Next year's shortfall? '$76M and growing'

The bad news keeps rolling in for county officials.

A day after County Executive John R. Leopold announced that Anne Arundel faces a shortfall of historic proportions this year, another county official revealed that next year's deficit is expected to be twice as large.

County Councilman Ed Middlebrooks said the behind-the-scenes projection for next year's budget hole is "$76 million and growing."

If borne out, the figure would push the county to cut at least 6 percent of its spending or raise taxes to keep services in place.

The $36 million shortfall for this year - which appears to be the largest in county history - prompted Mr. Leopold yesterday to announce a freeze on the purchase of big-ticket items such as fire trucks, computers and police cruisers. Those measures come after he announced in September a nine-month hiring freeze.

Mr. Leopold declined through a spokesman to comment on next year's predicted $76 million problem or how he plans to handle it. The spokesman said it is premature to talk about next year's budget before this fiscal year ends in June.

"County Executive Leopold has a plan in place to deal with the budget as it develops," spokesman David Abrams said. "We have more county figures coming in, and we also have the state numbers coming out shortly, and we'll deal with those numbers as they come out."

The county's fiscal woes for this year stem from the nose-diving real estate industry. County budget analysts predict revenue from the transfer of property to be flat relative to last year, but those tax receipts already lag last year's by $23 million, a 38-percent drop.

County officials declined to explain the reasons why the gap for 2010 is expected to be much larger.

On Monday, Mr. Leopold briefed county leaders on the budget picture for this year and next. He also has shared the increasingly bad news with schools Superintendent Kevin M. Maxwell over the past few months.

"We are on the same page, with a clear-eyed understanding of the fiscal picture," Mr. Leopold said.

Anne Arundel is one of many jurisdictions in Maryland struggling to make ends meet as money falls short. Yesterday in Montgomery County, teachers agreed to give up a 5-percent raise promised in their contract next year in order to save $89 million.

Gov. Martin O'Malley's administration has proposed furloughs for state workers, forcing employees to take at least two days off without pay before the end of the year in order to save about $34 million.

Yesterday morning, Mr. Leopold said, "furloughs are a remedy of last resort" for Anne Arundel County.

Council Vice Chairman Cathy Vitale, R-Severna Park, suggested county leaders should mimic the cost-cutting methods of former County Executive Robert Neall, who faced large shortfalls in the early 1990s. Mr. Neall held forums and information sessions with county workers, inviting employees to help choose the solutions that ultimately put teachers on furloughs and cut other workers' wages.

"They work in the field every day," Ms. Vitale said. "They know better than the first or the fourth floor of the Arundel Center where the savings are," she said, referring to the offices of the council, Mr. Leopold and his cabinet.

"Faced with options, we should ask them (the workers) to help make solutions for the county. Let's tap in the expertise and the ingenuity of the people that we hire," she said.

News of the projected shortfall brought on worries of new taxes to help shore up revenue problems.

"It's not too early for us in the business community to have those fears, because we, as the chamber of commerce, are always on the lookout for potential new taxes," said Bob Burdon, president and CEO of the Annapolis and Anne Arundel County Chamber of Commerce. He added that everyone in the community had a responsibility to help make sure government stays afloat.

The shortfall predictions mean the county government will have to shave $110 million in expenses over the next two years unless a new revenue stream is found. A task force formed by Mr. Leopold to tackle financial issues has recommended some tax increases.

"I don't think you can balance (this) on the backs of the business community with the magnitude of the losses you're seeing here," Mr. Burdon said.

But the collaboration of county and school officials came as welcome news to observers who have watched Mr. Leopold and Dr. Maxwell spar over funding.

The chamber has advocated without success for the schools and county to combine expenses on things such as printing, purchasing or payroll software in order to cut costs.

The deficit provided Mr. Burdon with a touch of optimism those measures may come to fruition, saying the circumstances "give the opportunity to really look for efficiencies ... right now the motivation does exist."

The Associated Press contributed to this report.