As the national and global economies continue to deteriorate, we're fortunate that Maryland is in a better position than most states. We're relatively wealthy, our economy is largely service based and a steady stream of Federal government expenditures supports much of the state economy.
Nevertheless, we're definitely going to feel the effects. A glance at the newspapers over the past couple of days reveals that state tax revenues continue to fall, the unemployment rate continues to climb and foreclosures are still climbing.
Many local jursidictions are taking steps to reduce their expenditures in view of expected revenue reductions in the coming years. Montgomery County is negotiating with the employee unions to see if they can reduce or defer the pay raises that had been negotiated for the coming year and the county executive has proposed cuts in services. Baltimore mayor Dixon has announced she will propose up to $200 million in cuts and Prince George's County is looking at possible cuts.
It would be nice to see the jurisdictions here on The Shore being a bit more proactive in looking at cuts. In less than two months the new legislative session begins and we can be sure that the state is going to further cut support to local governments in an attempt to close the projected state shortfall of $1 billion or more.
With Maryland's peculiar three-year cycle of real estate appraisal, the local governments have been somewhat insulated from the effects of falling property values, but that's going to change soon. Because increases in assessments are phased in over three years, assessed values in many jurisdictions appear to be still rising. But properties assessed in 2006 when values were high will be assessed again in 2009 and it's very likely that there will be a decline in values most places. Thus the property tax base will begin to decline.
So keep an eye on the county governments and see what steps they are taking to deal with the issue. The sooner they start, the better.