The Montgomery County Council set a cap on its operational spending Tuesday, a move that could limit county government should resources fall short.

In a unanimous vote, the council set its spending affordability guidelines for the fiscal 2013 operating budget, including funding both Montgomery County Public Schools and Montgomery College at maintenance of effort levels.

Maintenence of effort law requires counties fund schools at the same per pupil level from one year to the next.

By the second Tuesday each February, the council must set three guidelines on its operational spending: a ceiling on property taxes, a ceiling on its aggregate, or tax-supported, operating budget and its allocation of its aggregate operating budget.

In the current fiscal year, the county did not fund the school system at maintenence of effort, and as a result, the school is scheduled to lose $26 million in state aid for fiscal 2013 as a penalty. School board members are assuming in their recommended budget that the penalty will not be assessed.

Funding the schools at maintenence of effort restricts available resources for county government and the Maryland-National Capital Park and Planning Commission, said Jacob Sesker, senior legislative analyst. Should resources fall short of projections, commitments to education and other allocations could significantly limit funding for other areas.

Following the unanimous recommendation of its Government Operations and Fiscal Policy Committee, the council capped property tax revenue at the charter limit, or the amount of property tax revenue it can collect without requiring a unanimous vote. The charter requires such a vote if property tax revenue exceeds the previous year’s tax by more than the rate of inflation.

The council capped its tax-supported budget at last year’s level plus the 4.8 percent rate of increase in personal income.

It’s guideline for allocating the tax-supporting budget was:

n $315 million to debt service;

n $59.2 million to current revenue for the capital budget;

n $29.5 million to PAYGO, or pay-as-you-go revenue to offset the need for additional bonds;

n $146.6 million to pre-fund retiree health insurance, an increase of $97 million over the current fiscal year allocation of $49.6 million;

n $1.997 billion to the school system;

n $132.9 million to Montgomery College.

The council also set its targets for community grants at $2.2 million in council grants and $2.2 million in executive grants.

kalexander@gazette.net