Less than a month after leaving county government, former MoCo Chief Administrative Officer (CAO) Andrew Kleine has written an essay for Engaging Local Government Leaders, a public manager association, about his experiences in dealing with the COVID-19 crisis. The essay has set tongues wagging about whether Kleine has more to say about his time as CAO.
Kleine’s essay is fairly innocuous. He discusses teleworking, newsletters, masks and his personal exercise routine. He does not discuss his resignation. Notably, the essay makes him look good. The other thing one takes away from it is that Kleine is a superior writer. His writing style is concise, engaging, occasionally humorous and even a little zippy. It’s hard to write about government with zip, but Kleine can pull it off as he did in his book about Baltimore, City on the Line.
From a political perspective, the thing to notice about City on the Line is that Kleine names names. He recounts events and assigns quotes to city managers and politicians. Among other things, he reported this quote from then-Mayor Sheila Dixon: “The budget is like a $3 billion black box to me… The decisions brought to me are at the margins, which means that, as far as I know, 99 percent of the budget is basically on autopilot.” I bet Kleine is right. Very few politicians in my experience know much of anything about the budgets they are supposed to oversee. But what politician wants to see a quote like that in print?
As CAO, Kleine was THE top manager in MoCo government. He would have been present for all the big decisions. He knows who said what, who did what and how everything turned out. Heaven knows what documentation he has. Heaven knows how much he would be willing to say, but in his book on Baltimore, he said a LOT. (Kleine’s funniest story relates to a city manager who accused him of wanting to write a book about Baltimore after he leaves the city.)
If I were a senior official in the executive branch, I would dread the prospect of Kleine writing a book about his experiences in MoCo. He has nothing to lose and everything to gain. Let’s remember that Kleine never wanted to resign. The county council forced County Executive Marc Elrich to push him out. How would you feel if something like that happened to you?
One more thing: Kleine has plenty of time to publish another book before the next election.
Dear Adam, thanks for covering the “Nine Districts” matter. Rest assured, there is at least one dyed-in-the-wool Democrat who believes that County Council has for years betrayed the voters and residents on planning issues … and welcomes trying a new approach that might bring to end the years of County Council’s betrayal of voters and residents … so passing the “Nine Districts” ballot measure might not be a silver bullet, but it sends a strong signal — like passing the “term limits” ballot measure — that County Council’s betrayal of voters and residents has not gone unnoticed and that, to the extent possible, County Council will be held accountable by the voters they have betrayed.
This reader has an interesting point in bringing up term limits. The coalition for Nine Districts bears a more-than-passing resemblance to the coalition supporting term limits in 2016. Both groups contained Republicans, business folks, unhappy developers, moderate Democrats and everyone else who opposed the status quo. Some upcounty residents see a lot of appeal in Nine Districts. Four years ago, Clarksburg, Damascus, Derwood, Laytonsville, North Potomac and Poolesville voted in support of term limits by 80% or more.
Now let’s consider what Nine Districts supporters had to say about why they favored that initiative. There are themes of being ignored, losing out to downcounty and/or “Takoma Park” progressives, dissatisfaction with planning issues and more. Those very same grievances were cited by term limits supporters four years ago. And term limits were sold as the magic elixir that was supposed to fix it. All of it.
One thing that the term limits vote accomplished is that it spawned enormous, although probably temporary, aversion to tax hikes at the county council. Five council members who voted for the 8.7% property tax hike in 2016 that preceded the 70% vote for term limits are still on the council. Most of them along with at least half of the freshmen have opposed tax hikes at nearly every turn over the past year. When the county executive proposed a tax hike to fund more money for schools, eight of the nine council members immediately rejected it out of hand. When members of the General Assembly offered more taxing power to the council, a majority of them rejected that too even though it was merely enabling authority. They also rejected a hidden tax hike that was buried in the county executive’s budget. Council Member Evan Glass’s bill to tax teardowns is in limbo. And though they don’t favor Robin Ficker’s draconian charter amendment banning property tax increases, the council proposed an alternative containing a unanimous vote requirement for breaking the charter limit. Let’s remember that the latter requirement originated with a charter amendment passed by Ficker in 2008.
