Tag Archives: Adam Pagnucco

Another Mail Firm, Please?

By Adam Pagnucco.

A couple days ago, we received a mailer from Council At-Large candidate Hoan Dang.  We like Dang very much and might vote for him.  But we hate this mailer for three reasons.

First, the cover doesn’t spotlight the candidate’s name or image.  The key function of any mailer is to fix the candidate’s name in the mind of the recipient and couple it with a relatable image.  In the case of a positive mailer like this one, a good image would be the candidate, perhaps with family members and a diverse group of supporters.  This cover doesn’t do that.  Its biggest word is “What,” which could mean anything.  The candidate’s name is in relatively small print and his picture doesn’t appear.

Next, the mailer does not open easily to the interior content.  It was secured by thick tape, preventing your author from opening it without either a) taking a certain amount of time to do it carefully or b) ripping or otherwise destroying the mailer.  Dear mail firm guy: if you make it hard to open the mailer, most folks won’t open it.  You have just wasted the candidate’s money.  All tape of this kind should just be banned.  Aside from the difficulty of opening it, we don’t have an issue with the interior other than the word “What” is waaaay bigger than the much more important words “Hoan Dang.”

Finally, check out the large amount of empty space on the back.  It’s not obvious from our image, but the empty space goes all the way to the right side of this page and accounts for a majority of the back cover.  Dang is a handsome fellow with a pleasant smile.  You want to have a large shot of that smiling face, not a tiny one.  All the empty space shows that there was plenty of room to print that.

We are not criticizing Hoan Dang.  He’s a good candidate and a great guy.  But this mailer does not do him justice.  He deserves better than this!  If there’s any opportunity to do so, he should get another mail firm.

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Campaign Finance Reports: Council At-Large, May 2018

By Adam Pagnucco.

Today, we look at the Council At-Large candidates.  As with yesterday, we start with a note on methodology.  First, we calculate total raised and total spent across the entire cycle and not just over the course of one report period.  Second, we separate self-funding from funds raised from others.  Self-funding includes money from spouses.  Third, for publicly financed candidates, we include public matching fund distributions that have been requested but not deposited in raised money and in the column entitled “Cash Balance With Requested Public Contributions.”  That gives you a better idea of the true financial position of publicly financed campaigns.

Below is our fundraising summary for the Council At-Large candidates.

First, a few random notes.  As of this writing, five at-large candidates – Craig Carozza-Caviness, Ron Colbert, Paul Geller, Richard Gottfried and Darwin Romero – have not filed May reports.  Lorna Phillips Forde did file a May report and requested matching funds, but her report contains many duplicated entries and is a big mess.  We are not printing her numbers until they get straightened out.  Michele Riley has given herself a combined $21,000 in two loans and one contribution, which exceeds the $12,000 self-funding maximum allowed in public financing.  That needs to be corrected or otherwise remedied.

Now to the numbers.  In the pre-public financing days, winning at-large candidates generally raised $250,000 or more with the notable exception of Marc Elrich.  Four candidates are in that territory: Hans Riemer (the only incumbent), Evan Glass, Bill Conway and Will Jawando.  Gabe Albornoz and Hoan Dang are not far off.  Delegate Charles Barkley (D-39) has not raised quite that much, but he started with a big war chest built over years of little competition in his district.  The cash on hand leaders are Glass, Riemer and Barkley, who are virtually tied, followed by Conway and then Jawando.

In evaluating differences in cash position, we don’t find variances of $20,000-30,000 very significant.  That’s because candidates schedule their expenditures differently.  Some have spent a bit more before the deadline and some held back to show a bigger balance.  What we do find significant is the difference between candidates who have close to $200,000 available for the final push – Riemer, Glass, Barkley and Conway – and those who have half that amount or less, such as Albornoz, Dang, Marilyn Balcombe, Jill Ortman-Fouse, Mohammad Siddique, Ashwani Jain, Danielle Meitiv, Seth Grimes and Brandy Brooks.  (Forget about those who have $25,000 or less.)  The latter group of candidates now faces very tough decisions on resource usage.  A mailer to super-Dems can cost $35,000-$45,000 depending on how the universe is defined.  So a candidate with $100,000 on hand might be able to squeeze out two or three mailers and that’s about it.  Is that enough to stand out given all the other races going on?

