Council Nukes Elrich Over COVID Grants

By Adam Pagnucco.

Here are two things that almost everyone inside and outside of county government will agree on.

  1. The needs of residents and businesses for financial assistance to deal with the COVID crisis are immense.
  2. The $183 million in CARES Act grant money the county has been allocated by the federal government is helpful but is far from adequate to cover all the above needs.

With those two things said, representatives of the executive branch told the county council yesterday that they have not spent all the federal money appropriated by the council yet. And facing an end-of-year deadline to get the money out the door, there is now doubt as to whether the county will spend all of the federal money or forfeit some of it.

The council’s response to this was nothing short of nuclear.

The fissile material was prepared by council staff, whose memo to the council listed major appropriations of federal assistance and its actual expenditure by the executive branch. Six federal money appropriations mentioned in the memo and passed by the council months ago include:

Resolution 19-439: Emergency Assistance Relief Payment (EARP) Program
Adopted by council: 4/30/20
Funds appropriated by council: $5,000,000
Funds spent by executive branch: $0

Resolution 19-499: 3R Program (Reopen, Relaunch, Reimagine) – Economic Development
Adopted by council: 6/16/20
Funds appropriated by council: $500,000
Funds spent: $142,500 (Note: the county’s economic development corporation is responsible for spending this money.)

Resolution 19-506: Food Assistance/Security
Adopted by council: 6/23/20
Funds appropriated by council: $10,300,000
Funds spent by executive branch: $5,052,209

Resolution 19-523: Reopen Montgomery Initiative
Adopted by council: 7/7/20
Funds appropriated by council: $14,000,000
Funds spent by executive branch: $1,431,538

Resolution 19-535: Business Assistance for Medical and Dental Clinics
Adopted by council: 7/21/20
Funds appropriated by council: $3,000,000
Funds spent by executive branch: $0

Resolution 19-557: Rental Assistance and Eviction/Homelessness Prevention
Adopted by council: 7/28/20
Funds appropriated by council: $20,000,000
Funds spent by executive branch: $607,508

The above six appropriations total $52.8 million, of which the largest chunk ($20 million) is assistance to renters. Of that amount, the executive branch has spent $7,233,755. If the executive branch does not spend the remaining $45.6 million of federal money by December 31, it risks forfeiting the money.

That’s not all. Eight additional appropriations of federal money passed more recently by the council total $12.1 million, of which the executive branch has so far spent just $30,492. The two largest portions of this money are assistance to school age child care providers ($7.7 million) and assistance to distressed, affordable common ownership communities ($2 million). If this money is not spent by December 31, it might also be forfeited.

What’s the problem? First, the county just can’t spray checks around; it has to design the assistance programs, publicize them to potential recipients, process the applications and distribute the funds. Those things take staff and time. Second and more seriously, the county has had problems complying with FEMA paperwork requirements to get reimbursed. The process is nightmarish and time-consuming with FEMA changing the rules at least once (so far). County homeland security director Earl Stoddard told the council that the county had obtained just $20,000(!) in reimbursement from FEMA so far and that took more than two weeks and dozens of staff hours to process. Stoddard and Chief Administrative Officer Rich Madaleno made no defense of the feds and were clearly frustrated.

None of this mollified the council, who proceeded to nuke the executive branch from orbit. Here are just four quotes from MANY angry statements by council members.

Council Member Andrew Friedson
This is a really frustrating conversation and clearly there are a lot more questions than answers. Some of that is understandable when in the midst of a crisis and there are a lot more questions. We don’t know what the future will hold, we don’t know what this virus will do, we don’t know what the impact on our community will be, we can’t control what the federal government… and how they will respond. But the idea that our residents and our businesses are struggling more than they ever have and are more vulnerable than they’ve ever been, when the needs are as challenging as they currently are, with an economic crisis and a public health emergency, that our issue right now is not whether or not we will run out of money too quickly, but whether or not the clock will run out before these programs will have been able to help the businesses, help the residents, help the vulnerable members of our community who desperately need it. And I can’t tell you how frustrating that is for me. I believe it’s frustrating similarly for colleagues and I can’t imagine how frustrating that is for the 1.1 million residents who are desperately trying to get through the most challenging time in our lifetimes.

Council Member Nancy Navarro
For that list of special appropriations that we started, some of them, all the way back in April, the amount of money that has not been spent translates into residents not receiving that assistance. Residents who we interact with on a daily basis that I know I have said, “Oh no, we have this program, we have that program,” we all did, all these different places and interviews and social media, pushing all this out and I keep getting feedback that, “Well no, we have not really been able to access this and we have not received that,” thinking OK, we’ll keep working on it. So number one, I’m just super disappointed that so many of these amounts, these special appropriations, these funds that are specifically to address the needs of some of the most vulnerable people in the county, and when I see how little has been spent, I just don’t even know what to say…

There is no excuse for the fact that so much of this money has not been out there.

