Tag Archives: budget

Top Seventh State Stories, December 2020

By Adam Pagnucco.

These were the top stories on Seventh State in December ranked by page views.

1. What Happened to White Flint?
2. The Day of Reckoning is Near
3. Jawando Calls for a Tax Hike
4. Come on Now
5. Who’s the Boss?
6. MCEA to School Board: Reopening Should be Safe
7. Trump vs Hogan: Votes by MoCo Town
8. Council Overrides Veto, Attacks Elrich, Cuts Revenue for School Buildings
9 (tie). Minority Members of the U.S. House
9 (tie). Corporate MoCo Council Adopts Supply-Side Economics

The top three stories fit together and have meaning for the new year and beyond. The Day of Reckoning is Near summarizes the county’s dire fiscal picture as it heads into a challenging FY22 budget discussion in the spring. Jawando Calls for a Tax Hike kicks off an inevitable dialogue about taxes, one which will only get hotter before the executive makes his budget recommendation on March 15. And What Happened to White Flint? – December’s runaway winner – lays out the story of how the county’s premier development plan has been held back by our slow rate of job growth. Budget headaches, taxes and economic problems are about to collide.

Welcome to 2021, folks!

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Follow the Money

By Adam Pagnucco.

To understand the growing strains on MoCo’s pandemic-stricken budget, it helps to follow the money. Here is an example.

Follow This Money

Last spring, the county council voted down compensation increases contained in the collective bargaining agreements negotiated by County Executive Marc Elrich with the three county employee unions: MCGEO, the fire fighters and the police. The increases totaled $22 million in the current fiscal year and $29 million annually thereafter. This was the sixth time that the county trimmed or eliminated raises for employees in the last eleven fiscal years. (The county zeroed out raises in FY11, 12, 13 and 21 and reduced collectively bargained raises in FY17 and 20.)

At around the same time, the executive granted the three unions indefinite COVID pay without seeking the consent of the council. There is no question that workers exposed to hazardous conditions deserve extra compensation. The issues are that the executive’s COVID pay far exceeds what any other government in the region (and maybe the entire nation) has granted and that it has no fixed end date. The cost of this pay is $4 million a pay period or roughly $100 million a year, more than three times the compensation increases contained in the now-abrogated contracts. Employees of the college, school district and park and planning are not getting the money. It must be noted that the president of the largest county union said two years ago, “Marc Elrich won the primary thanks to our shoe leather.” Subsequently, the inspector general found that workers were getting pay to which they were not entitled in at least one county department.

No county leaders argue that employees should get zero emergency pay. Instead, the problem now is that the county has little clue how to pay for it even as its budget has been crippled by the COVID recession. Originally, the extra pay was supposed to be mostly reimbursed by FEMA, but the county’s emergency management director called that into question in October. The emergency pay liability grows every day and the need to pay it off grows more desperate.

Now Follow This Money

The county received a $183 million allocation of federal CARES Act money last spring to help it pay for COVID expenses, including aid for pandemic-stricken residents and businesses. But there’s a catch: if the county doesn’t use the federal money for eligible purposes by December 30, it forfeits it. In October, the county council went nuclear upon finding out that the executive branch was slow to spend the federal money it had appropriated for various assistance programs, including aid for rent, food security, child care and more. Administration representatives said that they were trying to prevent fraud and waste and dealing with frustrating FEMA paperwork requirements.

Now it turns out that the money won’t all be spent by December 30. Council staff wrote last week:

CRF [Coronavirus Relief Fund] monies received by Montgomery County must be spent on costs incurred on or before December 30, 2020. Since March 2020, the County Council has enacted special appropriations to help Montgomery County residents and businesses endure the pandemic and its effects. Due to the restrictions on spending imposed by Congress, the Administration expects that $9,934,156 in CRF dollars will be unspent based on current spending patterns and demands. The list below details the special appropriations where funds will likely go unspent.

The table below shows the $9.9 million in unspent federal money by assistance program. The three biggest programs are child care, assistance to distressed common ownership communities and African American health care.