Institutional endorsements also play a role.  Several of the lesser funded candidates, especially Brooks and Meitiv, have some good endorsements that could help them.  We think the biggest beneficiary will be MCPS teacher Chris Wilhelm, who has more cash on hand than Albornoz, Dang and Balcombe and also has the Apple Ballot.  If the teachers mail for Wilhelm, that could effectively close the gap a bit between him and the top-funded candidates.

For what it’s worth, the conventional wisdom is that Riemer will be reelected, Glass and Jawando will join him and the last seat will come down to Conway or Albornoz.  We’re not ready to buy that for a couple reasons.  First, among the seven County Councils that have been elected since the current structure was established in 1990, only one – the 1998-2002 council – had zero at-large female members.  Combine that with the fact that 60% of the primary electorate is female and it’s premature to write off all the women running.  Second, this is an unprecedented year.  We have never had public financing before and we have never had so many people running at-large.  What seems like conventional wisdom now could seem very unwise in the blink of an eye!  So we expect surprises in this historic election.

Next: the council district races.

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A Quick Note on Mailers

By Adam Pagnucco.

In the wake of our printing Evan Glass’s Watchdog mailer, we were promptly contacted by numerous other candidates, including several in his race, asking why their mailers were not also posted.  Rather than respond to more texts and calls than we can answer in a day, let’s respond once here.

We love political mail on Seventh State.  Yes we do!  We put up Glass’s mailer because it was different and we liked it.  Most mail is not different.  Your author has a collection of MoCo political lit going back to 1986 (and a few older ones too).  It’s almost all the same.  “I believe in strong schools!”  “I will fix traffic congestion!”  “New leadership for a new day!”  “Experience you can count on!”  And so on.  There are lots of endorsement logos.  The words “progressive” and “leader” are very common.  It’s all sooooooo safe and predictable.  The only thing that has changed is that in some districts the mail from long ago would sometimes say, “I am the best Democrat to beat the Republicans!”  We wiped out all MoCo GOP office holders in 2006 so that no longer needs to be said.

These candidates want their mail posted.  Would you be willing to pay for an intern who can do it for us?

So if you want us to put up your mail, be interesting.  Be different!  Use a sense of humor.  Stand out.  Say something that other candidates don’t say.  Say something that’s directly relevant to the circumstances of your race rather than blandly generic.  Or if you want to put out a particularly awful piece, we might post that too!

Here’s an example of lit we would definitely put up: Comptroller William Donald Schaefer, 2001.

There is so much more mail coming than we can ever post so we need to pick the good ones – or at least the different ones.  And if you’re not standing out to us, you’re probably not standing out to the voters.

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Campaign Finance Reports: County Executive, May 2018

By Adam Pagnucco.

The May campaign finance reports are in and we will start breaking them down with the County Executive race.  A note on methodology.  First, we calculate total raised and total spent across the entire cycle and not just over the course of one report period.  Second, we separate self-funding from funds raised from others.  Self-funding includes money from spouses.  Third, for publicly financed candidates, we include public matching fund distributions that have been requested but not deposited in raised money and in the column entitled “Cash Balance With Requested Public Contributions.”  That gives you a better idea of the true financial position of publicly financed campaigns.

Below is our fundraising summary for the County Executive candidates.

Council Member Roger Berliner (whom your author supports) is the leader in money raised other than self-funding and also in cash on hand.  He is closing in on a million dollars raised for the race, which was roughly Ike Leggett’s total in 2006.  He has enough money to be heard in the final month.

Council Member Marc Elrich is the leader among the publicly financed candidates.  His total raised of $745,352 is almost five times what he raised in his 2014 council race when public financing was not yet available.  Elrich has a long history of vastly outperforming his fundraising because of his large and loyal base of supporters, some of whom have been with him for decades.  With more than $400,000 to spend in the final month, he won’t blow anyone out, but he can combine that with a grass-roots field program to finish strong.