Council Member Gabe Albornoz
I’m not confident at all that a month from now, when we have another update, that things will be significantly improved from where we are right now. And we’re setting everybody up for failure right now. And it’s not fair. It’s not fair to the county employees who are working diligently and around the clock to address these issues. We need stronger strategic leadership to be able to provide them with the support that they need to be able to get their jobs done. And I’m not seeing that and I’m not hearing that right now.

Council Member Will Jawando
The thing that is totally unacceptable to me is that we can’t get money out of the door that we’ve appropriated for rent and for food and for emergency assistance. So we just have to do better on that.

Council Members also called out County Executive Marc Elrich directly.

Navarro
I apologize to you, Dr. Stoddard, because this is not directed at you, because you’re not the executive. And I will say, the executive should be here talking to us about what is happening because this is really, really critical.

Council Member Tom Hucker
[To Madaleno] Do you know where the county executive is? I would just expect the county executive to be coming in and making this presentation. This is not one, this is like five or six of the most important issues facing the county. It’s hard enough to tell our constituents, “We don’t have money to keep your business open, we don’t have money to keep you in your apartment,” but it’s heartbreaking to tell them, “We have the money, we appropriated it, and it’s in a bank account, we just haven’t given it to you yet. And we may not be able to.” And I would just think, if there would be one thing he’d be on top of, it’s this. I don’t want to be unfair to him, I’m happy to tell him that himself, but I’m a little shocked that he’s not here to make this presentation and that it also wasn’t made months ago.

Council Member Craig Rice
This lies firmly in the county executive’s lap. And look, I have been incredibly complimentary to the county executive in terms of how I think we’ve responded to the pandemic, and so now, I can also equally be critical of the fact that we failed. We dropped the ball. And it does rest in his court. That’s just the reality…

We cannot work as a county if we have a disconnect between the county executive and the county council on something that is so important as keeping people in their homes, putting food on their tables and making sure that they can continue to be employed. I mean, these are basics. And if it’s not happening, then there’s a serious problem ahead…

[To Stoddard] I just want to say I appreciate you falling on your sword, but sir, it’s not your sword to fall on.

Friedson
With all due respect, I heard earlier about the county executive and his frustration. We don’t need frustration from the county executive, we need leadership. And thus far on these issues, we have not seen it, and we need to.

On top of all that, Stoddard made this grim observation.

The FEMA reimbursement process is going to be incredibly difficult, not just for us, but also for FEMA. And as I think I have alluded to before, my experience with FEMA is generally that if they can find a reason not to reimburse you for something, they’re going to find it. And they’re going to utilize that as a rationale to not reimburse.

The county was counting on FEMA to reimburse it for tens of millions of dollars in extra pay County Executive Marc Elrich granted to the county employee unions. If the county doesn’t get federal money to finance that extra pay, it will blow a massive hole in its budget. In that case, the next nuke could be launched at Rockville from Wall Street with the county’s bond rating at ground zero.

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Friedson Floors Ficker on Taxes

By Adam Pagnucco.

Friends of White Flint made a huge score last week when they landed the heavyweight battle of the year, at least for MoCo tax geeks: a debate between Council Member Andrew “Real Deal” Friedson and long-time anti-tax activist Robin Ficker. Friedson and Ficker are the authors of Questions A and B, dueling tax limit charter amendments on the ballot this year. No quarter was asked and no quarter was given!

First, a reminder of what these tax questions would do. Question A (the Friedson amendment) would freeze the property tax rate and allow it to be increased only by a unanimous vote of the county council. Question B (the newest of many Ficker amendments) would allow property tax collections to rise at the rate of inflation and remove the current ability of a unanimous council to override it. Both questions impose limits on property taxes that the vast majority of Maryland counties don’t possess, although Question A would raise more money than Question B over time.

Friends of White Flint invited Friedson and Ficker to discuss their charter amendments on a Zoom meeting and they did not disappoint. Stiff jabs, hooks and uppercuts were thrown (virtually of course) as the high school linebacker and Muhammad Ali’s running partner put on a show. But Friedson threw the winning punch with this statement:

What Robin Ficker will not say, what he is not telling you, is when he repeatedly talks about that 8.7% property tax increase [in 2016] based on this ridiculous tax policy that we currently have, his property taxes, not just his tax rates, his property taxes, the literal dollars that Mr. Ficker pays today, are lower than what they were when property taxes were raised.

