Tag Archives: budget

MoCo Diverts $62 Million of Retiree Health Money for General Spending

By Adam Pagnucco.

Remember the county’s $120 million budget shortfall?  While up to half of it may have been caused by tax planning by rich people, the rest was in broad shortfalls across a range of taxes.  The County Council approved a FY18 savings plan of $53 million in January, but what happened to the rest of the shortfall?  Nothing was published in the press.  In fact, the council did cut another $62 million last month and, it seems, no one noticed.

What happened?

One of the county’s long-term obligations is money it owes for retiree health benefits, also known as other post-employment benefits (OPEB).  These benefits are becoming rare in the private sector but they are still common in state and local governments.  In 2008, the Governmental Accounting Standards Board (GASB) told state and local governments that they had to begin accounting for OPEB and prefunding it in the same way that they do for pension benefits.  In other words, each government would have to publish a funding ratio and start saving for future benefits rather than simply paying as they went.  MoCo had a plan to ramp up OPEB prefunding, but the Great Recession hit and the county couldn’t contribute towards OPEB for a couple years.  Since then, the county has socked away $797 million to meet future OPEB benefits.

That sounds like a lot of money, but the county’s actuarial liability for OPEB is currently calculated at $3.3 billion, meaning that its funding ratio is 24%.  That would be terrible for a pension plan – consider that the county’s pension plan is currently 92% funded.  But 24% is actually decent for an OPEB plan considering that state and local governments have only been prefunding them for ten years.  The State of Maryland’s OPEB plan was just 3% funded in 2015 and MoCo’s ratio was better than 38 states.  Even so, the county has a lot of work to do to get its funding ratio up and it makes millions in contributions every year to get there.

In FY18, the county had budgeted $122 million for OPEB contributions.  But the county had a problem: less than half of its FY18 shortfall of $120 million had been eliminated.  As late April came around and the FY19 budget process was underway, the County Executive and the County Council had a choice.  They could cut over $60 million in current year spending two months out from the primary election.  Or they could find the money somewhere else.

You guessed it – in a resolution introduced and adopted on the same day, April 24, the council unanimously cut $62 million from the county’s FY18 OPEB contribution.  This fiscal year’s spending on services won’t take another cut, which is great news for incumbents running for reelection or higher office.  And as Bethesda Magazine reported, the council has proposed adding up to $21.6 million more to next year’s budget and has so far identified just $1.6 million in offsetting spending cuts.  How do you think they will make up the difference?

The County Council did not send out a press release headlining the diversion of $62 million of retiree health contributions to support general spending on April 24.  It was buried in a press release spotlighting a resolution on equity data.  As a result, the press totally missed it.

Now look, folks.  The county is good at saving money.  They are setting aside close to 10% of revenues as reserves, an important reform adopted during the Great Recession that helped save the county’s AAA bond rating.  The pension fund is in excellent condition at 92% funding.  And as stated above, the county has done a better job at prefunding retiree health benefits than most other places.

But grabbing retiree health contributions and using them for general spending is something that is normally done in a recession when the alternative is layoffs.  That’s what happened a decade ago and it was justified considering the financial trouble the county was facing.  Now, despite huge evidence to the contrary, county leaders are telling us that the economy is in great shape.  The Council President told Kojo Nnamdi a few days ago that we have “a very strong economy” and “this is a good time in Montgomery County.”  Well, if the economy is so great, then why redirect $62 million of retiree health money to prop up this year’s budget?

And if we are diverting retiree health money now when times are supposedly good, what will happen when the next recession comes?

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The View From 2007

By Adam Pagnucco.

A long time ago in a galaxy far, far away, a newish county blogger and professor named David Lublin reached out to a then-young civic activist who had just gotten involved in local politics to write about the county’s economy and budget.  The activist, who had only lived in the county for three and a half years and was already raising Cain about a new Metro entrance in Forest Glen, was still figuring out what was going on but – what the hell – he agreed.  This was the genesis of my second blog post ever, written in April 2007.  (The first was a piece on the Apple Ballot the year before.)

The county’s economic pressures, which have drawn substantial attention on Seventh State, were apparent more than a decade ago.  Then as now, the county was dealing with short-term budget issues.  But over the long term, I wrote that the end of the real estate boom – which would lead to the Great Recession – would result in three choices to balance the budget and preserve county services: large tax hikes, slowing the rate of budget growth or encouraging economic growth to fund the budget.  Many things happened over the ensuing decade: dramatic budget cuts, equally dramatic tax hikes, warfare with the school system and the state over education funding, breaking of union collective bargaining agreements and more.  But in the end, more a result of just muddling through rather than any strategy, the county picked options 1 and 2 – tax hikes and slower budget growth – and not option 3, which was encouragement of economic growth.  Indeed, because our economy has been so stagnant since the recession, we are now discussing pretty much the same things I wrote about eleven years ago.

Will the next decade be different from the last decade?  Folks, that is what this election is about.  It’s all up to you.

Here is the piece from 2007 reprinted.

*****

In Montgomery County local races, four issues regularly rise to the top: education, development, traffic congestion and the environment, in no particular order. In last year’s elections, all four issues were discussed by the candidates – especially development. But this spring a fifth issue has risen to surpass all of them: the county’s difficult choices on the budget. The budget is not only an unavoidable issue because it is central to the functioning of the government – it also affects the ability of county leaders to deal with each of the above four issues that are important to voters.

The county has a short-term problem and a long-term problem with its budget.

The short-term problem appeared in the first budget submitted by our new County Executive. While Ike Leggett’s proposal for $4.1 billion in county spending was 6.3% higher than last year’s budget, the increase was below the prior year’s rate of 9%. Leggett pronounced recent budget growth “unsustainable” and declared that no county agency, including the schools, would get its entire budget request. Despite an aggressive lobbying campaign by public sector unions – especially the Montgomery County Education Association – the County Council seems likely to uphold the broad outlines of the County Executive’s proposal.

Furthermore, Council President Marilyn Praisner has identified a $269 million budget deficit for the fiscal year starting in July 2008. The deficit margin is about 7% – which is close to the increase recommended for this year. The council may very well combine a small tax increase with careful maintenance of core spending to deal with this deficit. This may be enough to avoid modifying the county’s labor contracts with its employees as the Council President has recently discussed.

As serious as the short-term problem is, it does not compare to the county’s budget issues of 1991-92 when it suffered from an economic recession. At that time, 7,000 county employees were furloughed for four days. Public employees occupied the council chambers, teachers engaged in a work slowdown and some public school students walked out of classes to protest potential cuts. No one is predicting similar upheaval this time.