So it appears that families needing child care, residents of distressed common ownership communities and African Americans needing health care may not be getting the federal grant money the council allocated to them. (They might not be completely out of pocket as the executive has recommended the use of county reserves to help.) That said, the $9.9 million in federal grant money still needs to be used by December 30 or forfeited. What’s the administration’s plan for that?

The executive branch sent the council a resolution that says essentially: trust us. The resolution suggests a number of alternate uses for the federal grant money and then says this:

If any of the $9,934,156 is unable to be spent on the Council priority uses identified above in advance of the deadline established by Congress, these funds may also be used for any eligible expense previously authorized by the Council by Resolution 19-498.

And what does Resolution 19-498 authorize? Lots of things, including this:

Payroll expenses for public safety, public health, health care, human services, and similar employees whose services are substantially dedicated to mitigating or responding to the COVID-19 public health emergency, including any pay differential provided to employees responding to the public health crisis. [Bold added for emphasis]

Last Tuesday, the council approved the executive’s resolution to allow a potential transfer on an 8-1 vote with only Council Member Andrew Friedson dissenting.

And so federal grant money set aside by the council for families needing child care, residents of distressed common ownership communities and African Americans needing health care is now subject to diversion to pay off part of the soaring emergency pay liability created by the executive. But even if that happens, it’s not the end of the story. There is only $9.9 million in unspent federal money in play here whereas the total emergency pay liability accounts for $4 million a pay period, or $100 million a year. A reallocation would buy the county about five weeks of time. After that, the liability resumes spraying red ink.

What will happen next as the day of reckoning draws near?

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The Day of Reckoning is Near

By Adam Pagnucco.

I worked at the county council during part of the Great Recession. Those were terrible years. Under County Executive Ike Leggett’s leadership, the county slaughtered every sacred cow to stave off fiscal disaster. It busted collective bargaining agreements, cut employee benefits, instituted furloughs, doubled the energy tax and cut positions by roughly 1,000 people. The county did those things for the sake of fiscal survival.

Never did we dream of cutting county government by 12% in one year. But that is the all-out disaster projected by the executive branch in its new fiscal plan, which was sent to the county council last night.

At first, the new fiscal plan doesn’t seem that bad. It projects lower shortfalls during the current fiscal year than the previous plan from July does. But it confirms what sage budget observers have been predicting for a while: Fiscal Year 21 is tough but Fiscal Year 22 will be much worse. The difference between them is reminiscent of the gap between a paper cut and decapitation.

To understand just how bad the projection for next year is, let’s go over the moving parts of the operating budget. Each fiscal year starts with a beginning reserve, targeted by the county as 10% of adjusted governmental revenues. (The 10% level was initiated by Leggett to stave off a bond rating cut ten years ago.) Next, the county projects its revenues, of which the biggest are property taxes, income taxes, other taxes and state aid (which mostly goes to MCPS and Montgomery College). After adjusting for net transfers, debt service, cash for the capital budget and a few other items, what’s left is allocated to the county’s agencies. Of those, there are four big ones: MCPS, Montgomery College, Park and Planning and Montgomery County Government (MCG), the latter of which is governed directly by the county executive. State-mandated minimums apply to local dollars going to MCPS and the college but not to MCG or Park and Planning. At the end, the fiscal year’s ending reserve is supposed to be set at 10% of adjusted revenues and carries over to the next fiscal year.

It sounds smooth and some years it is, but sometimes things go wrong. The current fiscal plan shows a LOT going wrong, including:

1. A drop in the projected reserve percentage in FY21 from 10.2% to 7.6%, a decline of nearly $140 million. That matters because it means less money will be available for FY22 than previously believed.

2. Declines in estimated FY21 receipts of income taxes ($58 million), transfer and recordation taxes ($19 million) and other taxes ($25 million) that are offset by assumed receipts of federal money, particularly FEMA reimbursements. The federal money is not assumed in FY22 but much of the tax revenue declines remain.

3. An increase in FY21 agency spending of $108 million, some of which is due to the executive’s COVID emergency pay program.

