UPDATED (8:43a.m.)—Baltimore County's budget could grow by 3 percent next year under a recommendation approved by the County Council's Spending Affordability Committee.
But a looming shift of costs of pensions for teachers as well as community college and library employees could have dramatic effect on the county budget for the coming year.
"These are tough times, no doubt about it," said Councilman Tom Quirk, chairman of the Spending Affordability Committee. "I'm confident we'll get through them and this recommendation gives the county some flexibility."
The recommendation for the budget year that begins July 1 calls for a nearly $47.5 million increase in spending based on a five year average of personal income growth.
Prior to the 2011 budget, the committee based its recommendation on a projection of personal income growth for the coming budget year.
The increase could raise county spending to more than $1.64 billion. The budget for the current year is sightly more than $1.6 billion.
The proposed increase is less than the more than 3 percent increase considered in a preliminary report earlier this month.
The recommendation is not meant to be a mandate on spending as much as a signal to County Executive Kevin Kamenetz as to the limits of budget growth for the coming year.
The County Council committee met Tuesday afternoon to make a final recommendation limiting the growth of the county budget.
The council has not passed a budget that has exceeded the committee's recommended limit.
Perhaps the biggest concern for local government is if the state will shift a part of the cost of pensions for teachers, community college and library employees onto the county.
Currently the state picks up 100 percent of those costs. Gov. Martin O'Malley's budget for 2013 proposes an equal split with local governments.
The governor estimates that the actual cost to Baltimore County in the first year will be just under $3 million after taking into account some offsets such as the closure of a property transfer tax loophole and higher taxes for so-called higher earners.
Internally, the county expects the costs could be as high as $6 million to $10 million for the budget year that begins July 1.
An estimate by the Maryland Association of Counties project Baltimore County's share could be as high as $29 million.
Quirk said he fears the cost to the county could be up to $50 million if the Maryland General Assembly fails to pass all of the tax changes in the governor's proposed budget.
"We just don't know that number yet," said Quirk.
The General Assembly is not required to finalize the budget until the beginning of April—about two weeks before Kamenetz is required to deliver his budget to the County Council.
Whatever the final pension number turns out to be, it will not count against the final number used for spending affordability compliance. The committee left in place a policy passed last year that allows the county to absorb passdown costs from the state on a one-time basis. Kamenetz would be required to account for the costs and bring his budget in under the spending affordability limit the following year.
Also of concern is the continuing gap between projected county revenues and spending.
As it stands, the county auditor's office projects there will be about a $94 million gap between revenues and spending. That projection could change when final estimates on revenues, including property transfer taxes, are known in mid-February.
The shortfall could require the county to pay for ongoing expenses from surplus funds—a policy that the county has mostly avoided until recently.
If Kamenetz were to use surplus money to fill in the gaps, the 2013 budget would mark the third consecutive year the county has used such a tactic.
"There is enough surplus," said County Auditor Lauren Smelkinson. "However, the continued use of surplus is not sustainable."