By Michael Laris
Washington Post Staff Writer
Friday, December 3, 2010; 12:27 AM
Montgomery County Executive Isiah Leggett has instructed the heads of most county departments to begin searching for cuts of 15 percent as officials project a shortfall of more than $300 million.
Leggett (D) also called Thursday for $19 million in cuts to the public school system as part of a proposed midyear "savings plan" that would reduce ambulance service and eliminate home heating subsidies for thousands of poor residents. Hundreds of layoffs are possible next year, and numerous programs will shrink or be eliminated, officials said.
Officials overseeing public safety, health and human services, and transit programs were given a target of 5 percent.
Effects of the cuts, the result of a stark mismatch between shriveling tax revenue and the growing costs of employee benefits, will be felt across the county of nearly 1 million residents. Officials overseeing everything from housing and libraries to recreation and the environment were told to trim their already shrinking budgets.
Although federal spending and contracting have helped cushion the Washington region from the full effects of the nation's economic pain, other local jurisdictions are also facing an intensified fiscal squeeze.
"It's going to be really, really painful," said Gabriel Albornoz, director of Montgomery's Recreation Department. "There's not very much left."
Since Albornoz arrived in Montgomery in 2007, his career staff has gone from 172 to 99 employees. Starting in the new year, rec centers will be closed the equivalent of one day a week, throwing off schedules for volleyball and badminton players and community groups. Albornoz said he expects that programs for senior citizens and at-risk youths will be cut as well. "The thought of more is sobering," he said.
An unexpectedly sharp drop-off in projected income tax receipts this year and next - coming after a decade in which spending on employee medical and retirement benefits soared by more than 120 percent - has left a deep hole in Montgomery's finances, six months after a tumultuous round of reductions.
"I wish I could say to you that our difficulties are easing, but this is not the case," Leggett said in an e-mail Thursday to county employees.
Departments have two to three weeks to submit their proposed cuts to Leggett's budget staff in preparation for the fiscal year that begins July 1.
Like Montgomery, the District is grappling with shortfalls. It faces a $188 million budget gap for the rest of fiscal 2011 and an estimated $345 million gap in fiscal 2012 - a scenario that has council members discussing a possible bump in the income tax rate.
Fairfax County is in relatively good shape, with an estimated $55 million shortfall in the next fiscal year. Although county officials have not been given a specific target, they have been asked to find cuts that would work out on average to about 1 percent of spending, said Susan Datta, director of Fairfax's Department of Management and Budget.
The fiscal situation in Prince George's won't be clear until at least next week. Departing County Executive Jack B. Johnson (D) has not supplied detailed information about each agency, according to the transition team of County Executive-elect Rushern L. Baker III (D). In a fiscal analysis that Johnson released a few days after he was arrested last month on charges of witness tampering and destruction of evidence, he said that revenue in the $2.6 billion county government is likely to be flat.
Flat revenue would have been considered a windfall in Montgomery, where budget officials said income tax revenue from the state is much lower than expected. Revenue is down more than $30 million this year from earlier projections and is projected to be off by about the same amount next year, officials said.
Leggett's $36 million "savings plan" for this fiscal year would serve as a down payment of sorts on the $300 million-plus shortfall. The County Council is expected to vote on the first round of proposed cuts in coming weeks.
In addition to Montgomery's lost revenue and history of generous spending, outside forces are also at play, officials said.
"The State of Maryland is facing a $1.6 billion deficit. The realignment in Congress may dampen our regional economy. And President Obama's just-announced two-year freeze on federal salaries will also adversely affect county tax revenues," Leggett said.
Officials said Obama's move on salaries will cost Montgomery almost $6.9 million over the next two years in lost revenue from federal workers who live in the county.
In May, Montgomery officials reduced overall county spending for the first time in more than 40 years. In June, they endorsed a six-year austerity plan designed to increase reserves and put aside more for retiree health benefits. That plan contemplated a slight increase in spending next year by county agencies.
But adhering to that plan - which some viewed as a bit miserly just months ago - is proving even tougher than many officials had thought.
The shortfall for the current fiscal year is estimated at $100 million, Leggett said. In the next fiscal year, the projected gap is more than $200 million, officials said.
Some neighboring jurisdictions have also faced a mismatch between resources and hoped-for spending, leading to a variety of approaches.
D.C. Mayor Adrian M. Fenty (D), who leaves office next month, delivered the council a gap-closing plan of more than $160 million in cuts to programs and services throughout the government, particularly in human services. To save some of the social services programs and to prepare for the 2012 hit, several council members are suggesting a 1 percent increase in the income tax rate on residents with taxable annual income exceeding $200,000.
In Fairfax, coming up with a budget for the current fiscal year required $90 million in cuts, a slight increase in property taxes, a reduction of almost 200 positions and a slight reduction in the amount of money passed on to schools. The county also reinstituted a car-registration fee known as the decal tax.
In Prince George's, Johnson said that the government could face a reduction of about $20 million in state aid because of state budget woes.
There may be other challenges ahead for Baker. Johnson used about $40 million in one-time money this year to plug an $85 million budget gap, and he furloughed and laid off some county employees. Baker is opposed to finding savings by instituting employee furloughs. But he favors lengthening the school day in elementary and middle schools, which would take additional resources.
In Montgomery, there is also a serious gap between school funding requests and economic realities. School officials say they plan to request a schools budget soon that is tens of millions of dollars greater than what they received this year. The increase would cover higher enrollment and other costs, school officials said.
But county officials say that big increases in school funding would be difficult, given the target of 15 percent reductions for many government departments. The final figures are likely to shift with the arrival of new fiscal information and with judgments on which cuts identified by each department are palatable. For example, one department might take a 12 percent hit, and another would be cut 17 percent, officials said.
The targets are "starting points," Leggett said.
Staff writers Fredrick Kunkle, Miranda S. Spivack and Nikita R. Stewart contributed to this report.