Businessman David Blair is going to break Steve Silverman’s fundraising record in 2006 with more than $2 million.  The difference is that Silverman raised his money from the business community while Blair is mostly a self-funder.  Blair’s self-financing of $1.9 million sends a message that he is deadly serious about winning.  He is the strongest of the outsider candidates.

Council Member George Leventhal will get votes because of his longevity, name recognition and sheer hard work in the campaign cycle.  (His brilliant Avengers-themed video could get some votes too!)  But he doesn’t have enough resources to make a big push at the end.

Former Mayor of Rockville Rose Krasnow is a substantive and knowledgeable candidate who impresses those she meets.  But she made two big mistakes in this campaign: getting in late and using public financing.  Those mistakes reinforce each other.  If she had gotten in early, she might have been able to raise enough in public financing to compete with the totals accumulated by Elrich and Leventhal.  Since she did get in late, traditional financing offered a better option to raise money in a hurry.  Now she is in the same situation as Leventhal and Bill Frick: struggling to make a final push.

Your author likes Delegate Bill Frick (D-16) a lot personally but he doesn’t have the resources to make his case.  We wish Frick had stayed in the House of Delegates and plotted a course to succeed his former district mate, Brian Frosh, as Attorney General.  The path not taken will be harder now.

Republican Robin Ficker has applied for public financing, but as of this writing, we don’t know whether he will receive it.

Overall, there are two competing narratives among those who are really focused on this race – admittedly, a minority of the voters.  First, there is the view that the county should be more progressive.  It should be bolder about closing the achievement gap, do more to help vulnerable residents (including renters), institute tougher environmental protections and push back against the influence of developers and big businesses.  People with that perspective are mostly rallying behind Elrich, who is the overwhelming choice of progressive endorsing organizations.

Then there is the narrative advanced by your author’s writings on the county budget and the economy, the Washington Post’s endorsement editorials and the now-famous report by Sage Policy Group: to pay for progressive priorities, the county needs a stronger tax base.  That message plays more to the outsider candidates, especially Blair, who put it in a recent mailer.  But there’s no reason why Berliner and Leventhal shouldn’t embrace that perspective too.

It’s important to recognize that these views are not mutually exclusive.  Not all progressives are skeptical of economic growth.  And not all people who would like to see a stronger economy oppose spending the resulting revenue on progressive priorities.  But the two messages contain differences in emphasis and differences in potential for attracting blocs of voters.  Both of them represent change in some form, implying that running on resume and experience won’t be enough in this cycle – at least not in the Executive contest.  Everyone needs to pick a path forward to win.

Next: the Council At-Large race.

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This Has to Change

By Adam Pagnucco.

Going into this year’s budget deliberations, the County Council was told two important things.

First, county budget director Jennifer Hughes wrote the following on April 5.

The County Executive’s recommended budget, released on March 15, 2018, closed a $208 million budget gap, raising the cumulative amount of budgetary shortfalls resolved in County Executive Leggett’s proposed budgets to more than $3.7 billion. Due to many economic pressures, the shortfalls between projected budget demands and projected revenues will likely continue into the foreseeable future. Our income tax revenues are projected to grow only modestly and the economic recovery continues to be modest and fitful. Additionally, we have not yet adjusted our revenue projections to reflect the effects of H.R. 1, the Tax Cuts and Jobs Act of 2017 (TCJA). There will be an impact on our revenues due to TCJA although the magnitude of the impact is uncertain at this time.

Second, the council’s own senior legislative analysts wrote this on April 27.

FY18 tax revenue is now estimated to be $106.1 million below the FY18 approved budget, and $11.1 million below the estimate from December’s estimate. FY19 tax revenue projections are $76.8 million below the FY19 projections made less than one year ago.

So shortfalls “will likely continue into the foreseeable future” because the economic recovery is “modest and fitful.”  The GOP’s federal tax law could be a problem.  And next year is already projected to see a $76.8 million shortfall after this year’s shortfall, which was over $100 million.