This is a true statement as can be verified from county records. Ficker was charged $4,920 in county property taxes on his Boyds home in 2016 and has been charged $4,723 this year, a 4% drop in his taxes. This is despite a slight increase in his property’s assessed value. Ficker’s experience demonstrates a quirk of the current property tax charter limit that his charter amendment would convert into a hard cap: because the charter limit ties revenue growth to inflation and not growth in the assessable base (which is usually higher), it can actually result in cuts to property tax rates and reductions in collections from some specific properties, including Ficker’s. Friedson argues that this deprives the county of the full tax benefits it could otherwise derive from growth and serves as a disincentive for economic development.

Ficker had no response on the issue of his county property taxes.

The full video is below.

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Time to Get Control of the Budget

By Adam Pagnucco.

Back in July, I wrote a post about the county budget titled “Crash!” The post discussed the county’s revenue writedown of $522 million for Fiscal Years 20-22, with more shortfalls to come later. That post was soon followed by another titled “MoCo is Praying for a Federal Bailout,” which described the county’s cream-puff savings plan and desperate desire for more federal money (which so far has not arrived). Three months later, an eye-opening memo from county council staff contains more details of what is becoming one of the most serious budget crises in recent county history.

Consider the following.

CARES Act Funding

The county has received $183 million in federal aid under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Of that amount, $100.6 million has been used for special appropriations, $82.2 million has been allocated for county operations (some as placeholders) and $10 million has been allocated for municipal and outside agency reimbursements. If the placeholders (totaling $85.9 million) are included, the county will have overspent its CARES Act money by $9.4 million.

COVID Pay

I have previously written that County Executive Marc Elrich agreed to distribute COVID pay of up to $10 per hour at a cost of $3.2 million per pay period indefinitely. According to the council staff, the initial cost estimate was low. The cost is now roughly $4 million per pay period. Through 9/26/20, $49.2 million has been paid out, far in excess of any savings the council achieved through canceling collectively bargained raises. The total cost of the extra pay is projected to total $72 million through the end of the calendar year and approximately $100 million if paid for an entire year.

The executive branch expects to get FEMA reimbursements for most of this pay but that is not assured. Council staff wrote:

Previously, the Executive Branch had indicated that the pay differential would likely be eligible for FEMA reimbursement – meaning that the County might only be required to cover 25% of the total cost. However, the County has yet to apply for or receive FEMA reimbursement for these costs. In preparation for this briefing, the Executive Branch provided the following update on the status of FEMA reimbursement for the pay differential: “These remain pending. There were changes in the FEMA reimbursement guidelines on September 15 and other reimbursement rulings that created significant questions about some personnel cost eligibility. We met with FEMA representatives on Monday, October 5 to clarify some of these questions and are proceeding with data collection for reimbursement. We have added a large number of staff to this effort to address the increasing data collection burden.” Based on the updated guidance from FEMA, even in the best-case scenario, it is likely that the County will need to cover much more than 25% of the total cost of the pay differential.

In other words, who knows whether the feds will come through, leaving the county stuck with tens of millions of dollars in liabilities.

Council staff also compared the extra pay negotiated by Elrich to other jurisdictions. Maximum payouts per pay period are $140 in D.C., $200 in Baltimore City, Baltimore County and Frederick, $250 in Anne Arundel and $350 in Prince George’s. Howard County paid one-time bonuses of $600 to $1,500 and Fairfax County does not have COVID pay at all. MoCo’s maximum payout is $800 per pay period, by far the highest in the region.

Spending from Reserve

This fact is not contained in the council staff memo but is nonetheless relevant to the county’s budget issues. Since the start of the calendar year, the council has appropriated amounts totaling $28 million from general fund reserves. This does not include another $28 million taken from reserves that were reimbursed with federal CARES Act money.

These appropriations might be understandable if the county had undertaken a deliberate strategy of dipping into its reserves to fight the recession. But no such strategy has been announced. The county has not officially diverged from its policy of setting aside 10% of its revenues into reserves, a policy originally devised ten years ago. What happens if we have a bad winter and the county must dip into reserves some more to pay snow removal costs, a common practice of the past?

During the Great Recession, County Executive Ike Leggett and the council of that era adopted very tough measures combining brutal spending cuts, an energy tax hike and a 10% reserve policy to save the county from financial disaster. Both the county employee unions and the business community were outraged at these tactics but they worked. When Leggett retired, he bequeathed a large reserve, a 96% pension funding ratio and a gold-plated AAA bond rating to his successor.

