Howard County's budget shortfall is growing instead of shrinking as the fiscal year enters its final quarter.
A deficit that was projected two weeks ago at $13 million has swollen to about $20 million because of snow-removal costs and a decline in state income tax payments, county budget director Raymond S. Wacks told the County Council at a meeting Monday.
"This is a difficult time for us," Wacks said. "We've had more snow than Buffalo this year."
The council is to vote in April on a transfer of $1.3 million to help pay for snow removal, a move that would empty the county's contingency fund. Only $800,000 was budgeted for snow, with the expectation that more would be needed by winter's end. But instead of the typical $1.5 million expense, snow removal is now expected to cost the county about $5.8 million, though computations aren't complete and winter isn't quite over, Wacks said.
At the same time, state distribution of income tax receipts Feb. 26 for the final quarter of calendar year 2009 was 3.2 percent below the same period for 2008, which amounts to another $2.4 million decline in revenues on top of earlier declines and state budget cuts, all caused by the recession. Income taxes represent the county's second-largest source of income after property taxes. In the November state distribution, Howard's payment declined 19.6 percent compared with November 2008.
If that weren't enough, Wacks said that any federal relief for the costs of cleaning up February's record snowfalls won't come before June 30, the end of this fiscal year, and might not come in fiscal 2011, when the general revenue outlook is just as bleak.
"How are we finding the $20 million?" asked council Chairwoman Courtney Watson, an Ellicott City Democrat.
Wacks had no specific answer, though he repeated that the Ulman administration is continuing to leave open jobs vacant and cut spending in a variety of ways. He is scouring the budget for every unused penny, he said, and County Executive Ken Ulman is talking to county school officials about giving some money back to help the county.
"We're required to give them maintenance of effort," Wacks said. "They're not required to spend it." Maintenance of effort is the state requirement that local governments fund schools at the previous year's level per student or lose state aid. The county also still hasn't tapped its $48.5 million rainy-day fund.
"It's hard to imagine a worse year," Watson said.
Despite all the gloom and the jokes about Wacks being called "Dr. Death" at the meeting's start, the veteran budget director did offer some encouragement.
"We're going to end the year with a balanced budget," he said. "We're looking at all our options."
Councilman Greg Fox, a Fulton Republican, said this is why he pushed for less spending on new programs over the past several years.
"The reality is if we don't get it out of the current budget, we'll be facing this [revenue shortfall] next [fiscal] year," he said.
"We didn't want to be spending on the brink," he added after the meeting adjourned.
Mary Kay Sigaty, a west Columbia Democrat, agreed with Watson that the year has produced a run of bad fiscal news.
"It really is a horrible confluence of events," she said. Later, Ulman repeated Wacks' assertion that the budget will be balanced by June 30, though he too offered no specifics on how to make up the shortfall.
"We've been having lots of conversations with the Board of Education. They understand" the problem, he said, but any return of money from the schools would be only "part of the solution," he said.
"The bottom line is, every county and state are facing the same problems," he said, though Howard is in better shape than most. "It's not going to be easy, but we'll get through it," he said.
Statewide, the drop in income tax payments to local governments was 6.2 percent, or $61.8 million, though overall revenues dropped a net of just 0.9 percent, according to charts distributed by the Maryland comptroller's office.
That compares with a $339 million statewide payment drop in the November distribution, a 28.3 percent decline.
George Freyman, assistant director of revenue in the state comptroller's office, told local officials that the February net decline "represents the best performance in quarterly receipts since the third quarter of 2008" and might be a sign that the worst of the recession is over.
The state's payments to local governments were lower, however, he said, because they are in part estimates of future returns and reflect higher refunds to taxpayers. The lower payments represent a continued adjustment to 2008's dismal tax payments, some of which were still arriving in the fourth quarter of 2009.
On a percentage basis, Howard's 3.2 percent payment decline was better than 19 other jurisdictions among the 24 in Maryland. Talbot County led the state with a 23.8 percent decline in payments. In the Baltimore area, Anne Arundel dropped 2.8 percent, Baltimore City was down 8 percent,
Baltimore County declined 11 percent, Carroll was down 3.7 percent, Harford dropped 3.1 percent and Frederick County declined 4.3 percent.
Prince George's County got 4.2 percent more because of an increase in the local income tax rate, while Charles rose 1.6 percent.