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Posted at 10:44 AM ET, 12/ 2/2010

Mont. Co. faces $350M budget shortfall

By Michael A. Laris

Montgomery County is facing a two-year budget shortfall of $350 million, an unexpectedly wide gap just six months after Montgomery's last tumultuous round of reductions.

Officials are being told to scour departments immediately for new cuts. Numerous programs will shrink or be eliminated, and hundreds of layoffs are possible next year, officials said. County Executive Isiah Leggett (D), for example, is calling for $19 million in cuts to the public school system, part of a broader mid-year "savings plan" that would also hit public safety and other county programs.

In an e-mail to county staff Thursday, Leggett said he has instructed officials overseeing Fire and Rescue, Police, Health and Human Services, and transit to identify cuts totaling 5 percent of current spending in preparation for next year's budget.

Other county government departments -- from housing and libraries to recreation and the environment -- were instructed to find cuts of 15 percent. The final numbers might shift, with say one department taking a 12 percent hit and another taking 17 percent, officials said. The targets are "starting points," Leggett said.

"I wish I could say to you that our difficulties are easing, but this is not the case," Leggett wrote.

Income tax revenues are down tens of millions of dollars from already diminished projections, he said, and other major forces are at play.

"The State of Maryland is facing a $1.6 billion deficit. The realignment in Congress may dampen our regional economy. And President Obama's just-announced two-year freeze on federal salaries will also adversely affect County tax revenues," Leggett said.

In May, officials reduced overall county spending for the first time in more than 40 years. In June, they endorsed a six-year austerity plan designed to increase reserves and put aside more for retiree health benefits. That plan contemplated a slight increase in spending next year by county agencies.

But the assumptions in that plan -- which some viewed as somewhat miserly just months ago -- have proven overly optimistic.

The budget shortfall for the current fiscal year is estimated at $100 million, Leggett said. In the next fiscal year, which begins July 1, the projected gap is $250 million, Leggett said.

By Michael A. Laris  | December 2, 2010; 10:44 AM ET
Categories:  Maryland  
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