Yes, it’s true: so far, the county council of 2020 has had the same position on breaking the charter limit on property taxes that Robin Ficker had in 2008. No one seems to have noticed.
Someday, the anti-tax sentiment on the council will fade. Term limits, after all, create lame ducks who are by their nature immune from political accountability in the event that their careers in office are over. Throw in the county’s humungous multi-year revenue crash and we have not seen the last of tax hikes.
Whatever becomes of taxes, none of the other things that term limits were supposed to “fix” have been “fixed.” Four years later, supporters of Nine Districts are still complaining about those very same things. Here’s a prediction, folks – if Nine Districts passes, the new county council will be seen as just as bad as the current one by a faction of angry residents who will then spawn a new charter amendment – for the same reasons. And on and on it will go.
Instead of endlessly rejiggering the charter, how about we organize people to vote for adults? And then if the politicians act like bottle-throwing babies, vote them out. A few election cycles of that will send a message to the politicians that they won’t forget, even more so than term limits or nine districts.
The Montgomery County Economic Development Corporation (MCEDC) is the county’s economic development authority. It is a 501(c)(3) whose board members are nominated by the county executive and confirmed by the county council. Its operating budget comes mainly from county government. In June, MCEDC launched a business assistance initiative called 3R (Reopen Relaunch and Reimagine), which is funded by a combination of public and private money. One component of 3R is a new grant program for restaurants and retailers to prepare for the winter months. All companies in those sectors are encouraged to apply, but there’s a catch:
Getting the money depends in part on where in the county they are located.
As part of the public-private 3R (Reopen, Relaunch and Reimagine) Initiative, the Montgomery County Economic Development Corporation (MCEDC) is now accepting grant applications from local restaurants and retailers for up to $5,000 to prepare for the upcoming holiday season and winter months. Eligible businesses can submit applications through November 5.
More information on the 3R Initiative Restaurant & Retail grant program and the application can be found here. The grant is an important component of MCEDC’s comprehensive year-long 3R Initiative designed to address the devastating impacts of the pandemic on the Montgomery County restaurant and retail industries.
Although any locally-owned restauranteur or retailer with fewer than 100 employees can apply for the grant, ten Montgomery County target corridors will be given priority for funding: Burtonsville/Briggs Chaney, Wheaton/Glenmont, White Oak, Aspen Hill, Germantown, Damascus, Takoma-Langley, Four Corners, Montgomery Hills, and Twinbrook/White Flint. These ten target corridors were selected with community input.
I asked MCEDC CEO Ben Wu to explain the organization’s rationale for geographic prioritization. He wrote the following to me:
Hi Adam, thanks for your message and your interest in the 3R Initiative.
As you know, the 3R Initiative supports our Montgomery County restaurant and retail sectors during this pandemic crisis. This $1 Million public-private partnership is designed as a year-long initiative, of which the grants are an important element, especially now with the start of the winter and holiday seasons. Future elements include a retail recovery guide, a countywide e-commerce marketplace and additional targeted investments in selected commercial corridors.
While the 3R Initiative has county-wide components such as the recovery guide and the e-commerce marketplace, it is also an economic development pilot project that seeks to bring together community stakeholders in hard-hit target corridors that might not have significant resources to search for collective solutions. These community stakeholders could include landlords, tenants, chambers of commerce, neighborhood associations, local support organizations, and the County Regional Service Centers. The 3R Initiative will work with the target corridors to help their restaurants and retail establishments develop strategies and access funding (through the 3R and/or Reopen Montgomery grants). At the program’s conclusion, depending on the pandemic, we would discuss the future of bringing the successes of this community-based model in the target corridors to potentially be recreated in other areas of the county.
Although any locally-owned restauranteur or retailer with fewer than 100 employees can apply for the grant, ten Montgomery County target corridors will be given priority for funding. These ten target corridors were selected with recommendations and input from the five County Regional Service Centers and the community. They were selected to be geographically and demographically diverse. Each of the Regional Service Center jurisdictions have at least one target corridor, many with more than one.