So far, the actions taken during the current recession bear no resemblance to the prudence of Leggett and the council during the Great Recession. We have seen a nothing-burger savings plan full of lapses, projected overspending of federal money, a new unending liability of COVID pay with no assurance of federal reimbursement, a drawdown of reserves and even hints of another raid on retiree health care money, a practice that has drawn a baleful eye from Wall Street.

The county’s elected officials are united in opposing Question B, the tax cap charter amendment from Robin Ficker that they say would endanger the county’s AAA bond rating. They’re right to oppose Question B. But the actions described above, occurring in the context of a huge revenue writedown, might be at least as big a threat to the bond rating as anything Ficker’s proposal would do. The council must heed the warnings of its staff and get control of the budget.

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Florida Isn’t Maryland: I’m Okay with That

I’m in Florida for personal reasons. Let me tell you that it’s not just warmer, it’s different.

Welcome to Florida!

After leaving the airport, I stopped at a 7-11 to pick up a soda. A woman wearing a blue cap that said VOTE in big white letters was in line to pay and trying to convince the man behind her (wearing a mask over his mouth but not his nose) to vote early. She succeeded in making her purchase but failed in her political mission. After she walked out, the target of her earnest efforts sorta laughed and mumbled to the cashier something about Trump and voting on election day. Welcome to Florida!

Swing States Get All the Love

Commercials are from a different universe down here. It’s political ad after political ad. There seem to be two or three major Trump ads. In the one that leaves me cold, a guy pops up like a used car saleman and tells me Biden comes with scary lefty friends like Sanders and Omar. A more effective ad shows a Latino small business owner calmly explaining why Biden’s tax hikes will hurt.

Leadership Matters

The contrast in the rates of people wearing masks to protect public health between Florida and Maryland (at least the parts of both I’ve seen) is striking. Don’t get me wrong; most people in Florida wear masks. But the rates are different enough to drive home the importance of government in communicating a clear and consistent health message.

The result is that I feel much safer going indoors to businesses in Montgomery County because both customers and employees wear masks properly at very high rates. It was crucial that all of the key leaders at the state and county level united to make the rule and to model this behavior. Unlike Florida Gov. Ron DeSantis, a Trump acolyte, Gov. Larry Hogan has publicly worn masks and held socially distanced press conferences.

In Florida, people frequently sport what I think of as the “half-Trump” (mask over mouth but not nose). Still others favor the mask as a chin strap. I guess it’s a fashion statement if you can call risky behavior a fashion statement (and no, they aren’t just taking a breath while socially distanced). A few just don’t wear it all indoors even where required.

Florida once again showed me how it provides author Carl Hiaasen with such rich material at a small “COVID-19 Supply Store.” I was pondering buying a Biden/Harris mask I saw in the window. I walked in and then promptly walked out when I saw two of three employees wearing their masks as chin straps. Practically all the store sells is masks. No folks, this isn’t satire. This is Florida.

Recently, Gov. DeSantis announced that indoor restaurants and bars can now operate at full capacity. Municipalities can have lower limits but all must allow at least 50% capacity. The White House recently demonstrated how large indoor gatherings can prove to be superspreader events.

The more secure the public feels, the more likely people are to engage in behaviors that fuel these events. Now that the Governor of Florida has paved the way for mass alcohol fueled gatherings in tightly packed spaces, the people of Florida have nothing to fear but the absence of healthy fear.

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Who is Spending Money on the Ballot Questions?

By Adam Pagnucco.

The six committees formed to advocate for and against MoCo’s ballot questions have filed campaign finance reports through October 4. Let’s see who is paying for all of this – so far.

First, a quick summary of the ballot questions.

Question A: Would freeze the property tax rate but allow a unanimous vote of the council to increase it. Authored by Council Member Andrew Friedson.
See Why Progressives Should Support the Friedson Amendment.

Question B: Would remove the ability of the county council to break the current charter limit on property taxes, thereby capping property tax revenue growth at the rate of inflation. Authored by Robin Ficker.

Question C: Would add 2 district seats to the county council, thereby establishing 7 district seats and 4 at-large seats. Authored by Council Member Evan Glass.
See MoCo Could Use More County Council Districts.

Question D: Would convert the current council’s 5 district seats and 4 at-large seats to 9 district seats. Authored by Nine District for MoCo.
See Don’t Abolish the At-Large County Council Seats, Nine Kings and Queens.

Here is a summary of committee finances for the entire cycle.

Nine District for MoCo, by far the oldest committee, has raised and spent the most money. It has had far more individual contributions (252) than Ike Leggett’s Vote No on B and D (30) with no other committee reporting any. Real estate interests have accounted for 83% of Nine District’s cash contributions. Interestingly, while Washington Property Company president Charlie Nulsen and the three county employee unions were major Nine District contributors in prior reports, they have not contributed any more since July. Nine District has collected contributions from leaders of the county’s Republican Party, which has raised money for the group on its website. The group has spent money on fees for Baltimore consultant Rowland Strategies, legal fees, robocalls and advertising (especially on Facebook).