However, the long-term budget problem represents a significant challenge. Since 1990, the county’s population growth has averaged 1.4% per year while its budget has generally grown 5-10% per year. In recent years, the county has managed this by depending on big increases in property tax receipts driven by its real estate boom. That real estate boom has ended and property tax receipts will soon reflect that. The county faces three choices in the long run:

1. Large tax hikes to fund budget increases. The danger here is that those tax hikes may slow the county’s economic growth rate even further, worsening its fiscal problems in the future.

2. Slowing the rate of county budget growth to equal the rate of economic growth. This would mean county budget growth of 1-2% per year. This would be insufficient to meet the standards of service to which residents have become accustomed. School, fire, police and health care costs are all increasing at faster rates even if the size of the relevant county departments remains unchanged. This budget growth rate would also be insufficient to adequately compensate county employees, and that would gradually damage one of the nation’s best-educated, least-turnover-prone local government workforces.

3. Systematically encouraging enough economic growth to fund the county’s budget.

The third option reveals a naked truth that was not commonly discussed during the last campaign: budget policy and development policy are inter-related. Over the long run, limiting economic growth will limit the ability of local government to serve its residents. But as any resident of Phoenix or Las Vegas would observe, economic growth has consequences for quality of life. The question of the last campaign was, “Should we have development or not?” But the real question is, “How can we have enough economic growth to pay for government services we need without driving existing residents crazy?”

Economic growth comes from two sources: population growth and job creation. If one of these occurs without the other, or if they occur in different geographic locations, the result is traffic congestion. The two should occur together, at similar rates, and in nearby locations. This has direct implications for county development policy.

In general, the county has three kinds of developable areas: the agricultural reserve, the four downtowns (Bethesda, Rockville, Silver Spring and Wheaton), and the rest of the county. Most residents agree that the agricultural reserve should continue to be protected for cultural and environmental reasons. That leaves the other two areas for consideration.

The four downtowns are unique assets in the county because they each have residential density, concentrated office space and pedestrian-oriented retail space all within walking distance of each other. A resident of Bethesda’s central business district (CBD) who also works in the CBD does not have to use his or her car every day. That individual can walk to work and walk to the grocery store on the way home. The fact that all of the amenities of life are concentrated in a walkable radius cuts back on car use, which cuts down on energy usage, greenhouse gases and pollution. It also reduces the need for road maintenance.

But many residents may want to live in one CBD and work in another. This means that the CBDs should be connected, preferably through transit. Bethesda is connected to Rockville, and Silver Spring is connected to Wheaton through Metro’s Red Line. Bethesda could be connected to Silver Spring through the Purple Line. And a bus rapid transit route from Wheaton to Rockville is the county’s top transit study request of the state government. If both of those projects go through, the county will have four inter-connected downtowns.

How could the county encourage economic growth in downtowns rather than sprawl in non-transit-accessible suburbs? In the downtowns, the county could use zoning text amendments (or more ambitiously, coordinated and complementary updates to master plans) to encourage transit-oriented CBD growth. In non-CBD areas, project area transportation reviews and robust school capacity tests would limit development outside the downtowns. This combination of measures would channel economic growth to the CBDs while minimizing the consequences of traffic congestion and pollution. The side effect would be to encourage the creation of downtown entertainment districts, each customized to reflect the unique cultural identities of each CBD.

For those who are uneasy about growth in downtowns, keep in mind the other two budget options: large tax hikes or gradually deteriorating government services. No local area in this country – even Montgomery County – is immune to the negative long-run effects of either (or both).

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Placeholders, Indeed, Do Have a Place in the MCPS Capital Budget

By Glenn Orlin.

In a recent piece in Seventh State it was argued that so-called “placeholder” projects have no place in the Montgomery County Public Schools capital program. But there are very good reasons why the County Council has done exactly that for the past eight years.

First, some background.  The Subdivision Staging Policy (SSP) Public School Adequacy Test compares enrollment five years in advance—at each cluster and level (HS, MS, or ES), and at each school—against the budgeted capacity at each cluster/level and school five school years hence.  If the future enrollment exceeds the future capacity in a cluster by more than 20% at any level, then the cluster goes into a housing moratorium; that is, no more housing subdivisions can be approved until the capacity standard is met.  (Relocatable classrooms are not counted towards “capacity” under the School Adequacy Test.) If the future enrollment exceeds the future capacity in a MS service area by more than 20% and 180 students, then that MS service area goes into a housing moratorium.  If the future enrollment exceeds the future capacity in an ES service area by more than 20% and 110 students, then that ES service area goes into a housing moratorium.  The five-year rule was selected many years ago because, on average, that is how long it takes for a housing subdivision approval to morph into occupied housing units, many of them having kids of school age.

At the start of this decade the Council began the practice of budgeting generic “Solution” (i.e., placeholder) CIP projects in certain circumstances.  The rationale is that while a cluster or school service area might have enrollment that exceeds the moratorium threshold, in many cases MCPS is concurrently planning for a new school or addition that would provide sufficient capacity in time to avoid such a moratorium.  The Council has approved Solution projects only when all the following conditions are met:

  1. A cluster or school service area is projected to exceed the moratorium threshold;
  2. MCPS is concurrently—or about to start—planning for a capital project that would address the potential moratorium; and
  3. MCPS’s normal schedule for planning, design, and construction would have the project’s added capacity opening by the start of the school year five years hence.

The most recent application of the School Test was approved by the Planning Board on June 22, 2017.  The Board placed seven ES service areas into moratorium: Burnt Mills, Highland View, Kemp Mill, Lake Seneca, Rosemont, Strawberry Knoll, and Summit Hall.  At that time, while all of them met Condition #1, none of them met Conditions #2 and #3.  Eight other clusters or school service areas were not placed into moratorium because Solution projects were justifiable and programmed: they met all three conditions.  In the FY19-24 CIP several of these Solution projects will be replaced by specific projects that the Board of Education (BOE) is now officially ready to recommend.  This new CIP will include only four Solution projects.

It is important to note that the decision to budget a Solution project for a school has nothing to do with whether there are new housing applications in that area awaiting the Planning Board’s approval.  Condition #1 occurs either when projected enrollment growth due to turnover, already approved new housing, or both, will be over the capacity threshold.  Whether there are impending housing development applications simply doesn’t matter in the decision to budget a Solution project or not.  Now let’s turn to the examples raised in the earlier Seventh State piece.