And so lower reserves, less tax revenues and higher spending in FY21 bleeds over to FY22, when the red ink really begins to gush. According to projections, getting reserves back to a 10% level in FY22 will require an extra $127 million. That has to come from somewhere, and since revenues won’t be growing, it will have to come out of allocations to the agencies. But remember – as we said above, MCPS and Montgomery College are subject to state-mandated spending minimums. The fiscal plan projects just 0.5% cuts to both of those agencies. That leaves Park and Planning and Montgomery County Government (MCG) to bear the brunt of the cuts.

Do the math and the fiscal plan projects cuts to Park and Planning and MCG of 12% in FY22. If you include one-time COVID-related spending in FY21, the cut to MCG appears even higher at 17%.

That’s right, folks: a 12% cut to the agencies that pay for police, fire service, parks, libraries, health and human services, transportation, environmental protection, courts, corrections, housing, recreation and most functions of government other than education.

Montgomery County has never seen anything like that before.

The Leggett administration used to send us ominous fiscal plans in December to warn the council against exuberant spending increases only to reveal rosier projections in March. It’s tempting to believe there may be a bit of that here except that the pandemic’s economic effects are truly unprecedented. If this projection is anywhere close to the truth, it would be a planet-shattering cataclysm for all stakeholders in county government – employees, residents and businesses alike. Layoffs would be inevitable. Benefit cuts for employees and vulnerable residents might be unavoidable. Terminated Ride On routes, less street maintenance, cuts to fire service, deferred police recruiting, cuts to child care and social assistance, extractions of cash from capital projects – you name it, it’s all on the table. It makes the Great Recession look like a rain drop on a sunny day.

Assuming the revenue projections hold, there are only three ways to avoid an evisceration of county government. The county can get a federal bailout (as it has been futilely praying for since last summer). The county can raid its reserves and retiree health funds, going significantly below its reserve target of 10% and risking its bond rating. Or it can raise taxes. It could also use some combination of the above in concert with cuts to spread the pain.

Given the ferocity of the pandemic, some degree of budget unrest was certain. The county could have prepared for this better by instituting a real FY21 savings plan rather than the nothing burger it passed in July, sticking to its hiring freeze rather than ending it, not spending freely from its reserves and behaving responsibly on emergency pay rather than creating a new $100 million a year liability. But it’s too late.

The day of reckoning is near.

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Fix it or Own it

By Adam Pagnucco.

Once again, the county council has expressed its displeasure at the administration of County Executive Marc Elrich. And once again, executive branch officials were invited to a Zoom thrashing that was less pleasant than most root canals. Chief Administrative Officer Rich Madaleno plays more defense now than beloved former Washington Capitals goalie Braden Holtby.

Right or wrong, this is turning into a regular thing.

The current object of the council’s ire is the executive branch’s administration of the county’s COVID emergency pay program. The program was first established way back in April by the executive and has continued without interference from the council since then. It is based on the erroneous notion that it was mandated in the county’s union contracts when in fact those contracts referred to emergency pay in the context of weather events. The program is bleeding the county budget by $4 million a pay period, or $100 million a calendar year, and was discovered by the inspector general to be plagued with mismanagement and inflated costs in at least one department. Unlike COVID pay programs in other jurisdictions, MoCo’s has no defined end date.

One of the more troublesome revelations from the inspector general’s report was that managers at the Department of Permitting Services deliberately violated county policy in handing out undeserved COVID pay to employees. Madaleno’s first response in the Washington Post was to characterize it as an “unfortunate mistake.” He walked that back in discussion with the council, but then his deputy chief administrative officer and the current permitting services director both told the council that it was a mistake. It was not. The inspector general said that the managers who awarded the extra pay “decided to allow inspectors to claim front facing differential for their entire workday rather than ‘nickel and dime’ them by asking that they account for individual hours.” This was not a mistake. It was insubordination.

Council Member Andrew Friedson lays out remedies for the conduct found in the inspector general’s report.

Several council members called for an independent investigation, but if the administration continues to believe that this was a mistake rather than insubordination, whether accountability occurs is an open question. Other managers are watching. So are employees who may be thinking of calling the inspector general because of issues going on in their departments. If no one is held to account, why bother?

By the way, while we are on the topic of scandals, was anyone ever disciplined for the $908,000 in overtime paid by the fire department that a whistleblower said was a “scam?”