Vote No on B & D, Leggett’s committee, spent $9,610 on graphic design for printing and campaign materials and $58,437 on direct mailing. So far, this is the only expenditure by any committee on mail. (Where’s my mailer, Ike?) Two other committees have collected money but not spent it and two more have collected less than $1,000.

Here are the biggest contributors to these committees and their positions on the ballot questions.

David Blair – $100,000
Supports Question A, Opposes Questions B and D
The former county executive candidate has given $50,000 each to Leggett’s group opposing Questions B and D and his own group supporting Question A and opposing Question B.

Charlie Nulsen – $50,000
Supports Question D
The president of Washington Property Company made one $50,000 contribution to Nine District for MoCo on 6/4/20. This was a critical boost for the group as it was in the home stretch of gathering signatures to appear on the ballot.

Monte Gingery – $40,000
Supports Question D
The head of Gingery Development Group has made three contributions totaling $40,000 to Nine District for MoCo.

MCGEO – $30,000
Opposes Question B, Supports Question D
The largest county government employee union gave $20,000 to Montgomery Neighbors Against Question B and made a $10,000 in-kind contribution to Nine District for MoCo. MCGEO President Gino Renne is the treasurer of Empower PAC, which gave another $5,000 to Montgomery Neighbors Against Question B.

Willco – $15,000
Supports Question D
The Potomac developer gave an in-kind contribution of $15,000 to Nine District for MoCo which was used to pay Rowland Strategies.

UFCW Local 400 – $10,000
Opposes Question B
This grocery store union which shares a parent union with MCGEO gave $10,000 to Montgomery Neighbors Against Question B.

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New Ad Supports Question A

By Adam Pagnucco.

Montgomery Countians for Question A & Against Question B, a ballot issue committee headed by David Blair, has announced its first ad. The ad and accompanying press release appear below.

FOR IMMEDIATE RELEASE

October 7, 2020

Scott Goldberg
Montgomery Countians for Question A & Against Question B
Scott@AistheAnswer.com

PRO QUESTION A & ANTI QUESTION B EFFORT LAUNCHES

Group Headed by David Blair Announces First Round of Ads Supporting Fiscal Responsibility

Montgomery Countians For Question A & Against Question B is spearheading a significant campaign to pass Question A and oppose Question B on citizens’ ballots this fall. A broad spectrum of growing groups and individuals share this policy position including the Greater Capital Area Association of REALTORS® (GCAAR), Montgomery County Council of Parent-Teachers Association, Montgomery County Chamber of Commerce, Montgomery County Education Association, the Montgomery County Democratic Party, Jews United for Justice, the Sierra Club, SEIU Local 500, all 8 State Senators and 32 Delegates representing Montgomery County, State Treasurer Nancy Kopp, and former Republican Councilmember Howie Denis.

Enacting Question A is a fix to our broken property tax system. “I strongly support Question A. This common-sense measure will set a consistent property tax rate so we can adequately plan to fund our schools, parks, and libraries,” according to David Blair, Chair of the Council for Advocacy and Policy Solutions and the ballot issue committee. State Treasurer Nancy Kopp has this to say: “Montgomery County is the gold standard in this country when it comes to public finances because our leaders make thoughtful, reasoned decisions. Question A continues allows county officials to balance budget stability, fiscal responsibility, and financial flexibility in a crisis. Question B would endanger Montgomery County’s financial well-being, threatening our triple AAA bond rating and creating instability for future budgets.” GCAAR has been working in close collaboration and their 2020 President, Danai Mattison Sky, says “Question A would modernize the property tax charter limit allowing for proper, measured growth in the county. Question B would threaten the financial stability of our county and endanger our AAA bond rating. GCAAR is proud to stand For Question A and Against Question B.”

In the coming days, the Committee will release digital ads, a social media plan including Facebook (@QAistheAnswer), Twitter (@AistheAnswer), and Instagram (@QAistheAnswer), direct mail and launch a website which can be found at www.AistheAnswer.com.

#

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State Audit: Thousands of MoCo Homeowners Overcharged on Property Taxes

By Adam Pagnucco.

The state’s Office of Legislative Audits (OLA), which is part of the General Assembly’s Department of Legislative Services, is one of the most useful offices in all of state government. Its many audits of state agencies are often must-reads for those who care about the proper functioning of government. And this week, OLA dropped a bombshell:

Because of mistakes made by the state in calculating homeowner tax credits, thousands of MoCo homeowners have been overcharged on their property taxes.

