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Prince George's County projects $77 million budget shortfall

By Miranda S. Spivack
Washington Post Staff Writer
Wednesday, December 22, 2010; 9:33 PM

Prince George's County is facing a $77 million spending gap, but County Executive Rushern L. Baker III says his new administration can plug it by trimming spending and not tapping reserves left by his predecessor, Jack B. Johnson (D), except in special circumstances.

Fast forward a few years, though, and the financial picture is expected to worsen, Baker (D) said Wednesday. So, in a preemptive strike, he outlined austerity measures - maintaining a hiring freeze, taking a deep look at outside contracts, limiting the use of take-home cars, reviewing county credit card use and asking all county agencies to look for ways to cut costs. Although it is unclear how much the efforts will save, they might stave off tougher times in the future, he said.

The Baker administration, in office since Dec. 6, is also projecting a gap of about $133 million for fiscal 2013. Officials said things could get worse after that because property values are dropping, state aid is diminishing and income tax collections are flat and could even drop because of a federal freeze on employee pay that affects thousands of county residents.

And the $133 million estimate does not include a potential shift of millions to the county in teacher pension costs to help Gov. Martin O'Malley (D) solve the state's looming $1.2 billion budget deficit, which Baker said would contribute at least an additional $28 million to Prince George's shortfall. Other estimates from O'Malley's office have put the figure at potentially $39 million.

"As we look at the overall fiscal picture . . . yes, in 2012 we are going to have a budget deficit . . . but clearly we are in a better situation than our neighbors around us," Baker said during a news conference at the county administration building in Upper Marlboro. "Closing the gap will be a manageable challenge, but it will not be easy."

After that, he said, "everything is on the table. . . . We don't want to jeopardize our Triple A rating," a highly coveted bond rating from Wall Street that allows the county to borrow money at lower rates and is a vote of confidence in the county's money management.

Baker's proposal to cut back on take-home cars - there are about 50, many of them gas-guzzlers, in use by county employees - sends a message that there is a new boss in town. But it might not get at the heart of what is ailing the county and its neighbors, all of whom are in similar straits.

And despite a vote of confidence from Wall Street, the list of bills coming due for Prince George's, which has a voter-imposed tax cap that limits its ability to raise revenue inside its boundaries, is cause for concern. Although its financial picture is somewhat better than those of neighbors such as Montgomery County, which faces a $300 million spending gap, Prince George's is struggling to pay for improvements in its sprawling school system, which is asking for $139 million in new state aid. The county also must figure out how to shore up the ailing Prince George's Hospital Center, which is costing the county and the state $30 million a year.

There is also increased pressure on social services agencies because of the county's high foreclosure rate. And the prospect for more state aid, at a time when local revenue is flat at best and likely to go down in the next few years, is not good. O'Malley is looking for any means to trim spending and shift costs back to localities. His budget director, T. Eloise Foster, scoffed at the county school system's budget request in a recent letter to School Superintendent William R. Hite Jr., saying it was as if the county thought "that the governor's winning reelection is the equivalent to winning the lottery."

"It's bleak; it's scary," Prince George's Board of Education Chairman Verjeana M. Jacobs said after Baker outlined the county's finances and needs at a school board meeting Wednesday.

"There are so many challenges, so many unknowns from the state," said County Council Chairman Ingrid Turner (D-Bowie), who said she hoped the council would be able to work with Baker to find new sources of revenue. "We will be looking at how we can improve our economic base."

About 25 percent of the county's property tax collections comes from commercial enterprises; the rest is from homeowners. Baker said that improving the commercial tax base is inextricably linked to improving the school system.

"You can't grow it unless you have an education system that is improving," he said.

On Wednesday, after his news conference, Baker told the school board that he would consider using some one-time money, if possible, from the county's $116 million reserve to support school system programs that help with reform, especially if it were for projects that would also bring in outside money from the federal government and foundations.

Baker's financial report is the first in recent months to give a detailed accounting of county spending and revenue.

Johnson had declined to explain the county's overall fiscal condition, saying at the time that finances were too fluid to give a detailed accounting.

Johnson, who left office this month after eight years, and his wife, council member Leslie Johnson (D), have been charged with evidence tampering and destruction of evidence in a federal corruption probe.

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