If you should have any further questions, let me know.
Best, Ben
Now let’s stipulate a few things up front. First, MoCo is an incredibly diverse jurisdiction in all kinds of ways. One can make a case that non-identical communities should not be treated identically. Second, MoCo holds events in locations all over the county that are not the same in kind or timing. There are county seminars, recreation programs, park programs, community events and all sorts of things that rotate across geography. Third, the county has different tax, fee and regulatory requirements depending on area, including parking fees, impact taxes, enterprise zones and of course master plans. We are too large and diverse to enact perfectly homogenous standards for everything the county does.
I don’t think MCEDC intends this, but their decision to steer money to some areas and away from others feeds one of the more toxic trends in MoCo politics: the suspicion that some parts of the county are treated better than others. There are tensions of east vs west (especially in issues connected to the schools). There is upcounty vs downcounty. (Folks ask why the Purple Line is being built but M-83, the upcounty highway, is not.) There is wealth vs less wealth. There are issues of racial equity which play out differently across MoCo. The current movement for nine council districts sprang from these tensions. The biggest single argument made by Nine Districts for MoCo is that the county council’s structure, especially its use of at-large members, steers resources away from some communities and towards others. MCEDC’s program is an unwitting but actual demonstration of this sort of thing.
So now two things will happen. First, conspiracy theorists residing in one of the non-prioritized areas will say, “Aha, we were right! The county really is trying to screw us!” Second, businesses in the largest non-prioritized areas will complain and say, “What about us?” The fact that the county’s largest business districts – Downtown Silver Spring, Downtown Bethesda, Downtown Rockville and Gaithersburg – are non-prioritized means that some serious clout could be brought to bear on this issue.
I think MCEDC is well intentioned. But I also think that this could turn into yet another headache that county leaders don’t need.
County Executive Marc Elrich has a soft and raspy voice. Close your eyes and imagine that voice saying:
I just think that developers should pay their fair share.
Last week was a terrible one for Elrich. His chief administrative officer and emergency management director were blown to smithereens by the county council over the pace of the executive branch’s distribution of federal assistance funds. The story dominated the local press for days. Elrich responded to the council with this saucy comeback: “I used to be a legislator, and it’s the best job in the world because you can just say, ‘I want to spend this money,’ and tell someone to go spend it. And you don’t actually figure out how to do it.” There is more than a bit of truth to this, but the observation won’t improve Elrich’s relations with an irate council.
I just think that developers should pay their fair share.
Supporters of the vetoed bill argue that it was necessary to enable development of high rises at the pending Grosvenor-Strathmore Metro station project. They feared that failure to act would doom or shrink the project. That urgency prevented them from examining other, more time-consuming, paths to a deal including an appropriation from the economic development fund (in which Elrich would get to play) or providing financing through the county’s economic development corporation or the Housing Opportunities Commission. But unlike those mechanisms, legislation is a highly public thing. By giving Elrich an opportunity to veto the bill, his critics on the council gave him an opportunity to go on offense.
But wait a minute, you say. The bill passed on a 7-2 vote, one more than necessary to override a veto. When the council overrides Elrich, doesn’t that make him a loser?
Those who think that do not understand how Elrich got elected executive. During his twelve years on the county council, Elrich was the sole no vote on a host of master plans, all increasing density. Yes, he “lost” those votes again and again. But he also picked up support in those communities from skeptics of the plans who came to see Elrich as their only champion. Those folks became a critical and expanding part of Elrich’s base. Few if any politicians in the county have ever won more from “losing” than Marc Elrich.
Elrich’s opposition to many new development policies have prompted his critics to brand him as a NIMBY. But there is more to his political success than pure NIMBYism. When you listen to him discuss development closely, he is making an equity argument as much as a land use argument. Here is what he said about development in 2002:
Our beleaguered middle-class is told that the County can no longer afford to provide the quality of life that made this place so attractive at the same time it throws millions in subsidies into the pockets of millionaires. We make great claims about ending welfare, but we’re really only changing the beneficiaries. What we’ve done is to recast developers as the new poster children of the Nineties. This blind devotion to growth is great – if you’re a developer or a tumor – but it doesn’t work so well for the rest of us who are better served by priorities that strengthen our communities and our schools.
