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Prince George’s County Executive Angela Alsobrooks (D) plans to plug a $60 million hole in her next budget with rainy day funds to avoid raising taxes even as she faces calls to increase county spending.
Alsobrooks is taking the stopgap measure as a deadline looms for county leaders to agree on its $5.4 billion budget for the year that begins July 1. That plan was based on projected revenue that fell short this month.
Building an accurate economic picture has been a moving target for state and local officials, who have been rattled by a fluctuating economy and have had to adjust their mid-cycle predictions now that they haven’t been injected federal money for coronavirus relief that has boosted revenue in recent years. years.
“We’re in a triple whammy,” said Michael Sanderson, executive director of the Maryland Association of Counties. “It’s a strange economy that many of us have never seen. Has it been strong because of federal intervention and subsidy-backed businesses? How much of the strength has been an illusion that is about to disappear as does federal support evaporate?
In Maryland, Gov. Wes Moore (D) faced falling sales tax receipts after taking office with a surplus. California Governor Gavin Newsom (D) closed a budget deficit of $32 billion with $33.7 billion of budget reserves. New York officials had it initially planned a surplus of $17.3 billion, but had to revise its plans as the projected surplus turned into an expected cumulative deficit of $22.2 billion over the next three years.
While the Prince George’s County Office of Management and Budget factored the pandemic and the coronavirus spending sunset into its initial projections, a sluggish economy and worsening revenue trends were not captured in the initial projection data, said Anthony McAuliffe, alsobrooks’ assistant director of communications. .
“New data continues to factor into revenue projections,” he said, citing fluctuating capital gains tax yields.
Maryland readjusting its own numbers could be the “canary in the coal mine” by alerting more counties to reexamine their numbers, said Sanderson, whose nonprofit promotes efficient government on behalf of of elected officials and governments.
Sanderson said government leaders typically want to avoid dipping into reserves because that can affect a jurisdiction’s bond rating or credit score, especially if they routinely use that money to cover expenses.
At the end of fiscal year 2022, the county had $625 million in reserve funds.
Prince George had one Triple A bond rating in 2022, which means the county has high creditworthiness and a low probability of default on its financial obligations.
When he was county executive, Rushern L. Baker III took that bond rating into account as the county’s cash reserves hit a record low in 2015 after county officials withdrew money to cover shortfalls budgets, snow removal and incentives for economic development. He proposed a fiscal 2016 budget with sharp spending cuts, higher property taxes, and higher hotel taxes and fees.
The needs of the region have grown since then. But the decades-old rules — the Marylanders’ Tax Reform Initiative — prevent the county from raising the residential property tax rate and limit what leaders can do, generations of politicians have said.
Alsobrooks in March denounced his options in the face of state education mandates that he said prevented the county from meeting other pressing needs, such as providing more affordable housing and facilitating economic development.
Months later, on the day he announced his candidacy to succeed US Sen. Ben Cardin (D-Md.), the grassroots advocacy organization. Progressive Maryland held a press conference along with other activists pressing Alsobrooks to fund social justice initiatives. Advocates called for Alsobrooks to fund a guaranteed basic income, a crime prevention security camera incentive program, senior housing assistance, rental assistance and the election program small dollar starting fairs created by the county council in 2018.
The total cost of these programs, many of which were implemented by members of the populist-leaning majority council, is $15 million. To say there’s no money in the budget to support these programs is “illusion,” Larry Stafford, executive director of Progressive Maryland, said on the day of Alsobrooks’ campaign launch.
The shortfall is barely 1 percent of the budget, Stafford told reporters, noting that the $5.4 billion is an increase from the $4.34 billion budget that was adopted last year.
While 1 percent may not seem like much, the amount shouldn’t be trivialized, Sanderson said.
“We might be talking about a big difference in public parks or a big difference in power [fix] potholes, and snow removal, or all the other things that local governments do,” he said. “It may be only one percent of the budget, but a large part of the budget each year is fair [continuing] pay the employees who were there the previous year and [continuing] to run most of the same programs it did before.”
The chances of the county using reserves to fund items championed by liberal activists are low as the county executive seeks to be frugal, McAuliffe said.
“Dipping into reserves to fund new programs is not ideal and is not sustainable in the long term,” he said. “Using reserve funds to fund new programs, when we should already be using them to cover the deficit and support government services, would be fiscally irresponsible.”
Alsobrooks will continue to face headwinds as it tries, in the current financial climate, to expand the county’s commercial economy to avoid tax increases, he said. Thomas Luke Spreenassistant professor at the University of Maryland School of Public Policy.
Demand for office space in major metropolitan areas has declined as the country reorients itself after the pandemic, making expansion of commercial areas difficult. Prince George must make up the difference by using reserves, cutting spending in some areas or raising taxes, Spreen said.
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