Bethesda ES and Somerset ES.  The service areas for both schools in the B-CC Cluster are projected to be well over capacity (+25% and +27%, respectively) in five years, that is, by the start of the 2023-24 school year.  MCPS is initiating an elementary school capacity study for the B-CC Cluster, which would examine a range of options.  The study will be conducted during the 2018-2019 school year.  The Board of Education (BOE) will then be in position to propose a specific project in its FY21-26 CIP request; if that project’s funding were to begin in FY21, then, following the normal schedule for planning, design, and construction it could open at the start of the 2023-24 school year.  Because all three conditions are met—a projected moratorium, planning about to begin, and a path to project completion in five years—the Council is poised to fund Solution projects for Bethesda ES and Somerset ES.  The total amount to be budgeted for these two Solution projects is about $6.4 million.  When a specific project is ready to be budgeted, this $6.4 million will be used to help fund it.

Judith A. Resnik ES.  The current CIP has a fully funded addition at this Magruder Cluster school (which would bring its capacity up to 740), but the BOE deleted the construction funding in its request for the FY19-24 CIP.  Enrollment is trending downward, although in five years it is still projected to exceed the moratorium standard if there is no addition.  The BOE is continuing planning for an addition, however.  So, since all three of the above conditions are met, the Council is planning to fund a $2.7 million Solution project for Resnik ES.

The fourth Solution project is about $6.3 million for Einstein HS, which the Council had already initiated, and the BOE itself has recommended continuing it. Therefore, the sum of the four Solution projects is about $15.4 million.  All but $3.7 million would be programmed in the last three years of the CIP (FYs22-24).

Burnt Mills ES.  This school is projected to be 47% over capacity in 2023-24, so certainly Condition #1 is met.  However, MCPS is requesting the Council to set aside in the CIP $120 million (talk about your placeholders!) while it undertakes a thorough review of the prior revitalization/expansion program “in order to develop a multi-variable approach to determine the priority order of large-scale renovations, possibly including programmatic and capacity considerations” (Superintendent’s FY19 CIP Request, page 1-2).  Therefore, the Burnt Mills situation meets neither Condition #2 nor #3.  Once the BOE has determined a strategy for this school, its improvement would either be partially funded as a Solution project or fully funded from the outset.

Ashburton ES.  If the argument is being made that Solution projects are budgeted to meet the desires of new development, then consider the case of Ashburton in the Walter Johnson Cluster.  It is projected to be more than 22% over capacity five years from now, meeting Condition #1.  Just last fall the Council approved the Rock Spring Master Plan which allows for at least 2,300 more housing units than exists or is already approved.  Almost all the Rock Spring area is within the Ashburton ES service area.  Nevertheless, since MCPS is not undertaking planning for additional capacity that would further relieve Ashburton, its service area will go into a housing moratorium in July.

E. Brooke Lee MS Addition. When the Council approves the CIP, it assures that there is enough money to pay for the projects it is budgeting in each of the CIP’s six years.  The Council is approving a tighter CIP this year than in the past, because it recognizes that debt service on borrowing has grown too high.  (Debt service is an obligation that must be paid before anything else in the budget, including salaries.)  Earlier this year the Council asked for the Superintendent to provide it with a list of “non-recommended” projects that would be the first choices to be reduced or deferred, should the Council need them to meet the spending limits.

One of the projects on his list was to delay the construction funding for Lee MS by one year, although not to delay the first-year (FY19) design funds, which would allow the opportunity for the project to be reaccelerated next year.  In its worksession on April 17, several members of the Council expressed the desire to delay neither the design nor the construction funds for the Lee MS project.  To accommodate this desire, there is a shortfall of $8 million in FY20 and $9.5 million in FY21 for which funds must be found.  We will do our best to do that, but deleting the Solution projects would contribute nearly nothing to this effort; there is only $169,000 in Solution project funds in FY20, and only $3.6 million in FY21; the remaining $11.7 million is in FY22 and later.

Do Solution projects almost never get done in five years, as the Seventh State article claims?  In fact, almost every project does get done within five years, or, the BOE later decides that the project isn’t needed after all.   In the article, it is stated that most of the Solution projects added in FY15 did not translate into actual projects within five years, which would have been the 2019-2020 school year.  For FY15 the Council added Solution projects for five Downcounty Consortium elementary schools: Brookhaven, Glen Haven, Highland, Kemp Mill, and Sargent Shriver.  Two years later, however, the BOE retracted its request for these projects, noting that the projected seat deficits were no longer high enough for it to request funds for additions there (see the FY17 Educational Facilities Master Plan, pages 4-37 through 4-41).

Is “real money” being taken out of the MCPS for Solution projects?  In a word, no.  The Council never budgets all the money it could in the CIP.  This is because the Council needs to reserve funds for: (1) when construction bids come in over estimates; (2) for when projects that are in the planning stage are ready for construction funding later in the CIP period; and (3) for unanticipated opportunities or emergencies that arise.  For these reasons, the Council this year will probably set aside a capital reserve of about 9% of the funds available for budgeting, as has been recommended by the County Executive.  But, after all, a Solution project is but a designated reserve, so the Council—as it has in the past—will likely set an undesignated capital reserve less than the Executive recommended by the $15.4 million in these Solution projects.  Therefore, the Solution projects do not compete with other projects in the MCPS CIP, nor with those in the County Government, Montgomery College, or Park & Planning CIPs.  If anything, the Solution projects provide a first claim on the capital reserve.

In summary, Solution projects in the CIP in no way compete with other projects, and they avoid housing moratoria in certain situations where they are not warranted.

Glenn Orlin is the Deputy Director of the Office of the County Council.  He has been the Council’s CIP Coordinator for the last 26 years.

 

 

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Placeholders Have No Place in the MCPS Capital Budget

By Laura Stewart.

Have you ever heard of the term “placeholder” in the county budget? I never had, until as a PTA President, I started to advocate for an elementary school that had 9 portables. The terminology surrounding placeholders was confusing.  At first it sounded like a planning tool that might be helpful.  But as I have looked at the scenarios in front of us in this budget cycle, I believe that real solutions need to take place instead of placeholders.  I will explain by using two real life scenarios below, followed by a review of the consequences of the current County Council’s SSP (Subdivision Staging Policy.)

Scenario 1:

An elementary school has just received an addition due to housing turnover, new development, and a boundary change that was intended to address split articulation patterns and crowding at other schools.  After the addition was completed, the school immediately became over-crowded again and now has four portables. More development is underway in the area, and it will cause even more crowding at the school.