In other words, throwing public money at developers reduces the money available for schools, public safety, health and human services, libraries, parks and more. Here is a more refined version of this argument from his 2018 campaign kickoff.
Elrich’s quarrels with developers resonated more when the economy was better, such as in 2006, when he was first elected to the council. As executive, such arguments come up less often, first because his office does not often deal directly with land use and second because the economy is in such wretched shape. MoCo has much bigger problems at the moment than “predatory” developers. But in a dark blue county in which Democratic primaries are the real elections for office, Elrich’s equity argument still has purchase when occasion calls for it.
Supporters of the bill that Elrich vetoed have good arguments on their behalf. It’s true that Metro sites have extra development costs. It’s true that, for the most part, high-rises are not being built on these sites. It’s true that transit-oriented development is superior to sprawl or no growth. So it’s not a crazy position that public investment should be used to make these projects happen.
But the bill’s supporters have two problems. First, they are making complicated arguments and Elrich is making a simple one. In politics, simple arguments usually beat complicated ones. Second, the supporters are making economic arguments while Elrich is making a value judgment. Most MoCo Democratic primary voters are not accountants or economists, but they do have progressive values. Broadly speaking, they agree with the notion that everyone with means – not just developers – should pay towards the cost of funding government.
On top of all that, consider the times we are in. The county’s unemployment rate is the highest it has been in anyone’s memory. Small businesses are shutting down left and right. Tenants are missing rent and will be, eventually, at risk of eviction. So what are we doing? Giving developers 15 year tax breaks. That’s how Team Elrich is going to frame this.
I just think that developers should pay their fair share.
Unless something strange happens, the council will override the executive’s veto. The bill’s supporters will get the policy win. But the political win? Overall, that belongs to Marc Elrich.
On Friday, County Executive Marc Elrich issued the first veto of his administration against a bill by the county council offering 15-year property tax breaks for high-rise developments at Metro stations.
Vetoes are uncommon events in MoCo politics. Elrich’s predecessor, Ike Leggett, vetoed three measures: a county property disposition bill in 2012 (which was overridden), a minimum wage bill in 2017 (which was subsequently replaced by a similar bill that he signed) and a 2018 line item in the capital budget covering stormwater contracting (which resulted in passage of a compromise). Vetoes are typically prevented by one of two things: deal-making between the executive and the council or passage of a measure by more than the six votes required to override. But there was no deal in this case: Elrich opposes the property tax bill and wrote his rationale in a lengthy veto message.
This post examines the policy debate around the bill, about which I wrote a three-part series. (Here are links to Part One, Part Two and Part Three.) Tomorrow, we will discuss the politics.
These events gave rise to Bill 29-20, which offers developers at Metro stations 15-year property tax breaks if they build high rises. The bill’s supporters claim that without the tax breaks, the sites will either remain undeveloped or will contain low- or mid-rise projects that waste the stations’ potential for generating transit-oriented development. Elrich disagrees, offering several key reasons that I will evaluate.
Elrich: The bill “harms the budget.”
Elrich wrote:
At a time when the County is struggling to fund critical services, where the outlook for the next couple of years is uncertain at best, and where full economic recovery from this pandemic may take as much as ten years, it is certainly not prudent to reduce revenues coming into the County coffers.
The bill’s supporters argue that the tax break would only apply to projects that would otherwise not happen without the bill, thus not creating a real marginal cost to the county. They also say that without the bill, the Metro stations would remain undeveloped and therefore pay nothing to the county. However, according to Fivesquares, a low density project would be viable at Grosvenor-Strathmore without a subsidy and would therefore generate actual property taxes for the county. So even without the bill, it’s possible to get taxpaying low- or mid-rise development at Metro stations. The real question is not so much about the budget but whether the public benefit of high-rise housing infrastructure at Metro stations is worth an investment of public dollars. Elrich says no, the bill’s supporters say yes.
Elrich: The public benefit isn’t worth it.
