Montgomery County Executive Isiah Leggett released his $4.3 billion fiscal 2009 operating budget last week, including funding for debt service on $1.8 billion of general obligation debt the county plans to issue over the next six years.
The operating budget proposes closing an estimated $400 million budget shortfall by raising property taxes by $138 on the median county home, cutting 200 jobs, and reducing spending.
“We work to be responsible stewards of our environment, to ensure a vital community where men and women can earn a living or grow a business,” Leggett said in a release. “The good news is that Montgomery County will continue to be a place where all that happens. But the bad news is that county government has been living beyond its means.”
He attributed the budget gap to weakness in the housing market and in the national economy, and said the problem would only worsen if action were not taken to get spending under control.
The County Council must still approve the budget. The new fiscal year begins July 1.
Release of the operating budget comes after Montgomery earlier this year published its $4.1 billion capital budget, where the GO issuance plans were initially proposed.
Under the plan, the county would issue $300 million of GOs each year through fiscal 2014, according to county finance director Jennifer Barrett. Nearly half of the bond proceeds would go towards funding a $1.4 billion, six-year school construction program — the largest commitment ever made by the county. The remaining proceeds would be used to fund affordable housing, public safety, infrastructure preservation, transportation, economic development, and environmental protection projects.
The budget release follows the county’s $75 million refunding GO sale earlier this month, a deal that was increased from $64 million. The bonds had a true interest cost of about 2.9% and an average maturity of 3.5 years, Barrett said.
Montgomery is expected to issue a total of $250 million in fiscal 2008, according to budget documents. Fitch Ratings, Moody’s Investors Service, and Standard & Poor’s all rate the county triple-A with a stable outlook.
