Three days into his new administration, Baltimore County Executive C. A. Dutch Ruppersberger III yesterday said that this year's tax revenues are $12 million below estimates, and a $3.9 million deficit is looming.
The shortfall next year could be as high as $15 million, budget officials said.
Despite the gloomy outlook, Mr. Ruppersberger said, he is looking for ways to make up the $3.9 million shortfall before the fiscal year ends June 30.
"Tax increases and layoffs will be an absolute last resort," he said.
The county has a $25 million rainy day fund, which is available if no other solutions are found, the executive said.
The lower-than-expected income tax revenues have more ominous implications for next year, but they may not be clear until spring, when Mr. Ruppersberger's first budget will be announced.
Under the latest projections, the county's fiscal 1996 income tax collections will be $15 million below earlier estimates. That loss, coupled with political pressure to keep taxes down, could force more budget cuts in the fiscal year starting July 1.
Although the $15 million shortfall is a tiny fraction of the county's $1.3 billion budget, other sources of revenue, including the property tax, have been flat or headed downward, leaving the county hard-pressed to keep up with inflation and contractual obligations. For example, each 1 percent increase in county employees' pay costs $6 million a year.
Although indications of lower-than-expected income taxes have been discussed since September, Mr. Ruppersberger said, he didn't get actual numbers until Tuesday, his first full working day on the job.
The new county executive spent most of yesterday meeting with County Council members, employee union presidents, school board officials and reporters to inform them officially of the problem.
Most union leaders expressed support and said they appreciated the prompt notification and a chance to offer cost-saving suggestions.
"The main issue in the firefighters' minds is that we're three days into this administration and we've been told," said John M. Norris, secretary of Firefighters Local 1311. He called it a welcome contrast to the style of former County Executive Roger B. Hayden.
"Roger dictated solutions," he said. "We're part of the process [now], and we appreciate that."
Most council members also praised Mr. Ruppersberger's quick candor. "The public must be informed that we're operating with reduced revenues," said council Chairman Vincent J. Gardina.
"I don't think anybody's surprised," said Dundalk Councilman Louis L. DePazzo.
Education officials said the reduced income will affect their negotiations with county teachers for a new contract. However, school board President Paul Cunningham and Associate Superintendent Robert Chapman said they were assured that the county would pay for enough new teachers next year to keep teacher-student ratios as they are. Enrollment is expected to grow by 4,000, or about 4 percent
Ray Suarez, president of the Teachers Association of Baltimore County, said he's "pretty confident" that Mr. Ruppersberger will not cut classroom resources. "We've got to hope for warm weather and better income and sales tax returns," Mr. Suarez said, noting that a warm winter would save money on snow removal.
County Budget Director Fred Homan said the overly optimistic income revenue estimates were the result of a mistake by Maryland tax officials in distributing too much income tax money to counties last winter.
The county based its estimates for this year on those distributions, which proved wrong. As a result, the county got too money from the state last winter, and state officials withheld $4.6 million during the summer summer to compensate.
Mr. Homan said the $12 million loss this year will be reduced to $3.9 million by several means. The county expects to save $2.5 million each from debt service payments that can be postponed and from lower than expected health insurance premiums. The rest of the savings will come mainly from unpaid salaries due to job turnover.
Mr. Ruppersberger said his main concern now is avoiding further damage from possible state budget cuts during the 1995 General Assembly session. "For now, what we will try to do is manage it through," he said. "I want to show leadership to resolve these problems."