Right now, developments at Metro stations are required to ensure that 12.5-15% of constructed units are moderately priced dwelling units affordable to moderate income people. Council Member Will Jawando amended the bill to require that 25% of a qualifying project’s units be moderately priced to get the tax break. Elrich says there should be a higher percentage of moderately priced units and he argues that they should be mandated rather than included in a tax incentive. (If he believes that, he should send over legislation to accomplish it.) Bill supporters argue that a higher percentage of affordable units would kill a project’s economics. The record of the bill does not conclusively prove either side right.
Elrich: Public funds should be used for affordable housing, not market rate housing.
Elrich argues that MoCo’s real housing shortage is in affordable units, not so much in market rate units, and that because the bill allows projects with 75% market rate units to get tax breaks, it contributes little to solving the county’s housing problems. He is right that MWCOG’s report recommends that “at least 75% of new housing should be affordable to low- and middle- income households.” But with all due respect to MWCOG, the difference between the county’s requirement that 12.5-15% of new units be moderately priced and the report’s recommendation that 75% of them be affordable is VAST. The county’s housing target is 10,000 units above forecasts. No one – not Elrich, not the council, not the planning board – has a credible financing plan for plowing (at least) hundreds of millions of dollars of public money into building 7,500 or more affordable units. Holding this bill or any other plan to that standard is unrealistic.
Elrich: The bill sets a difficult precedent.
Here, Elrich makes the same slippery slope argument that I made. If developers at Metro stations get these tax breaks, developers of properties next to Metro stations will want them too. The bill’s supporters argue that Metro sites have extra costs that require subsidies to offset. Those extra costs are probably responsible for the dearth of new high-rise projects at Metro stations all around the region. But the bill does change how the county does incentives. In the past, incentives have been granted on a case-by-case basis (including the Marriott headquarters development project). The bill establishes its subsidy in law, giving it to developers by right. The bill’s supporters don’t say this publicly, but they argue privately that legislation is necessary because Elrich can’t be trusted to constructively negotiate with developers. Even if that were true, Elrich won’t be executive forever, and case-by-case negotiations have advantages that a one-size-fits-all approach can’t replicate.
Elrich: Construction workers deserve prevailing wages.
Council Member Will Jawando offered an amendment to require that Metro station development projects should pay construction workers the same prevailing wage they receive on county construction projects to get tax breaks. The amendment failed on a 4-5 vote, with Jawando and Council Members Evan Glass, Tom Hucker and Sidney Katz voting in favor. Elrich cites the bill’s failure to require prevailing wage as a reason to veto it.
When I was employed by the carpenters union, I lobbied the council to pass what is now the county’s prevailing wage law. In doing so, I provided them with a mountainof evidence that prevailing wage laws do not inflateconstruction costs because higher wages tend to be offset by higher productivity. As Nooshin Mahalia of the Economic Policy Institute wrote just before the bill was passed:
An overwhelming preponderance of the literature shows that prevailing wage regulations have no effect one way or the other on the cost to government of contracted public works projects. And as studies of the question become more and more sophisticated, this finding becomes stronger, and is reinforced with evidence that prevailing wage laws also help to reduce occupational injuries and fatalities, increase the pool of skilled construction workers, and actually enhance state tax revenues.
Council Member Marc Elrich was a co-sponsor of the prevailing wage bill. No current council member was in office when it passed in 2008.
The county has a prevailing wage law for its construction projects. WMATA uses the federal prevailing wage law (the Davis-Bacon Act) for its construction projects. And yet a developer with a county subsidy building at a WMATA Metro station is not required to pay prevailing wage. That just does not make a lot of sense.
Those who voted against prevailing wage coverage argue (against the evidence linked above) that it would inflate project costs and offset the value of the 15-year property tax break. If they truly believe that prevailing wages increase costs, then to be intellectually honest, they should repeal the county’s prevailing wage law to save money for the capital budget. Unless they do that, the arguments against prevailing wage ring hollow. On this one, Elrich is right.
