Slashed budgets, frozen payrolls and a sluggish housing market add up to a grim short-term financial forecast for Montgomery County, according to a new report on the state of the county’s economy.
In a dour forecast for the fiscal year to begin in July, Montgomery County Finance Director Jennifer Barret told the County Council this week that the index of regional stocks was down 18 percent in 2007, job creation slowed in all sectors, and the diving housing market is projected to continue this year,
In November, home sales were down 71 percent from the June 2005 peak in Montgomery County. The result was a combined 18.1 percent drop in property transfer and recordation taxes to $73.9 million from $90.2 million in the first half of fiscal year 2008.
That’s just a slim portion of the $401 million budget gap predicted for Montgomery County’s next fiscal year that kicks off in July. To fill the gap, Montgomery County Executive Ike Leggett proposed broad budget cuts. Those cuts, combined with Maryland Gov. Martin O’Malley‘s slices to the state budget, could mean ailing school buildings continuing to crumble and firetrucks taking longer to get to house fires.
And while unemployment remains relatively low, household surveys from the past year show that employment has declined, though income and consumption tax collections look to remain on target for the remainder of the county’s fiscal year.
One promising note is that despite the slowdown in housing sales, property values rose 4.5 percent in November 2007, which in turn increased property tax collections by 4.9 percent from the first half of fiscal year 2007.
But national indicators show the housing market has yet to reach its bottom, and in Montgomery County, analysts say there are more homes on the market than there are buyers, which means residential construction, lagging nationally, could to take a dive locally, too.
Barret said housing sales are expected to begin a rebound in the second half of 2008.