Due to county policy, future development goes into moratorium when a school is forecast to be over 120% capacity at year 5 in the budget, unless there is a “solution.” That solution can be a “placeholder,” money put in the budget that covers the extra seats a development will create, based on the County’s “student generation rates.”  This money is not tied to a specific plan. It is only there to prevent the area from going into moratorium. The school system promises to develop an actual project in time for the seats to materialize in the next 5 years.  This school gets assigned a “placeholder” by the Council since a capacity project is not included in the Board of Education’s recommended FY19 budget.

Scenario 2:

A school has been over 120% capacity since 2011 and is at 151% today.  A plan to address the overcapacity is not included in the Board of Education (BOE) Recommended FY 19-24 budget.  Since there are no pending development projects in this part of the county, no “solution project” is proposed by the County Council, and the area officially goes into a housing moratorium.

Scenario 1 is in Bethesda, scenario 2 is in East Silver Spring.  Neither community is happy with place holders!

I will first explain why the areas with development aren’t happy.  The scenario 1 school, Bethesda ES, is in an area where housing development continues.  In fact, there are an additional 11 buildings submitting applications in the area under a recently approved master plan. Somerset Elementary School is in a similar situation and the Council has proposed a placeholder for that school as well. There is no actual plan for another addition at the Bethesda school (which may not even be possible, given the small site size,) or a plan for a new elementary school nearby. New schools, even at properties MCPS already owns, are much more expensive than additions. Additions also can cost more than the placeholder price tag that is included in the budget. Placeholders are supposed to guarantee seats in 5 years, but the past has shown that projects almost never get done in that time period.  Of the last five placeholders that had a due date before 2018, only one project finished by the due date. Another 4 placeholders added in FY15 were postponed the following year. Continuing development with a placeholder causes schools to go way over capacity, often much more than the initial 120% threshold, by the time there is a real solution.

Now let’s look at Scenario two.  East Silver Spring does not have pending development. The school that is the most overcrowded in the area is Burnt Mills ES, at 151% and over 200 children are in portables. In fact, this school has been over the 120% threshold since 2011, when the feasibility study was done. No project for this school is in the FY2019-2024 CIP. They will be considered in the new renovation and expansion program in a future CIP, but there are limited funds and there are many schools that will be considered. There are no guarantees for this school. So this area is now officially in moratorium, and has been for a while.  Relief at Burnt Mills seems elusive without any project on the books. Parents feel like they do not get the attention that other areas with lots of development get.  They are not wrong. Even though placeholders aren’t solutions, at least the conversation about a possible solution takes place at the County Council.

Seven areas are in housing moratorium in Montgomery County, but only three had placeholders proposed to be added in this budget cycle, two in Bethesda and one in Gaithersburg. I’ve spoken to parents in Bethesda that would rather have a building moratorium take place so the County could take time to come up with a real planned solution. The Gaithersburg school, Judith A. Resnik ES, had an addition project scheduled with a completion date. The enrollment there is trending down slightly, but is still projected to be at 122% capacity within 5 years.  To avoid a moratorium, the County removed an actual project (the scheduled addition), and added a placeholder.

Real money is taken out of the MCPS budget for placeholders, instead of actually using those funds for planned projects. In fact, several projects that were proposed in the BOE Recommended FY19 Budget are slated to be delayed due to lack of funds, including Col. E. Brooke Lee Middle School. It is considered a “sick” building by many teachers and parents. Mold and other issues come up regularly. They were elated to have a project that had a completion date of September 2021, only to be deeply disappointed when they were included in the delay list. Placeholder money – used to avoid putting development in moratorium- could be allocated NOW to schools with greater needs than the areas with pending development. Placeholders compete for scarce funds in the CIP.

There is another unintended consequence of giving placeholder money to areas of higher growth. These areas tend to be more affluent. So the optics continues to perpetuate the perceived and the real divide between East County and West County. For instance, there are huge disparities in wealth in our two scenarios. Bethesda ES has a 7.3% Free and Reduced Meals Rate (FARMS.) Burnt Mills ES has 67.1% FARMS.  The affluent area gets the attention of councilmembers and solution/placeholder projects – that may or may not actually come to fruition – while poorer areas are left out. This policy also divides the County North and South too, because rural areas do not have the growth that down county areas receive.

I am in no way blaming Councilmembers or insinuating that they mean to ignore certain areas of the County. I know that many fight for scarce resources, and fight to bring economic growth in underperforming areas of the County. I am blaming the processes and policies that perpetuate inequalities and perception of inequalities in our school system. I propose changing the system.  We can come together as a community and find a better way forward. Let’s get developers, Council Members, the Board of Education, the MCPS Division of Long Range Planning, and the Planning Department together and come up with REAL solutions so we can finally build real classrooms for kids, no matter in which zip code they live.

Laura Stewart is the CIP Chair for the Montgomery County Council of PTAs.

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MoCo’s Skyrocketing Debt

By Adam Pagnucco.

Last fall, County Executive Ike Leggett proposed cutting the volume of new general obligation bonds issued by the county in future years and the County Council concurred unanimously.  Advocates for school construction fretted over the move as the county’s needs in that area, as well as in transportation investment, are enormous.  But Leggett and the council had a point.  The county’s debt has skyrocketed in the past twenty years and especially in the last decade.  It now presents a substantial challenge to the county’s fiscal well-being that the next generation of county leaders will have to deal with.

The county government does not use debt to finance its operating budget, but it does use debt to finance its capital budget, known as the Capital Improvements Program (CIP).  The CIP is a six-year budget that is fully renewed every two years and is adjusted in off years.  The Executive’s latest recommended CIP currently totals $4.5 billion, of which $1.8 billion is recommended for school construction.  The CIP has many funding streams for its projects, but the single largest one is debt.  As of June 30, 2017, the county had $4.1 billion of outstanding primary government debt, of which the largest category is general obligation (GO) bonds, which accounts for $2.7 billion.  GO bonds are backed by the full faith and credit of county government.  The fact that the county’s GO bonds have had a AAA rating assigned to them by the nation’s three largest credit agencies for many years is a substantial source of interest savings to the county.  Other major categories of debt are short-term bond anticipation notes ($500 million outstanding), taxable Build America Bonds created during the recession ($308 million) and revenue bonds which are backed by dedicated revenue streams ($222 million).  All of this is separate from the substantial liabilities the county has for pension funding and retiree health benefits.

