The start of the new year means state and local governments will also begin honing in on budgets for the next fiscal year, which begins this summer. In Maryland it won’t be easy.

The state is looking at a multibillion dollar budget deficit, and county governments are also trying to figure out how to handle increased costs with a declining amount of revenue. Prince George’s County Public Schools Superintendent Millard House II told the school board last month the next budget will be a challenge.

“In addition to the uncertainty to the economy and changes in the federal government, we’re planning for the impact of a few different things,” House said.

That includes a reduction in federal funding after a big infusion of COVID relief money earlier this decade.

“The state facing substantial gaps between spending commitments and ongoing revenue” will have an impact on school systems statewide, House said.

Another big impact comes from a telecommunications tax revenue stream that used to go directly to the school system, but is now part of the county’s contribution to the Blueprint for Maryland’s Future funding requirements.

Instead of the county’s contribution on top of that additional revenue stream, the county will now get credit for it. In return, the county has promised to take on more of the cost of constructing new schools in the future.

For most taxpayers, a dollar is a dollar, but in this case, the capital budget is separate from the operating budget being discussed here, hence the budget gap.

Overall enrollment in the county has started holding steady, but it’s less than what it was before the pandemic, and the number of students who didn’t grow up with English as their primary language is increasing, which requires more services.

In all, House said the priorities for the upcoming budget will be investments in literacy among young students, mental health and other social services, and students with disabilities, as well as continued enhancements to transportation.

At the same time, the costs associated with running a school system are going up. Those expenses include everything from salaries to building maintenance, as well as new technology used by the school system.

“Given the financial constraints that we’re facing, my executive leadership has been challenged,” House said. “Even with the limited program enhancements that we’re facing, the budget deficit, due to the mandatory obligations and the rising cost of doing business … will require further cuts.”

A few million dollars have already been cut from the budget, but in the coming months the school system will try to find another $37.3 million in savings. And school leaders admitted this isn’t just a one-time deficit the school system will be facing — and the county will need to “look at really resetting our budget” in the future.

In the meantime, the school system will be holding multiple budget work sessions and public hearings during January and February to solicit more feedback from county residents.