Prince George’s County expects a deficit of $126 million in the coming fiscal year, which officials hope to address without layoffs or furloughs, according to a county budget official.

The county is projecting $2.71 billion in expenditures for fiscal 2013 but only $2.58 billion in revenues, according a report provided by County Executive Rushern L. Baker’s staff.

The report shows a 2.7 percent decrease in revenue from the current fiscal year and a 1.7 percent increase in expenditures. The fiscal 2012 budget was $2.65 billion.

The decrease is largely due to the weak real estate market, which included the county’s third consecutive year of decreasing property value reassessments, officials said. Overall, the county’s assessable base is expected to decrease 8.2 percent to $76.2 billion for fiscal 2013, according to the report.

"That's our biggest [source of] tax revenue," said Thomas Himler, the county's deputy chief administrative officer for budget, finance and administration.

The projected increase in spending in fiscal 2013, which begins July 1, includes a $13.8 million increase in payments on the county's debts and a $10 million increase for K-12 education, according to the report.

In anticipation of the budget gap, county agencies have been instructed to prioritize their goals for the coming year and focus only on the most essential tasks, Himler said. Agencies were also asked to prepare alternate spending plans based on a five-percent reduction in funds in case things get worse, Himler said.

Last year, the county faced a deficit of $77 million, and used a hiring freeze for county departments — not including police, fire and corrections officers — to help close the gap. Raises for county employees were also eliminated for the third year in a row.

Fiscal 2013 will likely feature a modified hiring freeze, allowing some vacant positions to be filled while others are frozen, Himler said. Police, fire and corrections officers would once again be exempt, he said.

Layoffs and furloughs are not currently being considered, Himler said.

The budget projection includes between $12 million and $15 million in merit raises for county government employees, but the administration is not currently planning to offer those raises, said Scott Peterson, Baker's spokesman.

County Council Chairwoman Andrea Harrison (D-Dist. 5) of Springdale could not immediately be reached for comment Wednesday.

The final budget won’t be determined until the spring, after the General Assembly passes the state budget and balances a projected $1.1 billion deficit.

The fiscal 2013 projections don’t include the possible shift in teacher retirement costs from the state to local governments, an idea that has been floated by state lawmakers in previous years. Various proposals estimate that such a shift could cost the county between $20 million and $70 million, Himler said.

The county is projecting a $13.3 million increase in expenditures for the remainder of fiscal 2012, due in part to higher debt service payments and the special election to fill the vacant District 6 County Council seat, according to the report. A slight increase in revenue is also predicted, from $2.65 billion to $2.656 billion, due in part to income tax and speed camera revenues that were higher than expected, according to the report.