Revenue falls short $21 million

Budget chief cites weakness in housing market and sales taxes

October 16, 2008|By Chris Guy | Chris Guy,chris.guy@baltsun.com

One third of the way through a budget year like none other, Anne Arundel County is coming up $21 million short for 2009, according to the county's chief financial officer.

Budget Director John Hammond told County Council members this week that continuing turmoil in world financial markets and the U.S. housing industry, which generates much of the tax revenue for local governments, could get worse.

"It's just too early to tell whether we have hit bottom," Hammond said. "We've brought in $21 million less than anticipated. September revenue has been flat, but that could be good if we are already at the bottom. We have a revenue hole, where in 2008 [the fiscal year that ended June 30], we were $11 million to $12 million to the good."

County Executive John R. Leopold has implemented cost-cutting measures in recent weeks, including a hiring freeze that will leave 185 jobs open among 4,000 county employees.

It was the third such job cut in less than two years. Leopold also negotiated a new health insurance plan that could save the county $15 million over the next five years. A year ago, Leopold took back 175 county-owned cars from employees who had been allowed to take them home.

Leopold has said he will consider unpaid furloughs for county employees (such as were ordered in Prince George's County) only as a last resort. County department heads have been told that they will be granted only cost-of-living increases and no merit pay advances.

"Things are a little dark, but we aren't draping the county office building in black," said Alan R. Friedman, Leopold's chief aide. "It's the first revenue report we've gotten since the fiscal year started on July 1."

In the meantime, Hammond said another problem for local governments is weak sales tax revenue and reductions in state aid paid to local governments for housing inmates in local jails.

The good news, Hammond said, is nearly $12 million set aside by the county as a rainy-day fund that can be used to fill gaps if taxes and fees continue lower than expected.

The hiring freeze, Hammond said, is saving the county $2 million to $3 million.

"In the 2010 budget, we could eliminate some of these vacant positions, Hammond said. "The problem is that some of these positions - public safety in particular - are in areas that are very important to the citizens of Anne Arundel County."

County officials worry about potential cuts in state aid. Next week, the state's Board of Public Works will meet to talk about cutting about $450 million in state aid to local governments.

"It's never too early to start looking at the next fiscal year," Hammond said. "The state is already rattling sabers enough to send chills down everybody's back."

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