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Prince George’s seeks to trim spending but fiscal picture beginning to brighten

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Prince George’s County officials, trying to plug a projected $152 million budget gap, have asked county agencies to trim current spending by 2 to 5 percent as they devise budget plans for the coming fiscal year.

Officials are considering delays or reductions in the number of new police, fire and corrections officers and have instituted an informal hiring freeze in other agencies, whose department heads are being asked to keep jobs vacant longer than usual and to justify any hiring.

“We are not doing an across-the-board cut,” Terri Bacote-Charles, the county’s budget director, told the County Council at an annual two-day retreat this week in Annapolis.

Lower property taxes collections, as well as an anticipated 4.6 percent increase in county expenses, have contributed to the $152 million gap. Property assessments, recently released by the state, decreased an average 11 percent for commercial and residential properties in Prince George’s.

Residential assessments alone in the northern and southwestern sectors of the county dropped by as much as 21 percent, according to recently released state data. But the value of commercial properties has generally held steady and, in some instances, has actually increased as much as 16 percent, the data show.

Despite the budget gap, Prince George’s is setting aside $164 million for reserves and one-time expenses. But much of that is considered untouchable by the administration of County Executive Rushern L. Baker III (D).

Thomas Himler, the county’s deputy chief administrator for budget and finance, said the administration wants to wall off about $87 million of the surplus to help maintain about $264 million in reserves.

Prince George’s officials say the size of the reserves helps them convince Wall Street that the county should retain its coveted triple-A bond rating, which enables the county to borrow money at a lower interest rate.

Baker’s administration wants to use about $25 million to $30 million of the remaining $77 million surplus in the soon-to-be proposed budget, which will take effect July 1, on one-time projects to enhance schools and public safety, similar to what it did last year.

“We want to responsibly cut spending where we can and make sure the funding is put in high-priority areas,” Bacote-Charles said.

Also looming is the possibility of a large payout this year to the county’s 5,000 employees, whose 10 labor unions are engaged in preliminary talks with county officials about pay raises after several years of salary freezes and unpaid furloughs.

The pressure to give raises increased after an arbitrator ruled that the county's nearly 1,600 police officers were entitled to four years of missed payments, totaling about $8 million, because the county refused to honor labor agreements, citing financial hardship.

The county had offered police officers $2,250 in one-time bonuses, which it has paid to other county employees, but the Fraternal Order of Police pressed for arbitration and succeeded in convincing the arbitrator that the raises had been wrongly withheld.

Adding to the fiscal pressures are rising pension costs, which Himler said are not funded sufficiently to meet future obligations to retirees.

“The pensions are funded by 56 percent, which is fairly low,” Himler said. “At some point, we will have to make some changes in how we fund benefits and who pays what.” The estimated rate of return on county pension investments appears to be falling, costing about $10 million in the coming fiscal year, he said.

Still, there are some bright spots.

Property tax collections, which fund a substantial chunk of the county’s $2.7 billion spending plan, are showing signs of slowly turning around, and the county’s foreclosure rate is improving, although it is still the worst in Maryland.

Incomes tax collections came in $14 million higher than predicted in the current fiscal year, Bacote-Charles said. And Himler noted that the county’s 6.7 percent unemployment rate is better than the state and national rates.

“It all means things are stabilizing and are starting to move in a positive direction,” Himler said. “Things are starting to get back on track to 2008 levels.”

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