In most states, local governments assess property values, send property tax bills and handle appeals. Maryland uses a hybrid system in which the State Department of Assessments and Taxation (DAT) calculates assessments and tax credit values which the local governments use when they send tax bills. The state handles appeals.

OLA audits agencies all over state government. On October 5, OLA released an audit of DAT that contained many troubling findings. Of most significance is its finding that a mistake in calculating homeowner tax credits resulted in thousands of MoCo homeowners being “improperly” – yes, that’s the word OLA used – overcharged on taxes.

OLA’s Finding 5 starts with this statement.

DAT did not ensure HTCs [homeowner tax credits] were properly calculated. As a result, HTCs awarded to thousands of homeowners in certain jurisdictions were improperly reduced by at least $4.4 million in fiscal year 2019. Most HTCs are calculated automatically by DAT’s automated system based on applicant income data entered in the system by DAT employees. Certain HTCs are calculated manually by DAT employees when a homeowner does not receive an individual real property tax bill (such as in the case of a housing cooperative) or for new home purchases where the tax credit must be prorated for less than a year.

The improper HTC calculations that we address in this finding were the result of DAT’s incorrect treatment of certain additional tax credits offered by certain local jurisdictions. Because each local jurisdiction may or may not provide its residents with other tax credits, which are in addition to the HTC provided for in State law and are paid for by the State, each jurisdiction could be impacted differently or not at all by this finding.

Let’s recall that Montgomery County offers MANY property tax credits and exemptions.

OLA continues:

DAT did not periodically review the programming of its automated system to verify that it was calculating HTCs in an accurate manner and in accordance with the law. As a result, DAT was not aware that it had incorrectly programmed the system and that HTCs for residents of at least one jurisdiction (Montgomery County) were not being calculated consistent with the law as further described below…

DAT’s automated system improperly deducted the income tax offset credit (ITOC) administered by Montgomery County from homeowners’ State and County real property tax liabilities, resulting in the HTCs awarded to homeowners in Montgomery County being improperly reduced. Specifically, individual homeowners under the age of 65 had their State and County HTCs improperly reduced by amounts up to a total of $692, and homeowners at least 65 years old had their HTCs reduced by amounts up to a total of $1,038. Based on our analysis of HTC applications processed in DAT’s automated system for Montgomery County residents in fiscal year 2019, the improper reduction of homeowners’ tax liabilities resulted in reduced HTCs awarded to 5,388 applicants totaling $4.4 million. We determined that, based on the automated system’s programming for Montgomery County, DAT improperly calculated HTCs dating back to at least 2005 in the same manner. We could not readily determine the amount by which HTCs were improperly reduced for years prior to fiscal year 2019…

DAT received advice from its legal counsel on January 23, 2019 that confirmed our determination that DAT’s HTC methodology commented upon above was incorrect.

OLA offers this example of DAT’s miscalculation of the homeowner tax credit.

As the above example shows, the state’s miscalculation of the homeowner tax credit increases the homeowner’s tax liability, resulting in an overcharge on property tax bills. One of OLA’s recommendations was that DAT “consult with legal counsel on how to proceed regarding any refunds resulting from the HTC miscalculations including the $4.4 million noted above.”

DAT (which refers to itself as SDAT) was not having any talk of refunds. DAT responded:

SDAT disagrees with the sentiment of impropriety in the statement “HTCs awarded to thousands of homeowners in certain jurisdictions were improperly reduced by at least $4.4 million.” Before OLA began their audit, SDAT made a policy determination that increased the amount of tax credits received by certain jurisdictions in future years. Subsequent conversations with SDAT’s Assistant Attorney General confirmed that this is the appropriate course of action moving forward, but the Department does not feel as though prior year calculations were inaccurate as they were consistent with the Department’s practice at the time and implicitly upheld by PTAAB and Maryland Tax Court decisions.

OLA shot back:

DAT’s statement that the PTAAB and the Maryland Tax Court “implicitly upheld” the specific calculation method we addressed in our report is not consistent with its position during our audit fieldwork or subsequent to the audit when we discussed the finding with DAT management. Furthermore, the statement is questionable since the specific calculation method we addressed was demonstrably improper, and our assessment that the calculation method was improper was consistent with advice DAT received from its legal counsel in January 2019 as noted in our report.

So the two agencies are deadlocked. OLA can’t force DAT to give anyone any refunds. But the General Assembly can and OLA is an arm of the legislature.

MoCo’s 8 state senators and 24 delegates need to get all over this like white on rice. Government bureaucrats don’t get to screw up, get caught and then say, “Sorry, we’re keeping the money.” If OLA’s findings hold up, our delegation must ensure that any MoCo homeowners who were overcharged must be identified and paid refunds.