There is more. The COVID pay program has expended tens of millions of dollars with no end in sight. The council has allowed this to fester for months while it has drained the county’s beleaguered budget. The executive branch has claimed that FEMA will reimburse it for most of this money, but the inspector general has questioned that and so has the county’s own emergency management director.

In the meantime, the county has huge needs for which this money won’t be available. For example, MCPS plans to resume some in-person instruction in January. With the county’s share of federal grant money either gone or spoken for, how will the county help MCPS pay for building improvements, personal protective equipment and any emergency pay for their employees? (The largest COVID contact tracing study to date has found that children are key spreaders of the coronavirus.) MCPS Superintendent Jack Smith has said the district “absolutely will have to hire more people” if it reopens. The county executive is asking for $3 million for HVAC improvements in seven schools but MCPS has more than 200 schools. That’s not going to be enough.

County spending is within the purview of the county council. If the council is dissatisfied with the executive branch’s management of it, the council must step in. The council may not be able to do much about money that has already been spent, but it can pass legislation governing it in the future. Such legislation should define emergency pay, specify who gets it and who does not, set its levels, specify the conditions under which it is paid, establish an approval process, establish a fixed duration with a possible extension process and mandate regular reporting. If county managers refuse to obey their chief administrative officer, let’s see if they will refuse to obey county law. More than that, let’s see if county leaders can reestablish respect for taxpayer funds rather than allowing them to be treated as “other people’s money.”

Complain all you want about this, council members. But in the end, if you think it’s a problem, you must fix it. Or own it.

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Council Outraged at COVID Pay Scandal

By Adam Pagnucco.

The county council has released a statement expressing outrage at the COVID pay scandal, which was uncovered by the county’s inspector general today. The statement appears below.

*****

Council calls for immediate Executive action to stop improper differential pay and an independent investigation across Montgomery County Government

ROCKVILLE, Md., Nov. 6, 2020—Today the Office of the Inspector General issued a Report of Investigation revealing that Department of Permitting Services inspectors improperly received COVID-19 differential pay. The Council will have an oversight meeting about this issue on Tuesday, Nov. 10 with Inspector General Megan Limarzi and Chief Administrative Officer Rich Madaleno. The Council made the following statement about the report.

The Council is outraged by the differential pay issues identified in the Department of Permitting Services by the Office of the Inspector General. We are calling for an independent investigation across all Montgomery County Government departments and immediate action by County Executive Elrich to stop improper differential pay. Every dollar that was improperly paid needs to be recovered immediately, and those who committed these egregious acts must be held accountable.

The Council thanks those who reported their concerns to the Office of the Inspector General. We also appreciate the ongoing diligent work of Inspector General Limarzi and her team to provide objective oversight and protect the integrity of county government operations and programs. The Council will continue to take legislative and budget action to empower the Office of the Inspector General with the resources needed to protect our taxpayers.

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Scandal: County Employees Got COVID Pay They Were Not Entitled to Get

By Adam Pagnucco.

MoCo Inspector General Megan Davey Limarzi, who previously uncovered an overtime scam in the fire department, has done it again. She has issued a new report detailing COVID emergency payments to employees of the Department of Permitting Services (DPS) who were not entitled to receive them under county policy. Moreover, she hints that this may be happening in other departments too. The whole thing is a massive scandal due to – at the very least – poor management in county government.

COVID emergency pay was set in three collective bargaining agreements with the police, the fire fighters and MCGEO in early April. Two categories of emergency pay were established:

Front facing onsite: work that cannot be performed by telework, involves physical interaction with the public, and cannot be performed with appropriate social distancing. This work would receive an additional $10 per hour.

Back office onsite: work that cannot be performed by telework and does not involve regular physical interaction with the public. This work would receive an additional $3 per hour.

Work performed through telework was ineligible for emergency pay.

In May, the Office of Inspector General (OIG) received complaints that DPS was allowing inspectors to receive front facing emergency pay ($10 per hour) for work performed at home. The complaints alleged that employees were “defrauding the system” and “taking advantage of undeserved hazard pay.”