There are two salient facts about the county’s debt.  First, it has been growing rapidly.  And second, it is paid off through debt service that is part of the county’s operating budget.  These debt service payments MUST be paid and they compete with other spending priorities.  Along with total debt, debt service has also been growing rapidly.

The chart below shows growth in total outstanding primary government debt and in GO bonds over the last twenty years.  While growth has occurred throughout the entire period, it has accelerated since the onset of the Great Recession.  From 1998 through 2008, GO bond debt grew by an average of 2.9% per year, about equal to growth in the Washington-Baltimore CPI (3.0% per year).  Total debt grew by an average of 5.2% annually over that period.  From 2009 through 2017, GO bond debt grew by an annual average of 8.1%.  Total debt grew by 8.4% annually.  The average rate of inflation in the Washington-Baltimore CPI was 1.5%.  Over the last eight years, the county’s debt has been growing by more than 5 times the rate of inflation.

Relative to the size of the population, the debt has been rising too.  When we compared the county’s total debt levels to population estimates from the U.S. Bureau of Economic Analysis, we found that total debt per capita has grown from $1,370 in 1997 to $3,768 in 2017.

As for debt service, it has risen from $140 million in FY97 to $408 million in FY18.  If debt service was a county agency, it would be the largest agency in county government other than MCPS.  Debt service payments are mandatory and cannot be cut like most other categories of spending during recessions.  The pit of the Great Recession came in FY11, when debt service was $258 million and the county slashed services, doubled the energy tax and furloughed its workforce.  Now that debt service exceeds $400 million a year, it will present a much greater impediment to the maintenance of county services when the next recession comes.

Let’s remember that debt is not an inherently bad thing.  It is the primary vehicle by which the county pays for core government functions like school construction and transportation projects.  The county’s needs in those areas are absolutely undeniable.  Also, construction costs were moderated during the recession, so the county was able to take advantage of that to build relatively cheaply in those years.  But over the long term, if you are going to have rapidly growing debt, you need to have a rapidly growing economy to pay for it.  And MoCo does not have that – instead, it has had weak growth in employment and incomes in recent years.  It saw 57 new business filings in 2015 and 19 new filings a year later.  It passed a 9% property tax hike and a year and a half later suffered a $120 million budget shortfall.

This is evidence yet again that an economic revival has to be a huge priority for the next generation of county elected officials.  Without it, debt service will consume larger and larger chunks of the budget and eventually lead to service cuts and/or tax hikes.  As for those who oppose economic growth or have worked to undermine it, the debt situation makes this clear: you cannot oppose growth and favor expanding school construction and transportation investment.  The economy and the credit markets won’t allow elected leaders to have it both ways.

Bear that in mind as we head to Election Day.

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Team MoCo

By Adam Pagnucco.

Yesterday, we wrote about the recent history of MCPS and it was not a pretty picture.  The recession, new state laws, political conflict and the erosion of a once-strong consensus around the public schools resulted in MCPS getting lower funding increases than most of the rest of county government, especially when measured in local dollars.  But the good news here is that change is coming to MoCo with the sheer number of open seats in county elected offices.  There is a better way forward.  And today, we will plot out what that way can be.

First, let’s steal a page from the playbook of former MCPS Head Coach Jerry Weast and recognize this: nothing brings folks together like a common enemy.  The Axis powers brought together America and the Soviet Union.  The New England Patriots brought together nearly all NFL fans without ties to the Greater Boston area to root for the not-quite-as-bad Philadelphia Eagles.  And Donald Trump may just bring together the feuding members of Crosby, Stills, Nash and Young, who hate Trump more than they dislike each other.

The various factions of MoCo’s education family do not have a common enemy, but they do have a common challenge: dealing with Annapolis.  The state capital poses three problems for MoCo’s public schools.  First, the state has a Governor who has cut education funding before (especially state aid for MoCo) and is doing it again.  Second, while the state has improved recently, it still short changes MoCo on school construction money and the county cannot keep up with capacity needs on its own.  And third, a consultant advising the state’s Kirwan Commission on education reform has recommended massive cuts to state operating aid to MCPS.  If all three of these things proceed in a baleful direction, MCPS’s funding issues will get a lot worse and the entire county – parents, students, school employees, residents and businesses – will pay a steep price.

When you get past the details of MCPS’s recent money problems, one root cause stands out: political division in the wake of Weast’s departure.  The County Executive, the County Council, MCPS leadership, the MCPS unions and the PTAs all have different priorities and different views on MCPS funding, and they often go in different directions.  That has to stop or things won’t change.  We need a Team MoCo.  And here’s what that looks like.

County Council

The council has one job when it comes to the schools: funding them.  And since the schools are both a critical public policy priority as well as a big political priority for the voters, their funding situation must improve from the last eight years.  The council largely got this right in its FY18 budget, which gave MCPS a modest (roughly $20 million) increase over the state’s Maintenance of Effort requirement.  The policy of regular, modest per pupil local dollar increases that will – at the very least – keep pace with MCPS’s costs and needs should continue.

The council must not get involved in sensitive internal MCPS issues, especially in pressuring the system on its collective bargaining agreements.  Blowing up the union contracts in 2016 was a major mistake and caused a serious breach of trust.  Let MCPS management and the unions decide what the agreements look like in the context of their total budget.  If the council does not stay out of this, Team MoCo will crumble and the entire arrangement will fall apart.

Superintendent and Board of Education

If the council gives MCPS leadership the funding it needs, then MCPS leadership must reciprocate by giving the council what it needs: fiscal stability.  The state’s Maintenance of Effort (MOE) law, which was rewritten in 2012, sets each year’s local dollar per pupil funding as a base for future years.  Every time the base goes up, it becomes a new base and can only be lowered by a waiver from the State Board of Education.  This is a major concern for the council and was partially responsible for several years of per pupil cuts and freezes.  Given the immense implications of this for the county’s budget and AAA bond rating, the council is right to be wary of going too far above MOE.

Fortunately, § 5-202 (d) (9) of the state’s education law specifies that the State Board of Education shall grant an MOE waiver “in the amount that has been agreed on by the county and county board that is attributable to reductions in recurring costs.”  In other words, if the county falls into another big recession and it has to cut costs in the school system along with all the other agencies, it can get a waiver if the school board agrees.  This deal must be honored by MCPS: if the council extends its trust by funding them, MCPS must agree to reciprocate by helping to relieve the county of financial stress in dire circumstances.  Both sides must stick to this or relations will revert to the bad old years.