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Instability Continues at WorkSource Montgomery

By Adam Pagnucco.

WorkSource Montgomery (WSM) is a non-profit designated by the county government as its workforce development organization. WSM helps match job seekers with employers through its job centers and a range of other services designed to enhance the functioning of the county’s labor market. It is funded with a combination of federal, state, county and private money. But at a time of the greatest need for its services – a devastating recession – WSM is in a leadership crisis that the county council is blaming on County Executive Marc Elrich.

The council’s dissatisfaction with WSM peaked last year after a number of revelations suggested that the organization was struggling to fulfill its mission. The council responded by passing legislation enabling – but not mandating – the designation of a “public educational institution” as the county’s workforce development organization, thereby potentially revoking WSM’s portfolio. The public educational institution the council had in mind was Montgomery College, but to date, my sources tell me that the college has not taken over WSM’s work. WSM survived but its CEO announced her resignation in August 2019.

Eventually, WSM landed Leonard Howie as its interim CEO. Howie is a well-regarded former state labor secretary who also held senior positions in the U.S. Department of Labor. The council enthusiastically supported him and told the executive branch that they wanted Howie hired as the full-time CEO. Technically, the CEO reports to WSM’s board but informally the county executive has influence over the hiring process. Furthermore, WSM’s relationship with the executive branch is critical to its ability to operate. The council was optimistic that Howie could get WSM to a better place.

But something went wrong and Howie is leaving. Multiple sources report that Elrich wanted another candidate to be considered but that person withdrew. According to the council, when WSM offered the full-time job to Howie, he also withdrew. Now WSM is back to square one.

Three council members – Sidney Katz (the current council president), Craig Rice (the education and culture committee chair) and Hans Riemer (the planning and economic development chair) – wrote a blistering letter to Elrich accusing him of fumbling the ball. This quote from the letter conveys its tone:

As the County’s highest elected official, you are directly chartered with great responsibility for our workforce programming by the Federal and State government. To be here at this point, without a permanent CEO for Worksource Montgomery, with a skeletal staff and few if any programs in place during a period of unprecedented workforce change and high unemployment is causing tremendous distress for county residents, and is unacceptable.

Wherever the responsibility lies, the tumult within the agency is a huge problem for the county. According to the U.S. Bureau of Labor Statistics, MoCo’s unemployment rate was 6.8% in August – lower than the 9.0% reported in May but still double the county’s pre-COVID rates. Nearly 39,000 county residents are unemployed and seeking work. WSM’s functions are more badly needed than ever. In the wake of this incident, what highly qualified applicants will be interested in leading WSM now? That’s a question that has to weigh heavily on the county’s leaders.

The letter from Katz, Rice and Riemer to Elrich is reprinted below.


October 6, 2020

County Executive Marc Elrich
Executive Office Building
101 Monroe Street, 2nd Floor
Rockville, MD 20850

Dear County Executive Elrich:

As the Council President and Chairs of the Council Committees charged with overseeing workforce development policy in Montgomery County, we were disturbed to learn that Leonard Howie, former Maryland Secretary of Labor and presently the Interim CEO of WorkSource Montgomery (WSM), recently declined the organization’s offer to be named full-time CEO.

Since Mr. Howie was first announced as Interim CEO, Councilmembers have repeatedly and publicly expressed great confidence in his leadership. We have stated our belief that he has the ability to get our workforce programming back on track from the debilitating crisis of the past year and a half. Not only have Council members noted Mr. Howie’s capabilities, but when we were consulted in July about how we wanted to participate in a hiring process for the position, the Council communicated to your office and WSM’s chair our strong support for hiring Mr. Howie rather than reopening a hiring process.

Since learning about his planned departure, Councilmembers have heard conflicting information about the search process and reason for Mr. Howie’s decision. To discuss this issue and your process to ensure the County’s workforce development system is well-positioned for our residents as we seek to recover from COVID-19, a joint Planning, Housing, and Economic Development (PHED) and Education and Culture (E&C) committee session is tentatively scheduled for 1:30pm on Wednesday, October 28.

As the County’s highest elected official, you are directly chartered with great responsibility for our workforce programming by the Federal and State government. To be here at this point, without a permanent CEO for Worksource Montgomery, with a skeletal staff and few if any programs in place during a period of unprecedented workforce change and high unemployment is causing tremendous distress for county residents, and is unacceptable.

Below are questions that we ask you and your staff to answer in preparation for the upcoming meeting.

Please provide written responses before the meeting, so we can include them in the public record.

