Correction: Earlier versions of this article incorrectly said that 75 percent of the county’s budget shortfall came from overtime payments to public safety agencies. Public safety spending accounted for 75 percent of the shortfall, but only some of that spending was from overtime costs. The article has been corrected.
Prince George’s County is facing a $62.5 million budget shortfall with six weeks left in the fiscal year, officials said.
The deficit was driven primarily by higher-than-projected overtime pay for public safety officials, workers compensation payments and snow-removal operations during an unusually snowy winter.
If county government leaders cannot decide on a strategy to close the gap, the deficits could carry into the next fiscal year, officials said, resulting in possible hiring freezes, furloughs and agency budget cuts.
“The problem is, we’re literally at the end of doing the budget for next year, and this came down,” said County Council member William A. Campos (D-Hyattsville). “We are juggling two monumental things.”
Normally, holes in projected revenue are plugged during the budget process. But for the first time in several years, the revenue collected in fiscal 2014 did not cover actual operating expenses for the year, said Thomas Himler, deputy chief administrative officer for budget, finance and administration.
The largest chunk of the deficit – 75 percent – went to public safety expenses. Overtime payments to police, sheriff’s deputies, corrections officers, paramedics and firefighters accounted for $17 million. The Prince George’s County Police Department exceeded its budget by about $21 million, a little more than a third of the total deficit.
Officials said some of the unbudgeted overtime stems from County Executive Rushern L. Baker III’s initiative to station extra officers in troubled communities in an effort to lower crime rates.
The county also needed more money than expected to fund new classes of recruits and their fringe benefits, including retirement and health care, according to a budget update presented to the council this month.
“Overtime has been a problem for some time,” said council member Mary A. Lehman (D-Laurel). “A certain amount of overtime is unavoidable because there aren’t enough officers and firefighters to staff all the stations and apparatus safely.”
Changes in the overtime rules under Baker (D) have contributed to the enormous expenses, she said.
Of the total shortfall, about $10 million went to one-time costs such as snow removal. The shortfall also includes a $7 million liability payout by the Prince George’s County Housing Authority after an independent auditor found that housing choice voucher funds were used inappropriately.
Income tax revenue was lower than expected in Prince George’s, in part because of federal government furloughs and cost-cutting as part of last year’s sequester. But that shortfall was made up by an increase in property taxes as the housing market recovers, according to the Office of Management and Budget.
Baker’s administration proposed this week bridging the shortfall by taking $42 million out of the fund balance, or reserve fund, and cutting $20 million in agency operating budgets.
The plan would have to be approved by the council.
Depleting the reserve fund would leave the county vulnerable as it begins the next fiscal year. The county is supposed to safeguard about 7 percent of operating revenue in the fund balance. Council members said they are concerned that depleting those reserves could affect the county’s triple A bond rating.
If the deficit carries over into next fiscal year, Prince George’s may have to impose hiring freezes and, possibly, furloughs — something some council members said they are unwilling to do.
The deficit debate could delay the council’s adoption of the 2015 budget next week.