Montco to tap reserves to cover budget gap

Montgomery County plans to overcome a projected $42 million budget shortfall by tapping its cash reserves and cutting spending and jobs, according to a budget proposed yesterday.

Under the $482 million budget, the county aims to hold taxes steady despite declining revenues and losses in its pension fund. It will forgo a $10 million contribution to the pension fund in the hope that finances are in better shape by the end of 2009.

Yesterday morning, two of the three members of the Board of Commissioners said they were proud of the cuts that reduced spending by about $2.5 million over 2008.

"I don't think that that's ever happened before," Vice Chairman Joseph M. Hoeffel III said.

The cuts include a net reduction of 20 full-time jobs from a total of 3,208 and continuing a hiring freeze. The department taking the biggest hit is the Parkhouse elder-care agency in Royersford, which will lose 21 jobs and $4 million.

But there is still a gap, so for the second straight year, the county will dip into its surplus, this time for $20 million. In the current budget year it withdrew $33 million from the fund to cover expenses.

That will reduce the reserve to $46.5 million, less than 10 percent of the annual budget, which is the minimum that advisers recommend the county keep on hand. Hoeffel and Commissioners Chairman James R. Matthews said yesterday that one more year of spending would still leave enough of a reserve to maintain the county's top-level bond rating.

"You wouldn't want to use up your surplus year after year," Hoeffel said. "Then I think the bond-rating company would be upset."

Commissioner Bruce L. Castor Jr., who did not attend the budget-proposal meeting because of a scheduling conflict, said he was uncomfortable with the county's 2009 debt-service cost of $31.1 million, which is the same amount as in 2008, as well as with the decision to defer the $10 million pension contribution.

"I don't see this problem improving for 2010's budget," Castor said. "All this is is passing the buck to future commissioners to solve this problem. That doesn't sound to me like a good way to carry out our mandate."

The budget is scheduled for a public presentation tomorrow morning and public comments are welcome until Dec. 16. A vote on adoption is scheduled for Dec. 22.