ROCKVILLE, Md. -- It was a hat trick of bad news Tuesday during a Montgomery County Council budget update:
- Home sale prices -- falling
- Unemployment -- rising
- Job growth -- slowing.
Existing-home sale prices dropped by nearly 8 percent in 2008, according to the report. The jobless rate rose by more than 1 percentage point last year; in December, about four percent of the county, or 19,000 people, was out of work. This is compared with 12,000 people in December 2007.
"There was basically no employment growth in 2008 over 2007," said Office of County Council Staff Director Stephen Farber.
But even the news that the county had a net gain of 420 jobs couldn't lift spirits. The combined effect of falling home sale prices, increased unemployment and no job growth will mean far fewer tax dollars in coming budgets, officials said.
"The decrease in capital gains is extraordinary," said Councilwoman Nancy Floreen, noting the loss of tax revenue that comes from transactions like real estate sales. "Nothing in here is good news."
The average price of a home fell by 8 percent to about $507,000 in 2008; this marked a decline from a 10-year high of about $550,000 in 2007. Home sales fell by 21 percent in 2008, to more than 8,000, according to the county's Department of Finance.
Home sales in Montgomery County have been falling since a high of almost 18,000 in 2004, but until 2008, average sale prices had been increasing.
Because of the decline in home values, residential property assessments that fell by more than 16 percent, according to the State Department of Assessments and Taxation. That will reduce property tax revenue for the county, though estimates won't be available until late this month, Farber said.
Despite the grim revenue outlook, the council voted to expand its affordability guidelines for capital projects as it prepares the fiscal 2010 budget. This essentially means the county is acting as if it will have $330 million, not $300 million, to work with on projects such as school construction and road repairs.
County Executive Ike Leggett opposed the move, saying it "sends the wrong message in this fiscal climate." But the majority on the council said it would allow its members budgetary flexibility before the final plan to be voted on in the spring.