Suppose you were an elected official reading that information.  What would you do?  Perhaps you might say, “Wow, things are kind of tight.  We need to cut back a little because if there is a downturn, we are going to have a problem.”

That’s not what happened.  Instead, the council tapped a total of $77.7 million in one-time fund transfers to finance ongoing spending both this year and next year.  Here are the one-shot revenue sources we know about:

$62.4 million in retiree health fund money (for FY18)

$4 million from the Public Election Fund (FY19)

$10.5 million from the Employee Health Benefit Self Insurance Fund (FY19)

$800,000 inter-fund from Park and Planning (FY19)

$77.7 million total

Believe it or not, there could have been more.  There were serious discussions of financing additional spending by tapping into retiree health money a second time.

The council was justified in taking money out of the Public Election Fund since its balance ($11 million) far exceeds the likely total cost of public financing this cycle.  But the $10.5 million transfer out of the county employees’ health insurance fund is problematic since it contains premiums paid by employees in addition to taxpayer money.  A group of employees has already sued to stop such transfers although both the Circuit Court for Montgomery County and the Court of Special Appeals have ruled against them.

This continues a pattern we have written about before: the council’s practice of using one-shot revenues to pay for ongoing spending on top of the Executive’s budget.  The council has used such methods to add many millions to the budget over the years, though it’s hard to tell exactly how much came from one-time sources because their financing methods are not posted along with the items that are added.  As a result, this is all rather opaque even for someone such as your author who used to participate in the council’s budget process.  (Yes, that makes me part of the problem!)

The council might reply by citing the fact that the county has enjoyed a triple-A bond rating for a long time.  That’s true.  There is much to recommend about the county’s financial practices, including its top-notch pension plan funding ratio (currently 92%) and its reserve ratio, now close to ten percent of revenues.  But the bond rating agencies care primarily about one thing: can bond issuers repay their debt?   Because the county contains a subset of very wealthy neighborhoods and has demonstrated a repeated willingness to raise taxes on them (along with the rest of us), we have a pretty low risk of default.  That probably allows us to get away with using band-aids a little more than some other triple-A jurisdictions that have less resources , like Prince George’s.

Ultimately, the bond ratings agencies’ interests are not identical to county residents.  The ratings agencies are perfectly happy to see more tax hikes that go to debt service.  They are less concerned with whether residents get better services to go along with higher taxes.  That’s our business.  And here is what is happening, folks.  The economy is not as great as our elected officials say it is.  Even Ike Leggett’s own budget director says, “the economic recovery continues to be modest and fitful.”  The county is resorting to band-aids, transfers and using money that is supposed to go to health insurance to add more ongoing spending.  Eventually, if it keeps doing such things, those options are going to dry up when the next recession comes.  And if the next downturn is bad enough, there will be three options on the table.

Raise taxes – again

Lay off county employees

Lose the bond rating

This has to change.  We need elected officials who can prioritize spending and exercise restraint now to head off problems later.  If you agree, remember that on Election Day.

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Ike Leggett’s Greatest Achievement

By Adam Pagnucco.

As the primary election approaches and the six Democratic candidates for County Executive make their case, it’s worth considering the incumbent they are seeking to succeed: Ike Leggett.  The county’s steady helmsman is approaching the end of a thirty-year career in politics and he deserves much respect for his knowledge, temperament and savvy.  But it is Leggett’s greatest achievement that sets an example for all who follow him and poses an important lesson for the next term.

Simply put, Ike Leggett saved the county from financial disaster.

When Leggett assumed office in December 2006, he was determined to cut back the rate of budget growth overseen by his predecessor, Doug Duncan.  In his first budget, Leggett proposed giving MCPS $19.7 million less than its request.  That was still a $117 million increase over MCPS’s prior-year budget, but it was a smaller increase than the schools wanted and the education community revolted.  The council worked it out.  The following year, Leggett proposed a big property tax hike which was mostly passed by the council.  These events may seem unrelated, but they weren’t: Leggett smelled trouble coming and he was battening down the hatches.