That’s exactly what the OIG found was occurring in four out of five DPS divisions. The OIG wrote:

Our investigation uncovered that DPS management enacted a COVID differential pay policy that was contrary to the Administration’s policy, resulting in overpayment of front facing COVID differential pay to DPS inspectors from approximately March 29 to August 29, 2020. We also found that DPS inspection data on its website, the Data Montgomery website, and in internal records is incomplete and not entirely accurate.

The reason for the overpayments was that work performed remotely was allowed to be paid an extra $10 per hour as if it had been performed in physical interaction with the public. That violated county policy, which held that each hour of work had to be evaluated separately to determine whether it was eligible for an extra $10 per hour (front facing), $3 per hour (back office) or nothing (telework). The violation occurred because DPS management allowed it. The OIG wrote:

The former Acting DPS Director and the four Division Chiefs stated that collectively they decided to allow inspectors to claim front facing differential for their entire workday rather than ‘nickel and dime’ them by asking that they account for individual hours.

Notably, Fire Prevention and Code Enforcement inspectors correctly followed County policy and did not claim front facing differential for their entire workday. The Division Chief told us that he did not know that the former Acting Director interpreted the policy differently. He also did not know that the other divisions were allowing their inspectors to claim all their workhours as qualifying for front facing differential.

The OIG could not figure out how much of the emergency pay was ineligible under county policy. That’s because “we were not able to obtain accurate information on the number of inspections conducted by DPS inspectors, how inspections were conducted, and their duration.” The OIG did note that when DPS finally adjusted its policy to match county policy, front facing differential hours claimed fell by 27% and the number of DPS employees claiming 80 hours of front facing pay per pay period fell by 90%.

Finally, the OIG made this ominous statement. “Additionally, we found that other County departments may also be misapplying the COVID differential pay policy and possibly paying undeserving employees COVID differential pay.” The report does not present evidence to back this up but one senses that this may ultimately be only the beginning of a much larger investigation.

The OIG recommended that the executive branch review DPS and all other county departments to ensure that COVID pay was being administered in compliance with county policy. The OIG also recommended that the county not use CARES Act money or apply for FEMA reimbursements for COVID emergency pay until all payments had been verified as complying with county policy. Chief Administrative Officer Rich Madaleno replied that county departments would review the pay and follow the collective bargaining agreements and regulations which established the pay. He also said that the county would “make all appropriate adjustments” to any FEMA reimbursement requests or uses of CARES Act money.

So let’s review this astonishing report. Top management in one of the county’s most important departments was willing to disobey county policy and overcharge taxpayers rather than have work hours properly reported. Management also lacked complete or accurate records on the actual work performed by its employees. The county’s budget monitoring processes failed to catch this and it would probably still be going on if it weren’t for the OIG. The county’s ability to seek FEMA reimbursements for this pay could be endangered. (Let’s remember that the total amount of COVID emergency pay is projected to be $100 million over the course of a calendar year and currently has no fixed end date.) And the county’s response is not “heads are going to roll and we will get our money back,” but rather that they will follow regulations and collective bargaining agreements.

Who knows what will happen now, but here’s a prediction: the county council’s review of this report is going to be must-see TV. A preview appears below.

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Moody’s: Passage of Question A is a “Credit Positive”

By Adam Pagnucco.

Moody’s Investors Service, one of the three major Wall Street bond rating agencies, has released an issuer comment characterizing the passage of Question A as a “credit positive” for Montgomery County. The comment is reprinted below.

*****

Montgomery (County of) MD

Voters amend limits to property tax revenue collections, a credit positive

On November 3, voters in Montgomery County (Aaa stable) approved a charter amendment on property tax limitations which enables the county to raise property tax rates without revenue constraints, a credit positive.

The approved measure (Question A) replaces the existing limit and enables a unanimous vote by County Council to adopt a tax rate on real property that can exceed the rate from the previous year. The amendment is credit positive for county operations because property tax revenue is not subject to any restrictions based on inflation, and revenue growth can be captured through tax base expansion in addition to any approved rate increases. The county’s previous charter limit, a self-imposed tax cap that was enacted in 1990, limited property tax revenue growth to the rate of inflation (CPI index) and an amount based on new construction.

