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City may have to lay off workers

January 31, 2003|by SCOTT BUTKI

scottb@herald-mail.com

The Hagerstown mayor and a councilman say they hope the city can find ways to increase revenues and decrease expenses so employee layoffs can be avoided.

But it is possible a general fund shortfall of about $2 million anticipated for the next fiscal year can't be resolved without furloughing some city employees, Mayor William M. Breichner and Hagerstown Councilman N. Linn Hendershot said Wednesday.

"We will probably have to have layoffs. We will probably have to do things we would not do in normal times," Hendershot said during Tuesday's council meeting.

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His comment was the first mention of the possibility of layoffs due to a budget shortfall for the next fiscal year, which begins July 1.

"Hopefully it will be minimal," he said.

City Administrator Bruce Zimmerman said Wednesday the city must find ways to increase revenues and cut expenses. It is too soon to say whether the budget cuts would have to include layoffs, Zimmerman said.

Hendershot said layoffs may turn out to be unavoidable.

The city has 455 full-time employees, 22 part-time workers and four seasonal workers, city officials said.

Labor costs account for about 75 percent of the city's general fund budget, Breichner said.

The city has been prudent about adding employees in recent years, and has kept some positions vacant to keep costs down, he said.

Layoffs are a last resort but they are a possibility, he said.

In early January, Finance Director Alfred Martin estimated the shortfall for fiscal 2003-04 would be at least $1.25 million.

But last week, Martin said that Maryland Gov. Robert Ehrlich's proposed budget would cost Hagerstown nearly $700,000, increasing the city's projected budget shortfall for the next fiscal year to about $2 million.

Ehrlich has proposed an $841,316 reduction in the amount of Municipal Highway User Revenues the state gives to Washington County's municipalities. Hagerstown, which receives about 74 percent of the revenue, stands to lose about $640,000, Martin said. That represents a cut of about 34 percent from the $1.9 million the city now receives, he said.

Under Ehrlich's proposal, the state also would begin charging an administrative service fee for property tax assessment services provided to local governments, Martin said. He estimated the cost to Hagerstown would be about $45,000.

The financial situation has worsened because revenue from personal property tax and state income tax have been less than estimated, among other factors, city officials say.

To balance the current fiscal year's budget, the city increased real estate and business property tax rates, trash fees and water and sewer rates.

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