Baltimore County department heads were told today to plan for a $41 million "revenue gap" in next year's budget, the projected result of economic recession and the proposed 2 percent limit on property tax revenue increases.
Translated into individual department cuts, county schools would lose $19.1 million, police $5 million and fire $3.5 million, all money that would have to come from programs and services.
Each department must pay for built-in increases such as 4 percent pay raises due to take effect Jan. 1, longevity pay raises, increased health and utility costs. The cuts, therefore, must come from such things as the number of teachers, firefighters or police.
County Executive Dennis F. Rasmussen and budget director Fred Homan told the department heads that those built-in cost increases, especially, debt service and retirement costs, will boost county spending by $55 million.
If the 2 percent cap on property tax revenues passes on referendum, Homan said, it will reduce county revenue by $20.3 million. Most of the other $20 million revenue reduction would be the result of economic recession, which would lead to lower real estate transfer taxes and lower local shares of state income and other shared taxes.
In addition, the county expects to lose between $6 million and $7 million per year as the unpopular beverage container tax ends Dec. 31. Further, depending on how the federal budget crisis is resolved, the county might have to withhold another $1.1 million from county workers' paychecks to pay for federal Medicare programs.
Rasmussen and Homan said Baltimore County, unlike several other metropolitan counties such as Howard and Montgomery, does not yet face a deficit in its current budget year, which began July 1.
The executive said he wants the department heads to determine in the next few weeks, however, whether a hiring freeze or other cost-saving measures need to be applied to prepare for the much tighter prospects next year. The projected revenue gap is 7 percent of the total budget.
"Eliminate positions through attrition. Layoffs should only come as a last resort," the executive told his assembled management team.
Rasmussen called on the General Assembly not to dodge the tough tax issue in the session that will begin in January, after the Linowes Commission report on tax restructuring in Maryland comes out.
"The General Assembly has got to come to grips with this issue this session," he said, predicting that his won't be the only voice calling for more local revenue alternatives to the property tax during the 90-day legislative session.
Last year the executive tried to get the state legislature to give him authority to increase the local share of the state income tax from 50 percent to 65 percent over seven years, in exchange for a reduction of the property tax rate by 55 cents over the same period. The proposal went nowhere.