Montgomery County officials are estimating that their budget deficit for the next fiscal year is $608.3 million, nearly $240 million more than officials had projected in September.
The new projection marks the second straight year that the county has faced budget gaps of more than half a billion dollars.
Office of Management and Budget Director Joseph Beach warned that many “difficult choices” are ahead for the county and all services will “be under consideration for significant reductions.”
The projected deficit grew because of an unexpected drop in the county’s income tax revenues. Two weeks ago, state officials told the county that its November share of income tax revenues would be $85 million less than expected.
The county also had expected that property tax revenues would rise with an increase in the Consumer Price Index, which tracks inflation, but that did not occur. That miscalculation added another $48.5 million to the county’s budget deficit.
And as bad as things are, they could get worse, said Staff Director Stephen Farber. The county could face tens of million of dollars in fines from the state over a dispute involving education funding. And with Maryland facing a $2 billion projected shortfall next fiscal year, the county’s budget gap likely will grow as more cuts are made to state aid.
The County Council is set to meet Tuesday to discuss with county staff how to bridge the budget gap. In a memo, Farber laid out some of the options available to the county’s elected officials to help bridge the gap, including freezing employee pay and instituting furloughs.
Pay freezes could save the county $150 million next fiscal year, and furloughing all county employees, including public safety employees and teachers, would save $9.9 million a day.
But Farber indicated that those measures still wouldn’t help address the entire deficit, and said large-scale changes will be necessary.
“For budgets in FY11 and future years to be in balance, all stakeholders — unions, managers and the community alike — will have to join in focusing more rigorously on what services county agencies should provide and how best to provide them,” Farber said.
