Leonardtown, MD –The new members of St. Mary’s County Commissioners have started their four-year term facing a $2.5 million current year budget deficit. The commissioners were given the news by Chief Financial Officer Elaine Kramer at a budget workshop Monday, Dec. 15.

Over the past few years the former commissioners had been confronted with flat property tax revenues and more than offsetting increasing income tax revenues upon which to build a budget. Now the situation has reversed. Kramer told the commissioners that property tax revenues are coming in at $1.1 million more than budgeted while income tax revenues are lagging by $3.6 million. The net is a $2.5 million shortfall.

The increasing property tax revenues may indicate that home values decimated by the recession are on the rise again. But at the same time the income tax problem is a likely lagging reflection of the Sequester, furloughs and overall U.S. Department of Defense belt tightening, affecting the county’s largest employer, Patuxent River Naval Air Station.

Kramer’s office has identified savings in the current year’s budget to offset some of the sticker shock. The county is anticipating a savings in its health care account of $800,000 from last year and also a $400,000 savings due to a Worker’s Compensation rate reduction.

The county also budgeted $673,317 as an Emergency Reserve to cover some of the potential contingencies of the fluid economy. Kramer has recommended that the county commissioners use that reserve to cover the shortfall.

Other savings that could be instituted include not filling all or part of the currently vacant positions (more than 30) or eliminating the hires scheduled for mid-year on January 31 of 2015. The decisions will be made when the commissioners return to session early next year and begin budget deliberations.

The county is in relatively good financial position to make up shortfalls when compared to many counties. According to the budget audit released Tuesday, Dec. 16 by the commissioners, there is a $22.8 million Unassigned Fund Balance and another almost identical amount in a fund balance that is listed as “committed.”

In addition, the county has budgeted a $7.5 million BRAC reserve to mitigate any negative impact from future Base Realignment and Closure activities, That amount is included in an additional $40.4 million capital projects fund balance account called “Restricted.”

Contact Dick Myers at news@thebaynet.com