ROCKVILLE – During the final county council meeting of the year on Dec. 10, council members received a budget update plagued with arguably possible shortfalls.
Although the county’s income and revenue figures are not yet definite, revenue estimates for fiscal year 2021 currently are estimated to decrease by two-tenths of a percent from FY 2020.
“We closed out almost $60 million” less than expected during FY 2019, said Gene Smith, a legislative analyst for the county.
However, he added, revenues were up $17 million, mostly from what he called a “one-time gain” due to changes in the federal income tax law pertaining to capital gains.
Smith said those issues and a smaller than expected workforce could make the county start FY 20-21 with a $130 million gap.
If that holds true, spending would have to be cut by almost 3%.
“We are operating in a new environment,” said Michael Coveyou, acting director of finance for the county.
Revenues from income tax are “somewhat more difficult” to estimate, he said.
Besides changes in the federal tax code, the county also may receive fewer dollars than expected, because the federal government changed its population estimates, he said.
“Our working population is down somewhat,” Coveyou said.
Another factor is that inflation is 1% lower than what was expected at this time, he said.
He also pointed to the fact that “new construction has not kept pace” with expectations.
As new figures come in from the state and federal governments, “hopefully we will be able to have a rebound,” he said.
Montgomery County Director of the Office of Management and Budget Rich Madaleno explained that the population had not decreased here, it’s just that it did not increase as much as first predicted.
David Platt, the chief economist at the county’s department of finance, told council members that the U.S. Bureau of Labor and Statistics reduced the number of county residents who are employed by about 6,000.
“They did this to just about every county in Maryland,” Madaleno said of the federal government.
The result of fewer people is less revenue from taxes, he said.
Therefore, this fiscal year began with $60 million less in reserves than approved initially.
“Clearly, we have a problem. We are not as good at this as we should be,” Councilman Andrew Friedson said, referring to the way the county estimates revenues and expenditures for future budgets.
“We have to do a lot better” in preparing estimates and “smoothing out the volatility” that comes with dealing with an ever-changing economic environment, Friedson said.
Apparently, he said, statements of how good the economy is don’t ring true.
“The economy is far more sluggish than we are willing to admit,” he said. “We are not attracting enough new workers to Montgomery County.”
Friedson added, “If we are not growing, we are falling seriously behind.”
Councilmember Nancy Navarro noted, “At the end of the day, we are going to have to pass a balanced budget.”
She hoped that would not necessitate any tax increases, stating, “We need to own this” and not make residents pay more.
“We have been here before,” she said.
Also, during the meeting, council members approved spending $15.9 million for the White Flint Workaround.
The money will allow the project to continue without delay and cover costs needed due to design changes for storm drain and utility conflicts, land acquisitions, utility relocations and other construction costs.
Those costs will be included in the FY20 capital budget and the FY19-24 capital improvements program.
The council also agreed to spend $2.3 million for the Rockville Grey Courthouse project, which is expected to be completed next year.
When completed, it will be used to house some county offices rather than continuing to pay for leasing space.
Also, during the meeting, the council announced a Jan. 14 public hearing concerning the expenditure of $1.5 million for school security systems and $164,000 to increase the number of school community health nurse positions.