County faces $100M deficit

Johnson imposes hiring freeze to help bridge revenue and spending gap

Johnson imposed a virtual freeze on hiring new employees on Friday to counter the projected shortfall for the next fiscal year, caused by state cuts and the flagging real estate market.

Johnson and the County Council will need to bridge the $100 million gap between revenue and expenditure by the time the budget is passed in late spring. Budget deliberations have just begun for the next fiscal year, which starts July 1.

This marks the first time in four years that the county has faced budget cuts. Since 2004, Prince George’s leaders rode a wave of rising assessments, commercial growth and robust home sales to fund increases in school spending and a bigger police force.

But slow home sales caused by the subprime mortgage meltdown have crippled county revenues from transfer and recordation taxes, causing major losses.

According to real estate firm Metropolitan Regional Information Systems, just 390 houses sold in Prince George’s County in December, a 50 percent drop from the same time in 2006. It capped a year of slow sales, where just a small percentage of houses on the market went to contract.

By the time the fiscal year ends in June, county officials estimate a $60 million drop from last year’s real estate sales taxes. That, combined with about $40 million in losses from state budget changes made during November’s special session of the General Assembly, has forced the county to plan for cutbacks in spending.

‘‘It’s the transfer and recordation. That’s really what’s killing us,” said Jonathan Seeman, director of the county’s Office of Management and Budget.

The county is also unable to raise taxes to cover the gap because of a property tax cap law in place. The County Charter requires that any increase in taxes be approved in a voter referendum.

‘‘We are not in a position to raise money in our county,” said Johnson, who did say the county might tap into a ‘‘tiny amount” of its reserve fund.

It is unclear where the cuts will be directed. County education officials recently proposed their own budget that keeps spending levels the same as the current year, while other departments are just beginning to meet to outline their spending plans for next year.

Johnson said he would likely make exceptions to the hiring freeze to bring on more police officers, 911 dispatchers and firefighters. But his aides said they aren’t sure anymore whether the county can commit to previous pledges to hire at least 150 new police officers annually.

Johnson said the county should be able to cope, but pleaded with state lawmakers not to cut the budget for his county further in the current legislative session in Annapolis.

‘‘The number one thing we need ... is to make sure we don’t have any further erosion,” he said. ‘‘We’re going to need you to really help us out.”

Lawmakers made no promises at the meeting, but said the county should look at ways to raise its own revenue, including imposing a telephone tax increase that the County Council sent to referendum last spring.

‘‘I would look at bringing that back,” said Senate President Thomas V. ‘‘Mike” Miller (D) of Calvert County, whose district includes a portion of southern Prince George’s.

County Council President David Harrington said it was too early to say what areas could be cut to balance the county budget. But he said the council would be more heavily involved in spending decisions this year than in the past.

‘‘There will be a different kind of process this year,” said Harrington (D-Dist. 5) of Cheverly. ‘‘I’m hoping we can work out an arrangement.”

E-mail Daniel Valentine at dvalentine@gazette.net.