Baltimore County is facing a $138 million revenue shortfall this year but will implement budget-balancing adjustments without furloughs, layoffs or disruptions in services, officials said.

Declining revenues, particularly a sharp drop in income tax, are contributing to the deficit that will affect the $2.5 billion budget for 2010, according to a newly released analysis from the county's audit department. Nearly every department will face budget cuts, but officials insist residents and employees will barely notice the changes.

"We will end this fiscal year with a balanced budget," said Don Mohler, county spokesman. "The bottom line is, there will be no cuts in services or staff. We will make the adjustments we need to make."

Mohler would not discuss specifics but said administrators are constantly reviewing the county's budget and will decide where to trim costs. The expected decreases in spending "are not unlike the budget management families go through during difficult economic times," he said.

The revenue situation "will necessitate action on the part of the administration to curtail budgeted expenditures and/or draw down additional surplus funds this year," according to the report, which was made public Friday.

General fund revenue projections for the current fiscal year, which ends June 30, are expected to total $1.48 billion, a drop of about 8.5 percent, since the County Council adopted the budget in the spring. Income tax revenues are projected to decline nearly 22 percent from last year. Unemployment among county residents was at 7.8 percent in November, a 5.4 percent increase from 2008 and slightly higher than the state average of 7.3 percent.

The decline in county revenue could deepen, depending on how the state deals with its steep shortfall.

"The state deficit is definitely a concern, especially since it is not yet clear what state aid cuts will be passed through to the counties," said Mary P. Allen, county auditor.

The county auditor's office has identified several possible cost-cutting measures, including the elimination of excess payments made this year to the county's self-insurance and retirement funds. The county's contributions to both funds were more than what consultants recommended, officials said.

"This really comes down to a measure of exercising control over spending and appropriations," Allen said. "We have identified some options available to the administration, but what they might choose, we don't know. But this has to be addressed by June 30."

County Council Chairman John Olszewski said officials may have to defer some capital projects and might fill the gaps with some surplus or emergency funds, often referred to as "rainy day" money.