Though Montgomery County expects to take in $31 million less in 2010 revenue than it did in 2009, the county has prevented a tax increase by cutting spending.

The $407.7 million budget that commissioners approved yesterday includes a dip into cash reserves of more than $10 million - leaving the fund, used in calculating the county's bond rating, with less than $36 million.

The budget also spends $27 million less than the county did in 2009, with most departments cutting costs or keeping new expenditures minimal.

Two departments - the day care and cafeteria used by county employees - were privatized, eliminating a handful of jobs from the 2010 payroll, which now has 3,057 workers.

County Commissioners Chairman James R. Matthews noted that the county had made a point of avoiding layoffs at a time when the national unemployment rate has been spiking.

"Out of 3,100 employees, we lose less than a dozen," Matthews said. "This is a dream place to work."

Although the county mostly avoided layoffs, its workers do get pinched in the new budget, which freezes wages without a cost-of-living increase and requires workers to pay part of their health-care costs for the first time, a measure that proved controversial during budget deliberations.

The county is self-insuring for the first time in 2010, which Matthews said was necessary because no outside insurer could be found to take on the risk of paying for county workers' health care. The county used Blue Cross as its insurance provider in 2009, and ended up costing Blue Cross millions more than it paid in premiums. Matthews said that appeared to have made other insurers leery of the potential risk.

But Commissioner Bruce L. Castor Jr. said he had not seen enough evidence that the county's private insurance broker had conducted a thorough search for outside insurers, and voted to reject the budget for that and other reasons.

The budget passed, 2-1, with Joseph M. Hoeffel III joining Matthews to support the spending plan.

Matthews himself balked at one of the larger cuts, which stripped $500,000 out of a requested $21 million appropriation for Montgomery County Community College, but eventually agreed it was necessary. He told college president Karen A. Stout yesterday during the commissioners meeting that the county would make emergency funding available if the institution required it.

Contact staff writer Derrick Nunnally at 610-313-8212 or dnunnally@phillynews.com.