Local Governments Begin Budget Cycle, Face Uncertainties

An article in the Gazette highlights a few of the budget uncertainties facing county governments as they begin to prepare their fiscal 2015 budgets. From the article:

While the financial outlooks for Montgomery County and Maryland have improved somewhat from earlier projections, uncertainty in the county’s budget stems from several variables, including the federal government’s decisions on the budget debt ceiling and a possible Supreme Court decision originating in Maryland involving payment of county income taxes.

In Montgomery County, although revenue projections have increased, its Director of the Office of Management and Budget is still urging fiscal restraint.

The county’s fiscal plan would require all county agencies to take a 0.9 percent spending cut to produce a balanced budget in fiscal ’15.

But because of the county’s obligations to provide “maintenance of effort” funding to its public schools and Montgomery College, funding for the county government and the Maryland-National Capital Park and Planning Commission would have to be reduced by 2.4 percent to balance the budget.

The county income tax case, Maryland State Comptroller of the Treasury v. Brian Wynne, et ux., could cost local governments approximately $50 million a year. Whereas, all counties will be affected by this decision, Montgomery County would realize a disproportionate share of the fiscal burden under an adverse final decision.

That case concerns whether counties must be required to provide a credit for county income taxes on out-of-state income taxes paid to other states on certain types of corporate income.

The Maryland Court of Appeals ruled that failure to provide a credit is unconstitutional, and the Supreme Court hasn’t decided whether to accept the case, according to county documents.

Additional coverage of the Wynne Case can be found on Conduit Street.