And boy, did trouble come.  In 2010, the Great Recession hit the county’s economy and budget with a fury that no one in government had seen before.  Leggett proposed what was then the ugliest budget of all time.  It included hundreds of millions in cuts and double-digit reductions in many departments.  750 work years were reduced through attrition and position abolitions.  A fire truck and an ambulance were to be taken out of service and four police sub-stations were proposed for closure.  Employee raises were eliminated and furloughs were instituted.  Healthcare for the uninsured was reduced.  And Leggett proposed increasing the energy tax by $50 million.

The Executive didn’t sugar-coat it.  In his press release, he said:

To those who object to these reductions, I have a simple message: I do not like these any more than you do… Hard choices must be made, and not just talked about, in this difficult economic and fiscal environment.

And then, unbelievably, things got even worse.  Revenues were written down twice while Leggett’s budget was under consideration by the council.  The county’s FY10 reserves were literally dwindling to zero.  Leggett was animated by two goals: save the county’s bond rating and save as many county employees’ jobs as possible.  To do that, he was going to have to battle every group that helped him get elected.  In the end, Leggett and the County Council worked together to pass the baddest budget ever, a $4.3 billion nuke bomb that had the biggest county spending cut since the current charter was passed in 1968.  And that wasn’t the end of it – two more years of not funding collective bargaining agreements and fighting with the school system were ahead.  But the bond rating was preserved and mass layoffs were avoided, laying the groundwork for recovery.

This was the county’s worst hour.  It was Ike Leggett’s finest hour.

Leggett didn’t do all this alone.  The council stayed with him and all ten of them jumped off the ledge together.  But as the Executive, Leggett’s role was absolutely critical.  He could have pointed fingers at Council Members who voted for earlier large budget increases, thereby blowing up the teamwork between the two branches that was critical to getting through the crisis.  He did not.  He could have papered over the problems with band-aids and said next year would be better.  That would have been very tempting for Council Members to go along with – let’s remember that 2010 was an election year.  He did not.  He simply told the truth and made the hard choices the voters paid him to make.  And in the end, it worked out.

Your author has had many policy differences with the administration over the years and the Executive is leaving significant unfinished business for his successor, as all Executives have done.  But let’s recognize a central truth.  Leaders are not remembered for doing twenty small things really well or maybe not so well.  They are remembered for how they deal with a crisis.

Ike Leggett passed that test.

And now we are charged with picking Leggett’s successor.  The economy is not healthy enough to pay our bills and the county is now resorting to quick fixes to balance the budget.  The entire Washington region is not as strong as it once was.  Most ominously, since the average business cycle lasts 5-6 years, we are due for a recession during the next term.  That doesn’t guarantee that the next one will be as bad as the earth-shattering Great Recession, but it won’t be fun.  The voters are about to make a judgment on which group of elected leaders will deal with our coming challenges.  Bearing in mind the example set by Leggett, who deserves your support?  There are important policy issues at hand, but on the personal traits of the candidates, here are a few ideas.

Vote for adults.  We will be well served by people who do their homework, take their responsibilities seriously and are willing to do the thankless chore of reading hundreds of pages of dreary, bureaucratic reports on everything the county does.  People who are not interested in that kind of drudgery will not be equipped to make tough but intelligent decisions.

Vote for civility.  This is one of Leggett’s greatest strengths.  Sure, he will push back on what he sees as inaccuracies or misrepresentations but he preserves his ability to work with everyone.  That paid off in a huge way during the Great Recession.  Elected officials who blow up at others won’t be able to assume a unifying role in an emergency.

Vote for honesty.  If someone tells one group one thing and then tells another group something completely different, be skeptical about that.  Trust the person who says no when necessary and not yes every single time.  And someone who tap dances all over the place on his or her record and positions is not going to be a reliable leader at crunch time.

Most of all, vote!  And do your best to make sure that the people you pick are ready to deal with the next crisis – just as ready as Ike Leggett.

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On Comments

By Adam Pagnucco.

Yesterday, a reader asked on our Facebook page why there were no comments directly on Seventh State posts.  Well, we have a history with comments.

