Montgomery to face staff cuts, possible tax hikes, officials say

WASHINGTON (Map, News) - Montgomery officials said Friday that reductions in county staff positions are inevitable and property tax increase possible as the county struggles to close a $297 million projected budget gap for the fiscal year that begins in July.

Last fall, County Executive Ike Leggett announced a $401 million budget gap. Budget officials announced last week that the deficit was down to $297 million, after midyear spending cuts, revised assumptions about county spending and slightly higher revenue projections. Nonetheless, a county official with 20 years of experience in Montgomery government told reporters Friday he had never seen a budget situation this dire.

“To be at a gap of $300 million at this point in the process is unprecedented,” county budget director Joe Beach said.

Officials blame the nation's housing crisis for the bulk of budget woes, saying the county had planned on collecting far greater revenue from taxes associated with home sales at this point than they have.

The county last had hard times in 2003, and dealt with budget woes by asking some employees on a union contract to delay cost of living adjustments for 4.5 months, raising the energy tax 200 percent and the income tax from 2.9 percent to the state limit of 3.2 percent.

Jennifer Hughes, special assistant to Leggett, said this year is “really different.”

“There wasn't the landscape created by the state's special session which brought a new computer services tax and a 20 percent increase in the sales tax,” Hughes said. “Residents are seeing big increases in Metro fares, water, gas and fuel bills and none of these things were part of the landscape in 2003 and 2004.”

Leggett's special assistant Chuck Short said county budget writers are researching all options, including buyouts of contracts for county employees and eliminating some government positions, while adding that the county typically transfers people to other jobs rather than lay them off completely.

Finance officials repeatedly told reporters that there were “very limited revenue options,” and were quick to point out that Montgomery “held the line” on property taxes last year.

“I'm going to say everything is on the table,” Hughes told The Examiner.

The county's charter bars increases in revenue collected from property taxes beyond the rate of inflation, unless seven of nine council members vote to override the charter limit. The council has voted to exceed the limit three times since the rule took effect in fiscal 1992.

kmiller@dcexaminer.com

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