman Mike Knapp, D-Germantown.
Knapp is urging county, union, education and other leaders to hold a budget summit soon to find a consensus on how to solve the county’s budget woes. He said the county needs to act now, and not wait until Leggett proposes his budget in mid-March.
County officials cautioned that it was difficult to use the January distribution, which is relatively small, to judge future revenues. County economist David Platt said the February disbursement, which is traditionally much larger, will give the county a clearer idea of what it’s budget problems will be for fiscal 2011, which starts in July.
Platt said it’s clear that the income tax revenues in February “are not going to improve” from what the county predicted in November. The county relies on income tax for about one-third of its revenues.
The county also received notice last week that the state is withholding $23.4 million in education funding as punishment for not funding schools it at a level consistent with the prior year, as required by Maryland law.
