A recent projection of a future county budget shortfall is likely not as damning as originally portrayed, Montgomery County Council President Hans Riemer said Monday.
Earlier this month, county legislative analysts Craig Howard and Aron Trombka reported on compensation cost trends over the past five years and forecasted a $200 million budget shortfall in 2024. The report says the county would be facing a budget shortfall of more than $100 million in the current fiscal year if not for a significant tax rate increase passed by the council in 2016.
According to the report, revenues are expected to maintain a consistent 2.7 percent growth rate through 2024. The report also projects the average annual growth rate for compensation costs will be 3.8 percent if wages, Social Security and group insurance costs grow at the same rates and retirement costs remain constant during that period. This would lead to a $200 million budget shortfall over the course of five years, according to the report.
But at his final media briefing as council president, Riemer on Monday said because the report focused solely on compensation costs and did not encompass other factors affecting the entire budget, it possibly painted a misleading picture about the future of the county budget.
“I don’t necessarily think that report says you must have a tax increase in the future at all,” Riemer said. “What it says is there’s a sustainability problem with compensation and the next several budgets are going to have to grapple with the fact that the overall compensation picture has not included additional funding for pensions.”
At its Dec. 11 meeting, the council members is scheduled to receive more information about the county’s revenue trends. That information will provide a better look at future budget projections, Riemer said.
“There’s no way to project the budget shortfall in five years. Well, there is, but it’s not going to be a very accurate number,” Riemer said. “I don’t think that was the gist of that report. It might have said, five years from now if you continue current trends, that there’s a mismatch.”
