Montgomery County officials are bracing for another year of disappointing state funding for local school construction projects in the wake of information that the state could be facing as much as a $1 billion budget gap next year.
“At this point it sure looks like we are in for a bumpy ride,” Warren Deschenaux, director of the state Office of Policy Analysis, told legislative leaders in an Aug. 27 letter, saying the budget gap is at least $500 million, and perhaps $1 billion.
This spring, Montgomery County leaders learned they would receive $46 million, instead of the $55 million Montgomery County Executive Ike Leggett was promised by Maryland Gov. Martin O’Malley. Montgomery still received more school construction money than any other Maryland county, but hurt feelings remain among leaders who assumed the help was a trade-off for raising income taxes for the state’s wealthiest residents, many of whom live in the county.
“We’ve had enrollment growth this year and we have schools that need modernization, so we’re intensely interested in getting a fair amount,” council Vice President Phil Andrews said. “We’re always eligible for a lot more than we end up receiving under the state’s rules.”
Deschenaux’s forecast for the fiscal 2010 budget was reinforced by final figures for fiscal 2008 released by Comptroller Peter Franchot last week, showing that state revenues came in $73.5 million below estimates. This means the surplus to be carried over into this year’s budget was smaller than expected.
“It is safe to say that in the current economic climate we’re in for more bad news,” Franchot said. “Last year, we were told we had to pass the largest tax increase in state history to solve the deficit, yet here we are nearly one year later, and we still have a deficit.”
David Roose, director of revenue estimates, said that the slowing economy had lowered receipts from the income and sales taxes. If the sales tax hadn’t risen from 5 percent to 6 percent, “receipts would have been essentially flat, the worst performance since 1991.”
The revenue shortfall was not a total surprise. In June, when O’Malley proposed $75 million in reductions to this year’s budget, as the legislature had required, he and his budget secretary both said additional cuts might be necessary because of the economic downturn.
“Obviously, when Annapolis catches a cold, we all are affected,” Leggett’s spokesman Patrick Lacefield said. “We are already looking at a $240 million gap of our own for our budget next year and there is the possibility of having to find more savings from the budget we passed this year. Anything that would take that us further in the wrong direction is obviously troubling.”
Deschenaux and Franchot both said the governor needs to get cooking, since only he and the Board of Public Works, on which Franchot sits, can make further cuts in the budget until the legislature comes back into session.
“Time is of the essence in reducing a budget already in force as resources diminish daily,” Deschenaux said.
“We need to get serious about the financial mess we find ourselves in,” Franchot said. Official updates of revenue estimates for this year are due Sept. 9.