MCPS Unions and PTAs

MCEA and SEIU Local 500 are two of the most powerful players in county politics.  The PTAs do not endorse candidates, but they have listservs that include thousands of parents and therefore – at least in theory – have a big voice.  These organizations should function as the muscle of Team MoCo.  They will be getting regular funding increases and, in return, they should help the Team pressure Annapolis to get what is needed for the county.

MoCo Delegation

If Team MoCo gets its act together and strikes an equitable deal for local funding for the schools, the remaining challenges lie in Annapolis.  Rockville does not understand Annapolis.  It does not fully appreciate the obstacles faced by the delegation in pursuing county priorities: the perception of MoCo by the rest of the state as paved in gold; the competing priorities of other population centers in the state; the constraining effect of the legislature’s leadership; and the fiscal constraints of the state’s own tight budget.  Given those hurdles, it’s a heavy lift for the delegation to bring back Big Bacon to MoCo.  But it can be done: witness the Baltimore City delegation’s victory in getting the state to pump a billion dollars into the city’s school construction program.  The city legislators are not smarter than MoCo’s legislators (although they are more parochial).  A big reason for their win was that the entire city stuck together, from the Mayor to the City Council to the city legislators to the folks back home who wanted the money.  Team Baltimore got a billion dollars.  We need a Team MoCo to do something similar.

The role of the county leadership and its constituent groups is to set a mark for the delegation and do everything possible to help them stay organized and succeed.  This is not easy; the other jurisdictions and the presiding officers won’t just roll over for us.  Every member of Team MoCo has to tell our delegation with one unified voice, “We have your backs.  We know it’s a lift, but if you come through for us, we will celebrate you like the heroes you are.  You will never have to buy a drink for yourselves in Rockville ever again.  And if you don’t come through, you will not be served a drink in Rockville ever again!”  Good performance must be rewarded.  Bad performance must be met with accountability.

One more thing: the delegation has an ace card.  Senate President Mike Miller and Speaker Mike Busch are not going to run the General Assembly for much longer.  Successors to their thrones are making the rounds and lining up votes, however quietly.  The MoCo legislators should tell all of them that whoever gives the county the best deal on schools will lock up all their votes.  It’s huge leverage that should not be wasted, but it will only be used if it pays off in political terms.  Team MoCo’s job is to make sure it does pay off so the Big Bacon gets served.

County Executive

This is the most critical person in this entire endeavor.  Every team needs a Captain.  In MoCo, that has to be the Executive.  This individual is the county’s spokesperson and the one everybody else will inevitably look to for leadership.  The Executive must be a troubleshooter who works out periodic squabbles between the different members of the family, charts out a general course on budgets and state action and makes sure everyone gets the credit they deserve.  Most of all, the Executive must be a LEADER.  The lesson from the aftermath of Weast is that without central leadership, everything can fall apart.  If we pick the right Executive, that won’t happen and Team MoCo can succeed.

And so if everything works out, everyone wins.  The county gets its fair share from the state.  MCPS stakeholders get the funding they need.  MCPS employees get fair compensation and the resources they need to do their jobs.  The elected officials get to be heroes.  And the county as a whole will maintain its status as one of the best places to live on Planet Earth.

We can do it, folks.  Yes we can!  If you agree, ask the candidates how they intend to play on our team and keep it in mind for Election Day.  Team MoCo will only come together if the voters demand it.

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Where Will the Apple Drop?

By Adam Pagnucco.

Many moons ago, when your author was young and blissfully new to the county, we wrote our very first blog post on the mighty Apple Ballot.  It was unimaginatively titled, “The 800 lb Gorilla of MoCo Politics.”  Then as now, the Apple was one of the most coveted endorsements in MoCo.  But my oh my, so much has changed.

Back in the Age of the Golden Apple, the Montgomery County Education Association (MCEA) was the centerpiece of a powerful political organization created by then-Superintendent Jerry Weast.  Weast was not a pro-union progressive by nature, but he understood that politics is a team sport and it was necessary to play it to get money.  So the Weast Machine included the education unions (MCEA, SEIU and the principals), the PTAs, the Washington Post editorial page and the school system’s internal Ministry of Propaganda.  (That was not its title, but you get the point!)  Weast traded real input in the MCPS budget for stakeholders in return for absolute loyalty in joint combat against the outside – especially the County Council.  Anyone who messed with the school system didn’t take on Weast alone – they had to go against the entire Machine.  Weast capitalized on his organization as well as productive relationships with County Executive Doug Duncan and County Council Education Committee Chair Mike Subin to get substantial and regular budget increases.  The whole system was greased by strong revenue growth and occasional tax hikes.

The District 18/Silver Spring version of the Apple Ballot from 2006.  This is the document that began your author’s career in blogging.

Those days are long gone.  Three major changes have occurred over the last ten years.

First, Weast jumped the shark – not once, but twice.  His first big sin was calling union leaders to his house to ask them to endorse Nancy Navarro in the 2008 Council District 4 special election.  That attracted criticism from multiple Council Members as inappropriate conduct by an appointed non-partisan administrator.  His second big sin was threatening to sue the county over a budget disagreement two years later.  These kinds of behavior helped convince Weast’s adversaries that he was not merely an irritant, but an actual threat, and prompted some to brand him a Rogue Superintendent.  That set the stage for the bitter budget battles to come.

Second, the county and regional economies were greatly weakened in the wake of the Great Recession.  The chart below shows growth in county revenue (excluding intergovernmental aid) over the last twenty years.  Red bars indicate years in which major tax hikes were passed.  From FY98 through FY09, a generally prosperous economy helped county revenues grow by an annual average of 6.2%.  But from FY10 through FY18, the days of the Great Recession and beyond, county revenues grew by an annual average of 3.1%.  (That does not include the recent $120 million budget shortfall.)  There is simply not as much money to go around as there used to be.  Accordingly, revitalizing the economy should be a huge policy objective for all of the county’s employee unions and everyone else who cares about funding local government.

Third, the local money that was available was not as directed to MCPS as it once was.  There are many reasons for that: the Holy War that broke out between the County Council and the school system in Weast’s final days; dissatisfaction with changes to the state’s Maintenance of Effort law; the state’s execrable decision to shift part of the teacher pension burden down to the counties, which is costing MoCo tens of millions of dollars every year and stifling funding for other priorities; and the growth of many other needs in the county’s budget.  Council Member Nancy Floreen defended the county’s record on MCPS funding and your author offered a reply.

