Montgomery County council members from left, Craig Rice, George Leventhal, Roger Berliner, Marc Elrich, Nancy Floreen, Tom Hucker and Sidney Katz on Dec. 1 in Rockville. A recent budget shortfall has become political fodder for a non-council member in the race to succeed County Executive Isiah Leggett in 2018. (Katherine Frey)

Montgomery County is preparing to draw up a savings plan in coming weeks in response to a budget shortfall of nearly $120 million.

More than half the gap, about $64 million, comes from a decline in projected income tax revenue, officials said. Another $25 million is a revenue shortfall from fiscal 2017. Most of the rest is from projected lags in revenue from the county's fuel and energy tax, and in income tax for the rest of fiscal 2018.

County Executive Isiah Leggett (D) is asking all county agencies under his control to propose ways to cut their budgets by 2 percent to cover the shortfall.

Leggett will take those recommendations and present the council with his own proposed savings plan, probably by Dec. 15. In a memo to County Council President Roger Berliner ­(D-Potomac-Bethesda), Leggett "strongly encouraged" the legislative and judicial branch departments to identify savings of 2 percent as well.

Berliner said lawmakers will weigh changes and adopt a plan to cover the shortfall by early February. The county's annual operating budget is about $5.5 billion.

In a Nov. 30 memo, chief administrative officer Timothy Firestine said the shortfall was driven primarily by a nearly 30 percent decline in income tax revenue from taxpayers filing extensions for tax year 2016.

The memo cites the Maryland Comptroller's Office as saying other jurisdictions in the state are shouldering a similar burden.

Berliner said the shortfall came as a surprise to county lawmakers, given that the "economy is pretty strong, we have low unemployment." He said the council assumed that in Montgomery, the largest and one of the wealthiest jurisdictions in the state, "our high-income taxpayers would have more dollars, not less."

"That assumption turned out to be wrong," he said.

Leggett said it was unlikely that departments would ultimately face 2 percent across-the-board cuts. Instead, he said, some agencies would probably be required to make greater spending reductions than others.

Berliner noted that the council, too, would be "reluctant" to impose a uniform cut.

In his memo, Leggett encouraged the council to act "as soon as possible" once the body receives his recommendations.

"The longer you wait, the less time you have to deal with it," he said.

Next year is an election year in Maryland, with Leggett retiring and three sitting council members — Berliner, at-large council members Marc Elrich (D) and George L. Leventhal (D) — among the candidates vying to succeed him. The budget shortfall immediately became political fodder for one of the non-council members in the race.

State Del. C. William Frick ­(D-Montgomery) issued a news release saying the revenue situation reflects the need for new leadership in local government.

"Despite an increase in the recordation tax, and a nearly 9 percent increase in property taxes, we find ourselves without sufficient revenues to pay for these councilmembers' pet projects, and, as a result, public services are being cut," Frick wrote. "Our county deserves better."