Our old blog, Maryland Politics Watch, originally allowed anonymous comments.  That was a mistake!  Many of them were vile, personal, racist and downright deplorable (just like a certain President’s Twitter feed).  Eventually, the anons chased out almost all of the people commenting under their own names.  The final straw came when a candidate dropped out of a race because of a terminal illness in his family.  An anonymous commenter accused him of making up the illness and dropping out because he allegedly knew he would lose.  The candidate went ballistic.  That’s when we banned anonymous comments and required people to use their real names.

But that wasn’t enough.  Under our old platform, Blogger, it was very easy to register a Google or Blogger account under any name and use it for commenting.  How could we tell if they were real or not?  The issue came to a head during my war with the “Boy King,” an intern hired by the Washington Post to write editorials about MoCo and Maryland.  The Boy King became so alarmed by my writings that he sent a college friend to troll us using a phony name.  So I tracked him down and printed the troll’s real name!  That was great fun, but I thought, “Why am I spending so much time on this when I could be writing real stuff?”  The new policy was ineffective.

Accordingly, when David Lublin started Seventh State, I totally understood why he was uninterested in going down that road again.  But we had a new tool for interaction that had not yet ripened in the old days: Facebook.  For better or worse, Facebook has become Seventh State’s de facto comment page.  There are certainly phony Facebook accounts and some of them played a role in our last presidential election.  But sadly, Vladimir Putin seems to not care about who gets elected to the Montgomery County Council, so there don’t seem to be a lot of bots here!

The quality of interaction that we get through Facebook far exceeds what we were able to obtain in the Maryland Politics Watch days.  I personally read every single comment on the Facebook page.  I like most of them and learn from a lot of them, even – and perhaps especially – from the folks who disagree with me.  There have been several occasions when a reader’s comment caused me to think, “Hmmmmm, I should look into that.  That could be a great post!”

Overall, the comments we receive reinforce what David and I have known for a long time – you are the best media audience in the county and perhaps in the entire state.  No one knows our politics and our community better than Seventh State readers.  Maybe more importantly, no one CARES more than Seventh State readers.  That’s why elected officials, candidates, advocates and other muckety-mucks come on here.  They may not care what David and I think, but they care what YOU think, and they should.

Thank you for reading Seventh State.

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McGee Files for Matching Funds… And Then There is Ficker

By Adam Pagnucco.

Update: Council District 5 candidate Kevin Harris has also filed for matching funds on May 15, claiming $12,400 in qualifying contributions from 176 in-county residents.

Original Post: Council District 1 candidate Jim McGee filed for public matching funds on May 15.  His filing claims 157 qualifying contributors and $36,580 in qualifying contributions, above the respective thresholds for a district race of 125 and $10,000.  Two other District 1 candidates have qualified for matching funds, including Delegate Ana Sol Gutierrez and Reggie Oldak, who has already applied for the maximum amount ($125,000) available under the program.

On Monday, we wrote that county law stated that the qualifying period for matching funds ended 45 days before the primary, which this year fell on Saturday, May 12.  That is true.  But at the time, we did not know that the State Board of Elections had allowed candidates to file as late as May 15 with only qualifying contributions received by May 12 eligible for matching funds.  A reader brought that to our attention and we updated the post.  But we are gonna own this one: we screwed up.  Your author apologizes to Jim McGee and Seventh State readers.

Then there is Robin Ficker, who is running for Executive in the public financing program.  Ficker registered his public account on 2/8/17 and so far has not qualified for matching funds.  (The other Executive candidates in public financing – Marc Elrich, George Leventhal and Rose Krasnow – qualified some time ago.)  Ficker told Bethesda Magazine that he was unaware that he was subject to the 45-day qualifying period because he has no primary opponent.  In order to qualify for matching funds, Executive candidates need 500 contributions from individuals living in the county totaling at least $40,000.  Ficker then sent an application for matching funds on May 15 but it asked for… zero dollars.

Can anyone figure this out for us?  Because we admit it – we can’t!

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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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