Whatever the reasons, MCPS has not received operating fund increases commensurate with most of the rest of the government in recent years.  The chart below shows budgetary growth by major department and agency from FY10, the peak year before the Great Recession, through FY18.  The effects of the recently approved mid-year savings plan are shown at right.  Note that the time period includes the recession itself, the recovery years afterwards and the FY17 9% property tax hike which was marketed as a boost for education.  MCPS’s total funding increased by 13% over these eight years, roughly half the 25% increase for the total county government.  Non-local funding for the schools, the huge majority of which is state aid, went up by 33%.  But local funding for the schools went up by just 6% as the county spent its own money disproportionately on other activities.  Meanwhile, MCPS’s enrollment went up by 15% during this period.

The Weast Machine has been shattered.  Its demise was due to the decline of the economy, conscious policy choices by county decision makers and, ironically, because of the school system’s own leadership as well.  The key moment came in the spring of 2016, when the County Council conditioned its offer of a substantial increase in MCPS funding on a requirement that it go to reducing class size and not to increasing teacher compensation.  The Weast Machine would have resisted that condition, but the system’s leadership agreed to it.  And so the council voted unanimously to instruct the school system to shift $37 million from employee compensation to class size reduction and the school system reduced teacher raises to comply.  The legacy of this moment is that there is no longer a united front between MCPS leaders and their unions – a major loss of leverage in the school system’s dealings with county electeds.  The end result was not so great for the council either as voters, displeased by the big tax hike that year and not mollified by the compensation changes, went on to overwhelmingly approve term limits.

MCEA runs a Facebook ad against the $25 million mid-year cut to MCPS.  The union flooded a town hall meeting with the County Executive to protest it but the County Council approved the cut unanimously.

MCEA will be deciding its 2018 endorsements for county office in the weeks to come.  In the contested races for County Executive, Council At-Large and Council Districts 1 and 3, the mighty Apple Ballot could play a huge role.  Where will the Apple drop?  That depends on how MCEA answers the following two questions.

What to Do With the Incumbents?

Incumbents usually win and MCEA has endorsed the majority of them, including ones who were lukewarm on their issues, in the past.  But in this case, most of the incumbent Council Members voted for multiple very tough budgets, all of them supported reducing teacher raises as a condition of approving more MCPS funding and all of them just voted for a $25 million mid-year cut to MCPS.  Can those strikes be offset by other considerations?

How to Find Someone Better?

Let’s be fair to the incumbents: the recession, the new Maintenance of Effort law and the partial shift of teacher pension funding to the counties created very hard choices.  No matter what they did, the incumbents would have offended someone.  Would the legions of challengers now vying for the Apple’s attention really have done better?  Which ones among them understand the very real and very complicated budget issues that face policy makers?  Which ones will aggressively pursue economic revival, which is necessary for financing all county services – not just MCPS – and supporting justified raises for county employees?  Which ones have the competence to deliver and the character to fight for teachers, parents and students alike?

When those questions are answered, we will know where the Apple drops.

End Note: For those who wish to study MCPS’s funding history, we reprint the following graphic from the County Executive’s recommended FY18 budget below.

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Revenue Shortfall Undermines Hogan’s Claims on Jobs

By Adam Pagnucco.

In 2014, candidate Larry Hogan ran on three issues: jobs, taxes and reforming Annapolis.  From 2015 through the present, Governor Larry Hogan has based his agenda on three issues: jobs, taxes and reforming Annapolis.  It’s a smart and focused way to campaign and govern and has largely (although perhaps temporarily) neutralized Hogan’s disadvantage as a Republican in blue Maryland.  But now the state budget is suffering from a revenue shortfall.  That calls into question Hogan’s standing on perhaps his biggest issue: jobs.

Recent polls show that jobs and the economy are the second most important issue for Marylanders, trailing only public education.  Accordingly, Hogan relentlessly promotes his jobs record in the press and social media, not so subtly using it as justification for his reelection.  But if employment was really surging, state revenues should be booming.  They’re not.

One of countless Facebook posts by the Governor on jobs.

Last week, the Board of Revenue Estimates, comprised of the Comptroller, the Treasurer and the Secretary of Budget and Management, voted to reduce the state’s revenue projection for FY18 (the current fiscal year) by $73 million.  The reduction included shortfalls of $92 million in income taxes and $33 million in sales and use taxes, which were partially offset by increases of $18 million in estate taxes and $17 million in corporate income taxes.

A summary of the shortfall released by the Board of Revenue Estimates.

Given the fact that the November income tax distributions were down by 26% in Baltimore County, 29% in Montgomery County and 30% in Howard County, it’s not surprising that the state’s income tax projections would take a hit.  In those three counties, tax planning by the wealthy to take advantage of next year’s federal tax cuts was probably a factor in their shortfalls.  The fact that Maryland has the highest percentage of millionaire households of any state in the country leaves it vulnerable to these kinds of revenue swings.

But that’s not all.  The $33 million decline in projected sales and use taxes does not relate to tax planning by the rich.  That’s a similar situation to what MoCo is experiencing as half the county’s shortfall comes from taxes other than income taxes.  Hogan is dealing with the same problem as MoCo’s county elected officials: for all their claims that the economy is strong, healthy economies tend to not produce significant revenue shortfalls.  Recent employment estimates are often revised substantially soon after their release, but current year revenue declines are something that governments have to deal with in the near term.

Here’s what Comptroller Peter Franchot had to say about the state’s falling revenue projections:

The revenue projections that have been brought to this Board for approval were meticulously and carefully crafted based on what we know … and the trends we are seeing … and the data we are receiving. Once Congress approves a final version of the tax reform legislation, our experts here will work diligently to determine its impact on Marylanders’ income and our state’s fiscal future and propose revisions to our revenue estimates where appropriate.

In other words, we’re doing the best we can with the information we have. But, here’s what we do know and here’s what the numbers tell us. While we have undoubtedly made considerable progress after the crippling effects of the 2008 Recession, with an unemployment rate hovering around 4 percent and stock market trends that are headed in the right direction, the fact of the matter is that thousands of Maryland working families and small business owners who were affected the most by the economic crash nearly a decade ago haven’t fully recovered.

We continue to see that with declining sales and use tax revenue. With wages and salaries that are lackluster at best. Even those who are employed with good-paying jobs have – in more cases than not – elected to put their disposable incomes in their piggy banks instead of putting money back in our local economy. And who can blame them?

