Baker, Prince George’s face $125 million budget deficit

Correction: An earlier version of this article misstated the increase in state aid that Prince George’s County’s school system expects this year. It expects an additional $8 million, not $80 million. The article also misstated the title of Thomas Himler, the county’s deputy chief administrative officer for budget, finance and administration. This version has been corrected.

January 4, 2012

Prince George’s County is bracing for a $125.7 million budget shortfall that will force officials to make tough programming cuts and consider controversial proposals to increase revenue.

Balancing the county’s nearly $2.7 billion budget in the coming months will “not be a pleasant” process, said Thomas Himler, the county’s deputy chief administrative officer for budget, finance and administration. But it should be familiar.

County Executive Rushern L. Baker III contended with a nearly $77 million spending gap soon after he took office in late 2010. Then, the projection for the fiscal 2013 deficit was a slightly bleaker $133 million, prompting Baker (D) to vow to take a closer look at frivolous expenditures and to maintain a hiring freeze, among other austerity measures.

This year’s budget will require even more trimming, although how, and from where, remains uncertain.

“We’re a little better than where we thought we would be at this time last year,” Himler said. “But for the second year in a row, we’re going to be looking at some difficult decisions ahead.”

The lagging real estate market continues to hurt the county’s coffers. Limited by the voter-imposed cap on property tax increases, Prince George’s faced a third-straight year of negative reassessments in 2011. The projections are worse for 2013.

“We’re expecting things on the real estate side to be tight for a while, with a little optimism in the last six months,” Himler said.

Although the foreclosure rate in the county declined slightly at the end of last year, Himler said, there are about 3,700 foreclosures pending in the courts — enough to cause “real concern” about a decreasing taxable property base. Another lingering worry is the possibility that Maryland will shift responsibility for teacher retirement costs to the counties, which is not accounted for in the projected deficit for Prince George’s.

The state faces budget woes of its own, with a forecasted $1 billion shortfall on the horizon. Still, Prince George’s is banking on state aid to the county not declining, Himler said. This year’s report estimates that the school system will receive an additional $8 million from the state.

Baker, a former state delegate, will spend time lobbying in Annapolis to make sure the county gets the aid it needs, Himler said.

And as the county seeks to begin school construction and replace the flagging Prince George’s Hospital Center in ­Cheverly with a teaching hospital, Baker has said he will look at “everything” to generate more revenue.

“Generally, in terms of revenue, we don’t have a lot of options,” Himler said.

Additional red light cameras throughout the county are expected to improve the bottom line. Less certain, albeit more controversial, is the potential of slots. Baker has said that in light of budget woes, he will have to at least consider the possibility of slots parlors in the county. Slots are opposed by many leaders of the county’s faith community, but even if they were approved, they would not have an effect on the deficit outlined Wednesday.

Amid talk of installing slots as Rosecroft Raceway, County Council Vice Chairman Eric Olson (D-College Park) proposed a bill late last year that would ban slots. Although Baker and other council members have traditionally shared Olson’s view, the proposal was tabled.

Baker has had a couple of encouraging developments on the economic front. After several months of debate, the council in November approved his request for a $50 million fund to draw businesses to the area. Also this fall, Prince George’s AAA bond rating, which enables the county to borrow money at lower rates and is a mark of Wall Street’s confidence in its finances, was renewed.

“We will continue to look for areas of improvement,” Himler said. “It’s always tough, but I’m optimistic about our general financial situation.”

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