The Council has been actively and deeply involved in enhancing and improving our workforce development system. The second section of the memorandum details our more recent work for your reference.

Questions regarding WSM’s CEO search and future direction

● Can you provide a list of the actions your administration took to address the deficiencies in the County’s workforce development system from the announcement of Dr. Giles resignation as the WSM CEO to the announcement of Mr. Howie’s decision not to accept the position?

● What instructions did you or your staff provide to the Workforce Development Board regarding the CEO position for the organization?

● What were the reason(s) that Mr. Howie shared for his decision to not accept the board’s offer to be CEO of WSM?

● Does the Workforce Development Board have any additional vetted candidates for the CEO position?

● If there are no additional vetted candidates for the CEO position, what is the anticipated timeline and approach for the new CEO search?

● If a new CEO search must be conducted, what is your administration’s strategy and approach to ensure continuity in the organization’s mission and obligations?

● What is the status of the “combined” Workforce Development Board and the WorkSource Montgomery Board?

● What is your administration’s strategy and approach, generally, to the County’s workforce development system?

A recent history on the Council’s efforts to enhance the County’s workforce development system

The Council and its committees have conducted several discussions and worksessions on this topic since the new Council was elected in 2018. Below is an abbreviated history of the major items that were before the Council or its committees. This list does not include the numerous meetings between you and individual Councilmembers and our staff about this topic.

● The Council discussed the workforce development continuum on March 5, 2019. Many Councilmembers communicated their disappointment at the quality of the efforts of WSM since its inception in 2015. The Council indicated its support of reconstituting the Workforce Development Board as an immediate action by your administration to “right the ship.”

● To strengthen the Correctional Facility job center, the Council added resources to the Department of Corrections and Rehabilitation (DOCR) budget in the FY20 Operating Budget. Following the March 5, 2019 discussion and subsequent follow up by WSM, the Council was not satisfied with WSM’s efforts with the Correctional Facility’s job center and provided these critical resources to DOCR.

● The Council adopted legislation to expand its options to designate the County’s Workforce Development Entity in October 2019. The Council continued to be dismayed at the lack of urgency from your administration and WSM’s leadership to address the issues plaguing the County’s workforce development system. This legislation provided an option to change the designation of the workforce entity to a new organization should Council action be required.

● The joint committees (PHED and E&C) discussed an update with WSM and Mr. Fletcher, Assistant County Administrative Officer, on November 19, 2019. After nine months of engagement, it was unacceptable to learn from Mr. Fletcher that the executive branch lacked a detailed vision and that efforts to reconstitute the Workforce Development Board were still in process.

● The Council in various resolutions appointed your designated members to the Workforce Development Board in April and May 2020.

● The joint committees (PHED and E&C) received an update from WSM and Montgomery College about the County’s workforce development efforts, with particular focus on issues due to COVID-19 on June 18, 2020. The committees were thrilled with Mr. Howie’s efforts to orient the reconstituted Workforce Development Board and address the many of the previous deficiencies of WSM. The joint committees, and subsequently the Council, voiced their support for Mr. Howie to become the full-time CEO for the organization believing he would generate the workforce development product our County sorely needed.

Sincerely,

Sidney Katz
Council President

Hans Riemer
Chair
Planning, Housing and Economic Development Committee

Craig Rice
Chair
Education and Culture Committee

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Leggett Responds to Seventh State on Question B and School Funding

By Adam Pagnucco.

Former County Executive Ike Leggett sent us the following statement about this morning’s post on Question B and school funding.

*****

Thanks to Seventh State for providing a public service by describing the state maintenance of effort law on school funding (“Would Question B Harm Schools?”). You accurately conclude: “… the bottom line is that Question B would do far less to hurt MCPS than the rest of county government.” Trust me, no one understands that point more than I do. As County Executive, I had to make deep cuts to county government to get us through the great recession of a decade ago. The fact that Question B would harm the county government more than it would harm the schools does not make the case that Question B would not harm the schools. Your article confirms the point that Bruce Adams and I have made that Robin Ficker’s Question B could harm our schools and public services. I urge Montgomery voters to vote against Question B.

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New Video Blasts Republicans for Nine Districts Charter Amendment

By Adam Pagnucco.

Residents for More Representation, a ballot issue committee co-chaired by Marilyn Balcombe and Michelle Graham, has released a video blasting Republicans for being behind Question D, the nine council district charter amendment. The video is consistent with facts I have previously written about on Seventh State, including the participation of many prominent Republicans in helping the nine districts effort due to their belief that it could lead to a Republican getting elected to the county council. County Republicans are even fundraising for Nine Districts. Residents for More Representation supports Question C, which would add two district council members, and opposes Question D. Their video appears below.

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