Budget Gap Forces Tough Choices

Schools Might Have to Defer Renovations, Make Other Cuts

Arlington County employees will have to do more for less after the announcement of a hiring freeze in the face of a projected $10 million budget deficit, and schools might have to put off scheduled renovations, county officials said yesterday.

But it was too early to say how the shortfall might affect residents.

The county faces a $10 million deficit for fiscal 2009, while the school system, which receives most of its funding from the county, faces a $7.5 million shortfall, County Manager Ron Carlee announced Thursday.

Facing the first significant budget deficit since the early 1990s, the county will begin reviewing operations to close the gap to determine what spending is mandated or essential to the community and what is discretionary, Carlee said. The county might be able to shave expenditures by looking at ways to consolidate services and form partnerships with service providers. At the same time, Carlee said, officials will search for ways to be responsive to residents who might already be hurting because of the faltering economy.

Bad economic news has rippled through state and local governments in the region. In Fairfax County, government and school officials are grappling with a projected $430 million deficit in the next fiscal year. With the District facing a $131 million gap, Mayor Adrian M. Fenty (D) has proposed leaving 400 government jobs vacant and postponing a retirement benefits package for city workers. Montgomery County Executive Isiah Leggett (D) has proposed unpaid government furloughs and also called on department heads to trim $50 million in spending to shrink an estimated $250 million gap for fiscal 2010. Montgomery Schools Superintendent Jerry D. Weast has warned that the district cannot meet scheduled pay increases for teachers and called on their union to renegotiate salaries. And Prince George's County Executive Jack B. Johnson (D) has proposed furloughs for 5,900 county employees to close a $57 million hole.

"We don't know at this point what some of the things are that we need to do to reduce spending," said Arlington County Board Chairman Walter Tejada (D). Except for essential spending, he said, "everything is on the table."

County officials said the shortfall, which represents about 1.6 percent of the county's operating budget, is the first since a recession gripped the country in the early 1990s. In an interview yesterday, Carlee reassured residents that the county's fiscal health was otherwise sound. The county's debt levels are not high, and its long-term financial obligations, such as pensions, are fully funded, he said.

"I think people are more concerned about the larger economic situation and the impact on their retirement savings," Carlee said. "We're approaching the full crash of the stock market this week."

He said a public briefing on the county's fiscal health would be held during the Oct. 22 board meeting.

For the schools, news of tighter spending comes as classrooms fill with more students because more families, facing difficult times, are staying in inner-suburban condominiums or townhouses instead of investing in single-family homes farther from the metropolitan area's center. The school system's enrollment grew 4.5 percent to 19,500 this year.

"What it means is, we're going to have to find areas to defer expenditures and look for cuts," Superintendent Robert G. Smith said. He said the poor financial outlook would almost certainly continue next year.

Smith, who announced this year that it would be his last after 11 years as superintendent, said school officials would begin searching next week for savings. But he emphasized that they would do everything possible to find savings without affecting classes. The district is fortunate, he said, not to have any vacancies in its teaching staff.

But Smith said that it would also be difficult to identify places to trim, because 80 percent of the school's budget is accounted for by contracted services. The most likely candidates for reducing spending might involve postponing spending on capital improvements, such as putting off renovation of an HVAC system, he said.