Tough economic times are hitting the Howard County government.

After running a budget surplus for the past several years, the county is now in a budget deficit, the county's top budget official said this week, and in danger of taking in less revenue than the previous year for the first time since the 1990s.

County Budget Director Ray Wacks presented the gloomy news to the County Council Oct. 14, warning that the county has a deficit of $1.8 million, compared to a surplus of $12 million at this time last year.

"It's been a roller coaster of a summer and fall, and who knows how many more bumps in the road we have facing us," he said.

The bleak budget picture already has forced the county to adopt several cost-cutting moves, Wacks said, including:

* a "conditional hiring freeze," which means the county does not automatically fill every vacant position but instead evaluates whether the position is necessary;

* setting aside $6 million from a fund primarily used for public works projects to possibly use for other expenses;

* asking department heads to cut discretionary spending, though there have been no hard numbers given;

* a more strict take-home car policy, to save on gasoline costs.

To some council members, however, those measures fell short.

"I'm concerned it's not proactive enough," said County Council member Greg Fox, the lone Republican on the council and the only member to vote against the county's fiscal year 2009 budget in May.

Earlier this year, Fox joined council Chairwoman Courtney Watson in challenging the county's revenue projections as overly optimistic.

The budget approved in May for fiscal year 2009, which began July 1, kept property and income tax rates steady, but raised fees for trash, recycling and water services.

Wacks said the economic outlook was better in the spring, and indications at the time were that the country would return to normal growth and perhaps avoid a recession.

Only County Executive Kenneth Ulman has the authority to alter the budget, and both Fox and Watson urged him to consider more serious spending cuts.

"I'm just concerned about where we're going to be in six months," Watson said. "We don't want to lay people off if we can do other things now." Watson also called for the council to look at ways to reduce its own spending.

Ulman said he did not think it would be necessary to do anything beyond what the county already has done to cut costs, but he would continue to monitor the situation and "nothing is off the table."

Wacks said furloughs of county employees are not being discussed, although the idea could be considered in the future. About 80 to 90 percent of most departments' budgets are salary costs, which are difficult to reduce without cutting employees, he said.

Another potential source of money is $10 million the county this year put in a fund used to pay retired county employees' health insurance. The state requires the county to contribute to the fund, but the county can reduce its contribution, Wacks said.

The drawback, he added, is that reducing the contribution and thus the size of the fund could lower the county's bond rating, which could make it harder and more expensive for the county to borrow.

Tax collections dip

About 85 percent of the money the county takes in is from property and income taxes, both of which could be down this year, Wacks noted.

The county was projecting 4 percent growth in its income tax revenues, but has revised the projections down to 2 percent. Wacks said that number could change again after the state, which collects the tax, makes its next round of disbursements to the counties in November.

Property tax revenues could also be down in the future, Wacks said. Houses in the northeast county and east Columbia will be reassessed soon, and the overall decline in the housing market likely means the figures will be lower. Reassessments in other regions could pose similar problems in coming years, Wacks said.

Meanwhile, Howard County and other local governments in Maryland already have been put on notice that they can expect less money from the state next year, primarily in school spending, as the state is expecting another budget shortfall.

At a meeting between the council and Board of Education Oct. 15, Watson said she expects the county will ask the schools to make cuts from their current budget to help offset the projected deficit.

Superintendent Sydney Cousin said the system has complied with similar requests in the past, but that it was premature to say where he would look for cuts in the board's current $657.1 million operating budget.

The last time the county faced a similarly rough budget period was in the 1990s, Wacks said, when the county cut services and raises, and furloughed employees.

Staff writer Jennifer Broadwater contributed to this article.

*This article has been updated from an earlier version.

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user comments (1)

user exinsider says...

Next year's budget is the most critical issue. And right now, school system negotiating teams are starting the process of negotiating salary increases for nearly 8,000 teachers and other employees. The last increases cost well over $30 million and provided teachers with both a 5% across-the-board raise plus "step" increases that averaged about another 2.5%. Given the recession, it seems prudent for the Board of Education to bite the bullet now and tell its negotiators that the 2009 target is $0. No raises: regrettable, but clearly realistic. There is no way to balance the budget in a recession without addressing salaries...no amount of cuts to supplies, travel, textbooks, or the like will generate the savings required.

Posted 9:28 AM, 10.16.08 | Permalink