Over the past few weeks, the Montgomery County Council has pared down its budget proposal for next year, trimming $71.6 million — or about 1.2% — in spending while keeping funding at levels that allow current programs to continue.
The “continuity of services” approach to the budget is unlikely to include new programs or initiatives, but the council unanimously agreed to add eight items to the budget. The additional expenses total about $2.6 million.
Among the expenses: 10 school health nurses; security grants for faith-based organizations; three field inspectors for solid-waste disposal; and enhanced cells, vents, bunks and doors to reduce self-harm for inmates under the supervision the Department of Correction and Rehabilitation.
A total of $110,000 for contracting outside counsel for case workloads in the county attorney’s office is the only cost among the additional items that is eligible to be covered by the $183.4 million the county received through a federal stimulus package.
Special appropriations for responding to the pandemic are expected to be mostly covered by the package, as well as other potential federal stimulus funding.
Some money will reimburse pandemic costs for municipalities that cannot directly apply for Federal Emergency Management Agency (FEMA) funding.
After rejecting two proposals for tax increases and a change in interpretation of the charter limit, the council has reduced its available money and some revenues by $66.4 million , bringing total revenues to around $5.2 million.
Council staff members have estimated that there are three possible scenarios for the county’s tax revenue loss for the combined fiscal years of 2020 and 2021:
● a short recession and quick recovery (until the end of FY21), with a loss of $150 million to $250 million
● a short recession and a long recovery (until FY24), with a loss of $260 million to $500 million
● a deep recession and a long recovery (until FY25 and FY26), with a loss of $360 million to $600 million
Marlene Michaelson, executive director of the Office of the County Council, said during Tuesday’s council meeting that a quick recovery is not likely.
“I would be remiss in not reminding you that this coming fiscal year is probably going to look a lot worse than we’re experiencing right now,” she said.
The budget doesn’t reflect any additional adjustments in total revenues since the county is waiting to receive “additional information about the length of shutdowns, potential pace of recovery, and whether we will receive additional federal funding” before estimating reductions, staff members wrote in a report.
The council still has a few budget items to discuss before a final vote on the budget on May 21. It is currently on track to have reserves that are 10.2% of the budget, or $553.8 million. County Executive Marc Elrich had recommended 10%, or $549 million.
“By reducing the resources, you effectively changed the ratio,” Michaelson said. “The base on which we calculate reserves is now smaller, so the amount we allocated looks a little higher than it was.”
“Basically, we’re still in OK shape right now on reserves, and we will obviously have to revisit it when we come back to the budget early in the fiscal year, whether that be summer or early fall.”
Council Member Nancy Navarro said she was pleased with the expected level of reserves.
“We literally had to deconstruct the budget that we received,” she said. “I don’t think I can ever recall a time that we had to do that under very, very stressful circumstances. I think we see the light at the end of the tunnel — that this was a very important approach.”
Council Vice President Tom Hucker said any expenses that municipalities in the county have taken on in responding to the pandemic should be tracked and “treated fairly” with reimbursements from the federal stimulus payment to the county.
Council Member Hans Riemer said the executive branch should provide the council with a savings plan for the next fiscal year.
The savings plan can be expected soon, but staff members still need to know more information before sending one over, Rich Madaleno, the county’s budget director, said.
That includes knowing how much the county will receive from the state in income tax revenues after May 25, which is four days after the budget is approve.
The revenues will be income tax from January, February and March.
“Probably 10 of those 12 weeks would have been very normal,” Madaleno said, adding that the last two weeks were the beginning of a decline because of increasing unemployment.
The county will receive income tax revenue for April and May at the end of June.
“You want to be cautious about what you’re putting on the table and taking off the table, and responding when we have better information,” Madaleno said. “We will be in a stronger position in a few weeks than we are now in understanding the situation. In two or three months, we will be in an even better situation.”
Riemer said next year’s budget will be one for the history books, since more of an economic and budget slump is expected.
“It’s a gathering storm and I think we have battened down and braced this county as best we can, and now we’re going to need to work together as it arrives,” he said.
Briana Adhikusuma can be reached at firstname.lastname@example.org.