Anne Arundel may be facing $10 million budget shortfall

State income tax data could improve outlook


November 14, 2001|By Lynn Anderson | Lynn Anderson,SUN STAFF

Anne Arundel County's operating budget might be $10 million short this year, a situation caused, in part, by drooping sales taxes and building fees, the county's top budget official reported yesterday.

Budget Officer John R. Hammond told the County Council at a work session yesterday that the Sept. 11 terrorist attacks as well as Monday's passenger jet crash in New York have consumers feeling nervous.

"The economy will turn around, but when, I don't know," Hammond said.

It was the first time that the elected body met with Hammond and John M. Brusnighan, the county's new chief administrative officer, to discuss budget concerns, which Brusnighan tried to calm.

Brusnighan noted that "2002 will be a problem, but one we can deal with. But in 2003, we could be faced with some significant decisions."

Brusnighan said that layoffs are not yet part of any budget bailout package. However, some capital projects could be scaled back or delayed, and the county could dip into emergency funds, including money set aside for increases in gasoline prices.

The county also has about $27.8 million in surplus from the last fiscal year, money that, according to Hammond, "could be used to get us over the hump in 2002 and 2003."

Hammond said there has been a decrease in fees collected for construction and building permits recently, a situation that could foreshadow a dip in revenue from real estate recording and transfer fees, including those paid by residents when they buy or sell a house.

Overall, license and permit fee revenues could drop between $1.5 million and $2 million during the current budget year, he said.

Sales tax revenues, including hotel and parking taxes collected at Baltimore-Washington International Airport, could come in about $3.5 million short. Income from stock market investments could also drop by about $1 million this year, he added.

Hammond cautioned council members not to get too anxious about his budget predictions because they are based on incomplete data.

"I'm making predictions without any firm information on income taxes," he said. Local income tax payments represent about 32 percent of the county's general fund revenues. Property taxes, which county officials don't expect to change much, make up about 41 percent.

County officials expect to receive income tax projections from the state by month's end. While statewide withholdings were up roughly 4.5 percent earlier this year, a 2 percent decline was noted more recently.

"We're keeping a very close eye on income tax," said Hammond. "We're being cautious."

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