Prince Georges County Council Town Hall PRINCE GEORGES

Prince George’s County Council Town Hall PRINCE GEORGE’S COUNTY FINANCIAL OVERVIEW March 2, 2021 February 26, 2019

q Long-Term Fiscal Outlook Agenda q Economic Outlook q Revenue Outlook q FY 2021 and FY 2022 2

Long-Term Fiscal Outlook 3

General Fund: Six Year Forecast §In the absence of structural change, an annual budget gap of $49 – $351 million is projected between FY 2022 - FY 2027. 4

Fiscal Challenges: Fiscal Structural Budget Gap § A structural gap between revenue growth and expenditure growth is expected to grow based on the factors below: § Revenue growth of $6 million ~ $115. 0 million per year § Expenditure growth of $12. 8 million ~ 150. 8 million per year, primarily driven by: § Debt Service § Maintenance of Effort (MOE) contribution to the Board of Education § Fringe Benefit Costs – pensions, healthcare, workers compensation, OPEB, etc. § Compensation increases based on collective bargaining negotiation results § Public Safety personnel costs and new recruitment classes § Additional staffing § Various operating expenses (gas/oil, utilities, contract cost increases, leases, equipment replacement costs, etc. ) 5

ECONOMIC OUTLOOK 6

County. Jobs. Growth County Source: Maryland Department of Labor, Licensing and Regulation § The County lost 46, 000 jobs(-14%) between the 2 nd quarters of CY 2019 and CY 2020. § The Leisure and Hospitality sector lost over 16, 000 jobs, equal to a 42. 3% decline. § The Trade, Transportation, & Utilities sector also lost nearly 8, 000 jobs. 7

Housing Trends – & Volume Median Housing Home Sales Price Median Home Sales Price & Volume § The average median home sales price from FY 2020 to FY 2021 rose from $322. 0 to $352. 4. Average sales volume increased by 20. 0% during in the same period. 8

REVENUE OUTLOOK 9

FY 2021 Preliminary FY 2020 SACSAC Recommendations 10

FY 2021 - FY 2022 11

General Fiscal Summary General. Fund Fiscal Summary ($ in million) § In FY 2020, the County had a $45. 4 million deficit. Revenues were by -$154. 6 million or -4. 3% below the budget. Expenditures were $109. 2 million or -3. 0% below the FY 2020 budget. The overall fund balance total for the three major components is $431. 1 million. § In FY 2021, revenues and expenditures are estimated to be -$60. 5 million below the approved budget. Overall fund balance is estimated at $370. 6 million, or 10. 0% of estimated revenues. § The preliminary FY 2022 forecast projects a -$49. 3 million deficit. Revenues are estimated to be $22. 5 million or 0. 6% over the FY 2021 budget. The expenditure forecast is $12. 8 million above the FY 2021 estimated budget. Overall fund balance is estimated at $322. 9 million; equal to 8. 7% of estimated revenues. 12

FY 2022 Projections Preliminary FY 2020 Projections § The pandemic has had a significant impact on County revenues. Federal and State stimulus legislation has helped support businesses and the income of County residents, however the State legislation also reduced County income taxes. Prior State legislation has also affected Pass Through Entity Withholding. Revenue forecasting is more challenging. § FY 2022 projected revenue growth is $24. 1 million or 0. 6% over the FY 2021 budget. Expenditures are expected to increase $12. 8 million or 0. 3% above the FY 2021 budget. The preliminary forecast estimates a projected budget gap of approximately -$49. 3 million. This shortfall is attributable to the fact that revenue is essentially flat for FY 2020 through FY 2022. 13

FY 2022 Projected Budget Gap - Expenditures § The County’s faces a difficult fiscal outlook. Demands on County services remain high but revenue is not growing. It is expected to take several years before unemployment levels return to normal levels. § The FY 2022 forecast projects a -$49. 3 million deficit. The expenditure forecast is $12. 8 million above the FY 2021 budget. The forecast for FY 2022 reflects the following: § Fringe (4. 4% annually for health plans for FY 2022) and operating expense adjustments (2% for general government) § Limited Public Safety Classes § Assume annual new debt requiring $172. 8 million to $209. 0 million between FY 2022 and FY 2027 for debt service costs. § OPEB/Worker’s Compensation in Non-Departmental § The FY 2022 budget will slightly exceed the recommendation of the Spending Affordability Committee. 14

Q&A