With all the uncertainty that’s being produced by Washington at an almost daily basis, coupled with the continued fiscal and economic challenges that our state and our communities face, it’s understandable why so many of our citizens remain hesitant and timid about how they spend their hard-earned incomes.

Let’s remember that Franchot has a famously cooperative relationship with Hogan.  Even so, Franchot is saying that the state’s economy has not fully recovered from the Great Recession – which is exactly what we wrote about MoCo before the revenue crash.

This is the opposite of Larry Hogan’s message that he has been great on jobs.  His opponents are sure to take notice.

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Is MoCo’s Budget in Trouble?

By Adam Pagnucco.

Montgomery County’s $120 million budget shortfall has set off political fireworks this election season, including attacks from Delegate Bill Frick (D-16), who is running for Executive, and Republicans who question how taxes could be going up while revenues are going down.  County Council incumbents pooh-pooh it, insisting that the budget decline is unremarkable and the economy is strong.  County Executive spokesman Patrick Lacefield, who once predicted that any loss of the county’s $30 million in liquor profits would cause a big property tax hike, now says that the $120 million shortfall is “pretty small” at just 2.2 percent of the county’s budget.

What is going on here?  Is MoCo’s budget in trouble?

First, the incumbents are right to point out that mid-year corrections, including budget savings plans, are not uncommon.  Between FY08 and FY11, the County Council approved five mid-year cut packages ranging from $30 million to $70 million each due to the Great Recession.  In FY16, the council approved a $54 million savings plan associated with the U.S. Supreme Court’s Wynne decision and disappointing income tax receipts in the prior year.  While mid-year cuts happen occasionally, it’s important to note that their history indicates that they are often – but not always – produced by looming economic problems.

So what’s causing this one?  No one is totally sure yet, but there seems to be two phenomena at work.

Declining Income Tax Payments from the Wealthy

In Maryland, the state collects income taxes on behalf of local governments and remits them in periodic distributions.  Part of MoCo’s problem originated in its November income tax distribution from the state, which includes extension filers who tend to be disproportionately very wealthy.  It’s difficult to forecast income tax payments from wealthy people because their dependence on capital gains and business income can be volatile.  The chart below from the state’s Bureau of Revenue Estimates contrasts the annual change in average federal adjusted gross income between all MoCo taxpayers (pink bars) and the top 100 MoCo taxpayers (blue line).  Income change for all taxpayers usually varies by single digits each year while income for the super-wealthy almost always varies by double digits.  This creates serious forecasting challenges for the county government since the super-wealthy have a material impact on its budget.

One relevant fact is that the November distribution may be down by 29% in MoCo but, according to the state, it is also down by 30% in Howard County and 26% in Baltimore County.  One thing these three jurisdictions have in common is that they all have substantial concentrations of very wealthy people.  That suggests that some of MoCo’s problem is not specific to the county but rather to variations in the incomes of the super rich.

Why is this happening?  One explanation lies in capital gains income.  Council analyst Jacob Sesker writes:

To a large degree, that volatility is the result of the year-to-year variations in the capital gains income of a small number of County residents. Illustrating this point, part of the projected FY18 decline in income tax revenue can be traced to a sharp drop in the capital gains of the County’s top 50 taxpayers, who realized gains in tax year 2016 that were 50% of the gains realized in tax year 2015, resulting in $21 million less in County income tax revenue (Revenue Administration Division of the Maryland Comptroller). Staff’s review of tax return data published by the Comptroller indicates that roughly 1.8% of Montgomery County returns report income of $500,000 or greater. On average, these returns explain more than half of any year-to-year increases in income tax revenue, and explain more than 100% of any year-to-year declines in income tax revenue.

Another factor could be the tax bills being considered by Congress, which contain numerous large cuts for wealthy individuals and corporations.  The super wealthy could be deferring capital gains and business pass-through income to next year when they would be subject to significantly lower rates.  If true, that would mean less income tax revenue this year but perhaps more next year when the deferred income is reported.  That’s just a theory but it can’t be ruled out.

Broader Economic Weakness

There are other facts that can’t be explained by the tax planning of the super wealthy.  First, FY17 (the year of the 9% property tax hike) closed out with $25 million less than expected.  Second, the county is writing down $206 million over the next six years in property taxes, energy taxes, transfer taxes, recordation taxes, telephone taxes and hotel taxes in addition to a $212 million income tax writedown.  The energy tax revision alone is $100 million over six years.  The reason for that is unclear, but it’s worth remembering that since commercial energy users pay roughly double the tax rates of residential users, some assumptions regarding employer energy use may be operative here.  It seems unlikely that a “strong economy” would produce such broad, multi-tax writedowns of the kind just put forth by the county.

What’s the bottom line?  Over the years, we have learned that under most circumstances, economic trends usually matter more than singular events.  One good year should not cause irrational exuberance and one bad tax distribution should not cause panic.  Whether the recent shortfall turns out to be meaningful or not, MoCo’s serious budgetary challenges are long term in nature.  They relate to decade-plus trends of lagging growth in employment and income, repeated funding of ongoing spending with one-time revenue sources and the county’s recent passage of large tax hikes and expensive employment laws at the same time, a unique combination among Washington-area jurisdictions.  That is on top of any targeting of Maryland and general economic insanity by Congress.  The big question is not about one tax distribution from the state but whether a combination of all these long-term factors will catch up with MoCo in a really bad way in the next couple years.

That’s a question for the next Executive and County Council.

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Bill Frick: Name One Program You Would Cut

Name one program in the county budget that is not working and can be cut.  Tell us how much in annual savings that would yield.

For too long, Council members have used the County budget as a piggy bank to fund their pet projects and ideas, often ones that could not survive a serious cost/benefit review.

As we reorient County government to be a constituent-consumer focused organization, we can find savings.  For example, the county employs nearly 40 personnel in its 311 call center, despite the dramatic shift in technology away from phone calls and towards electronic communications.  If Montgomery County complemented this with a constituent service app, as exists in neighboring jurisdictions, many constituent services would be routed directly to the relevant agencies instead of going first through bureaucratic call centers, and we could save taxpayer money.

Finally, the County should not be a leader in corporate welfare.  I would end our tax credits for investors, money that goes from everyday taxpayers straight to the pockets of wealthy investors, often to reward them for making investments they would have made regardless.  This is a fight I led at the state level as the architect of the Tax Credit Evaluation Act, legislation to spotlight and reform our runaway subsidies, and by going toe-to-toe with Hollywood to make sure our tax dollars were being spent productively.

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