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Olszewski expects deeper coronavirus-related impact in revised Baltimore County budget forecast

Baltimore County Executive Johnny Olszewski Jr. is expecting county revenues to fall short of projections over the next 14 months, telling county councilmembers the coronavirus-related shutdowns will have a bigger impact than the administration originally budgeted.

In a letter sent to the Baltimore County Council Monday, county budget director Ed Blades said the administration anticipates revenues will fall $69.3 million short of projections in the budget year beginning July 1, as income taxes, real estate taxes and other revenue sources decline during the pandemic. Adding to the problem, Blades said they are also expecting an additional revenue reduction of $63.2 million in the current budget year. In total, Olszewski’s administration is planning for county revenues to miss projections by more than $172 million between now and June 2021.

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The new forecast comes a week before the County Council is scheduled to vote on the proposed budget for fiscal 2021. Olszewski said a month ago the pandemic would cost the county $40 million in revenue, but at that time the Democrat said their expectations will be adjusted as they get a better understanding “of the depth of the crisis.”

“One month later the situation is still evolving and our office is prepared to respond as needed,” Blades wrote. “The impacts of the virus will not be limited to the upcoming fiscal year alone.”

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With schools closed and many businesses shut down, Blades said they are anticipating “a deep reduction” of 22% in income tax withholdings for tax year 2020. As a result, the county is “building in assumptions” of 0% personal income growth through the end of tax year 2021.

The county’s transfer and recordation taxes are also forecast to be down by 77% for the remainder of fiscal 2020, Blades said. Investment income is forecast to be down 26% from budgeted levels, however, Blades said the upcoming fiscal year projection “slashes expectations even further” to an anticipated 95% reduction from its former $10.5 million budget.

Motel and hotel tax revenue is projected to drop by 70% for the remainder of the fiscal year, but Blades said they’re preparing for “an anticipated recovery” for fiscal 2021. Admissions and amusement tax revenues will also be affected in each fiscal year, he said.

In total, Blades said their new recommendations for fiscal year 2021 represents only a 0.25% increase over fiscal year 2020 revenue.

Some County Council members think the shortfall could be even worse than the Olszewski administration is predicting.

Last month, Baltimore County Councilman Tom Quirk said county economic assumptions have “collapsed.” He said analysts now expect revenues to fall $270 million short of projections by the end of the budget year beginning July 1. Quirk has recommended the county consider eliminating plans to give workers a cost-of-living and other pay increases, plans to fund schools above state requirements and plans to pay for new construction projects.

“We have to go into this budget being really realistic," Quirk, an Oella Democrat, said Monday.

Adding to the challenge is uncertainty over how long the pandemic and its economic effects will last, said Councilman David Marks.

“There are concerns that we may get a second round of the coronavirus in the fall,” said Marks, a Perry Hall Republican. “All of us to some extent are operating on hunches about what the economy is gonna look like in the fall. Are schools open? Are a lot of people back in business?”

Marks added that cities and counties don’t yet know whether federal lawmakers will deliver another stimulus package that includes more aid for local government.

Quirk said he is hopeful for federal aid for municipalities, which “could go a long, long way toward helping.”

“But we can’t budget for that hope,” Quirk said. "We have to budget for the reality that we know.”

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The County Council is scheduled to discuss the budget Thursday with a vote set for May 21. Details for the full budget are available on the county government’s website.

Baltimore Sun reporter Alison Knezevich contributed to this story.

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