The best point that Elrich’s critics make against him is that if he opposes this bill, then what is his plan to build more affordable housing? The county’s current total of $62 million in operating and capital money for preserving and building affordable units is woefully inadequate when compared to the needs. Elrich has been discussing this issue while in elected office for 14 years. What is the Elrich Plan to Build Affordable Housing?
Tomorrow, we will get into the politics of the veto.
Following the meeting, which Elrich did not attend, he told Montgomery Community Media he was surprised at the council’s reaction. “There is no way the money goes out the door the next day.” Elrich explained that applications for funds must be gone through to make sure they meet the requirements. “This is the whole thing about allocating money,” he said, adding, “We are not holding money back.”
Um, whaaaaat???
Anyone who was surprised by the council’s response to the administration’s COVID grant challenges is not paying attention to them. This is only the latest episode in a loooooong line of council complaints about the executive branch. If I were to type them all out, my keyboard would break. There is nothing new here. And there is absolutely nothing surprising.
If one word can be used to describe the council’s sentiment towards Elrich, it is frustration. They are frustrated at the communication problems which have plagued the relationship for the entire term. They are frustrated at what they believe to be disorganization and a lack of an agenda (other than reacting to COVID) on the part of the administration. They are frustrated at Elrich’s management of the budget, including but not limited to his union contracts, a raid on retiree health care money last year, a hidden tax increase built into his budget this year, his failure to make any progress on restructuring government to save money and now his runaway COVID pay liability. But most of all they’re frustrated because they don’t think they have a willing or competent partner in the executive branch. For all their substantial powers over budget, legislation and land use, the council members have no authority to actually run the government themselves. And at this point, all of them think the government could be run better.
Many people look at the executive-council relationship through the prism of Elrich vs Council Member Hans Riemer. It’s true that Riemer (my former employer) is Elrich’s harshest and most frequent critic. But Riemer is something of an anomaly. His fifteen-year personal enmity with Elrich is not shared by any other sitting Council Member. Instead, look at Council Member Nancy Navarro, a cautious politician who is not given to public hysterics. She was at a loss for words at the tumultuous meeting about the grants on Tuesday. Look at Council Member Tom Hucker, who shares much of Elrich’s political base and is usually with him on progressive issues. None of that stopped Hucker from calling out Elrich. “Do you know where the county executive is?” Hucker asked Chief Administrative Officer Rich Madaleno on Tuesday. Look at Council Member Will Jawando, another progressive who called the administration’s slowness on getting out federal assistance to renters and vulnerable residents “totally unacceptable.”
The body and facial language says it all.
But most of all, look at Council Member Gabe Albornoz. Nicknamed Mr. Rogers by his colleagues, Albornoz – like his mentor, Ike Leggett – is one of the most courteous and civil politicians I have ever met. Unlike his flashier freshman colleagues who have been quick to establish their political identities, Albornoz has set the same kind of slow, steady and workmanlike path to higher office that Leggett employed decades ago. But Albornoz has become increasingly vocal over his unhappiness with the administration in recent months. When Elrich joked that the council was “fact proof” on a hot mic, Albornoz said:
I did not find the County Executive’s comments on this video funny or amusing. In fact, I found them deeply troubling and the reaction of his senior officials disappointing. It’s also disappointing that the County Executive does not have a better understanding or command of this situation.
And with regards to the administration’s grant problems, Albornoz said:
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.
When Mr. Rogers grabs a shotgun, you know that all is not well in the neighborhood!
There have been seven MoCo executives since the office was established in 1970. None of Elrich’s predecessors have been so isolated and so regularly attacked by the council as Elrich has – and let’s remember that one of them (Jim Gleason) was a Republican. Politics is a team sport. No politician – not the president, not a governor, not a mayor, not a county executive – can totally go it alone and succeed from either a policy perspective or a political perspective. As amiable and astute as Rich Madaleno is, he can’t fix the relationship with the council all by himself. No one else can fix it. Only Elrich can.
And if he doesn’t, the “surprises” are going to keep coming.
Here are two things that almost everyone inside and outside of county government will agree on.
The needs of residents and businesses for financial assistance to deal with the COVID crisis are immense.
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.
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.
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.
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.
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.
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.
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.
