P.G. County faces budget shortfall
Prince George's County officials are facing a budget shortfall next fiscal year, prompted by falling property tax revenue.
Property taxes are projected to drop $28.9 million, or 4 percent, in fiscal 2013 from the $720.6 million the county expects to bring in this year, according to a report from the county's Spending Affordability Committee.
That would translate into a budget hole of $15.5 million as expenses outpace revenues, the committee said.
"This means that we will continue to face difficult spending decisions due to the slow economy and poor housing market," Thomas Himler, the director of the county's Office of Management and Budget, wrote in an email. "At this time, projected spending will exceed projected revenues."
Experts say the county's high foreclosure rate has crippled its housing market and deflated housing prices by staggering numbers.
In the current fiscal year, housing values for a third of homes in Prince George's dropped by more than 28 percent. The state of Maryland reassesses one-third of every county's properties each year.
In Prince George's, the next group of properties is projected to have values slashed by 30 percent, according to the report.
Prince George's County has the highest rate of foreclosures in the state.
The effects of foreclosures on Prince George's tax revenue are two-fold, according to Richard Clinch, professor of economic development at the University of Baltimore. It starts when no taxes are paid on the foreclosed properties.
"Furthermore, property valuations across the state and region are falling because the property boom ended," Clinch said. "And foreclosures have the effect of causing the property values of adjacent and nearby property to fall."
And the county's ability to spend is tied to its property tax revenue -- it's the most lucrative local revenue source the county has.
The committee reported that spending in fiscal 2012 is projected to exceed general fund revenues in fiscal 2013 by about $16 million. The budget situation could get worse depending on federal and state budget cuts.
Officials are working on a more precise deficit projection over the next few weeks, Himler said.
Meanwhile, the county's focus of the next budget will be developing a sustainable model, one where spending doesn't continue to exceed revenue, he said.
bgiles@washingtonexaminer.com
Property taxes are projected to drop $28.9 million, or 4 percent, in fiscal 2013 from the $720.6 million the county expects to bring in this year, according to a report from the county's Spending Affordability Committee.
That would translate into a budget hole of $15.5 million as expenses outpace revenues, the committee said.
"This means that we will continue to face difficult spending decisions due to the slow economy and poor housing market," Thomas Himler, the director of the county's Office of Management and Budget, wrote in an email. "At this time, projected spending will exceed projected revenues."
Experts say the county's high foreclosure rate has crippled its housing market and deflated housing prices by staggering numbers.
In the current fiscal year, housing values for a third of homes in Prince George's dropped by more than 28 percent. The state of Maryland reassesses one-third of every county's properties each year.
In Prince George's, the next group of properties is projected to have values slashed by 30 percent, according to the report.
Prince George's County has the highest rate of foreclosures in the state.
The effects of foreclosures on Prince George's tax revenue are two-fold, according to Richard Clinch, professor of economic development at the University of Baltimore. It starts when no taxes are paid on the foreclosed properties.
"Furthermore, property valuations across the state and region are falling because the property boom ended," Clinch said. "And foreclosures have the effect of causing the property values of adjacent and nearby property to fall."
And the county's ability to spend is tied to its property tax revenue -- it's the most lucrative local revenue source the county has.
The committee reported that spending in fiscal 2012 is projected to exceed general fund revenues in fiscal 2013 by about $16 million. The budget situation could get worse depending on federal and state budget cuts.
Officials are working on a more precise deficit projection over the next few weeks, Himler said.
Meanwhile, the county's focus of the next budget will be developing a sustainable model, one where spending doesn't continue to exceed revenue, he said.
bgiles@washingtonexaminer.com
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