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Monday, June 25, 2012

Budget Challenges Continue

Our latest six-year fiscal plan shows a sobering reality for Montgomery County: our resources will continue to be constrained, and that will necessitate very careful management of our spending.

Since 2010, the county government has issued six-year fiscal plans.  The plans project revenues, mandatory expenditures (such as debt service, retiree health pre-funding and reserves) and the amounts left over for services. 

This practice allows us to see rough estimates over time for how much we will have to spend on schools, parks, police and fire protection and other county services.

Due to the economy’s slow recovery from the Great Recession, the county’s revenues are projected to rise by just 2.3-3.6% per year through 2018.  That is not very different from what inflation will probably be over that period.  At the same time, the state has mandated local spending increases for MCPS matching its growth in enrollment.  Next year, we are projected to increase our local contribution to MCPS by 1.5% as a result of state law.  If we do, according to today’s estimates, we will have to cut most of the rest of the government by 5.2%.

Over the long run, the answer to our budget problems is to increase our rate of economic growth to expand our tax base.  I’m committed to doing that.  But in the short run, we have to continue to manage our spending carefully and show restraint with our resources.  You can count on me to do exactly that.