A second charter amendment on the ballot (Question B) was rejected, which aimed to remove the county’s ability to increase revenue above inflation. The failure of the measure is also positive because it enables the county to retain flexibility to increase this revenue source when needed to balance the budget, particularly as its income tax rate is already levied at the maximum state cap of 3.2%. Montgomery County is just one of five counties in Maryland with a charter amendment limiting property tax revenue increases, and the ability to adjust the tax rate accordingly is important, particularly as most of the county’s debt is secured by its limited ad valorem tax and full faith and credit pledge.

Income taxes are the county’s primary general fund revenue source (43.5% of total fiscal 2019 revenue), followed by property taxes (36.6%) and other local taxes (7.8%).

The county demonstrated willingness to override its prior charter limit in May 2016 when it approved a 9.9% increase in property tax revenue to support rising debt service and insurance costs, as well as an increase in the Maintenance of Effort (MOE) for K-12 schools and the community college, mandated by the State of Maryland (Aaa stable). Without the increase, the county faced a $178 million budget gap in fiscal 2017 (ended June 30, 2017).

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MoCo’s Bad Bailout Bet

By Adam Pagnucco.

There are a lot of reasons to pay attention to the races for president and Congress: social justice, climate change, the pandemic, the economy, the fate of planet Earth… you get the idea. Here’s one more reason. If you’re a MoCo taxpayer, the fiscal fate of your county government might depend on what happens in Washington. And right now, that fate is not looking great.

Here’s why: since the summer, MoCo has been praying for a federal bailout. The reasons include:

1. The county is facing a revenue shortfall currently estimated at $192 million in this fiscal year and more than a billion dollars over the next six years.

2. In July, the county passed a nothing-burger savings plan that relied to a great extent on lapses rather than actual cuts.

3. From January through mid-September, the county council spent $28 million out of reserves.

4. The county executive has entered into open-ended agreements with county employee unions to give them emergency pay which could total $100 million over the course of a year. (Employees at MCPS, the college and park and planning are not covered by these agreements.) MoCo’s emergency pay is far more generous than offered by any other jurisdiction in the region.

5. Counting both appropriations and placeholders, the county’s share of federal CARES Act money is already spoken for.

6. The county’s own emergency management director has expressed skepticism in public that FEMA will reimburse the county for a meaningful share of its COVID expenses.

7. The county has ended its hiring freeze and is filling positions across many different departments, including ones not directly related to the pandemic emergency.

But who needs fiscal discipline when a blue wave sweeps over Washington, giving the Democrats total control of the federal government? And then they can solve all of MoCo’s financial problems with the biggest state and local government aid package in U.S. history. Right?

Wrong.

As anyone not hiding on Mars has noticed, the federal elections have not gone as planned for Democrats. Three scenarios seem plausible, all with troubling consequences for MoCo.

President Donald Trump wins reelection.
This is obviously awful for many reasons. One of them is that Vice-President Mike Pence can break ties in the U.S. Senate, giving GOP Senate Majority Leader Mitch McConnell extra latitude in his chamber.

Former Vice-President Joe Biden defeats Trump but Republicans hold control of the Senate.
This is better than a second Trump term but let’s remember that McConnell once said he would prefer that state and local governments go bankrupt rather than get more federal aid. Additionally, the last thing McConnell would want is to give Biden a big win with tons of federal money for blue localities like MoCo.

Biden wins and Democrats get razor-thin control of the Senate.
Even if Democrats win the Senate, McConnell could use the filibuster to block or reduce more federal aid. Would Democrats repeal the legislative filibuster with control of the Senate hanging on a vote or two?

Clearly, a huge bailout for MoCo is far from a sure thing under any of these scenarios. It’s also not helpful that the Democratic majority in the U.S. House could be the smallest held by either party in 20 years.

MoCo’s bailout bet was always a bad one. At the very least, a bit of restraint was in order. But we are now one-third of the way into the current fiscal year and any budget adjustments made now will be more severe than if they were put into effect months ago. The mess is getting harder to clean up, not easier.

Is anyone going to bring order to the budget or are we headed for another tax hike?

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The County is Not Taking its Budget Crisis Seriously

By Adam Pagnucco.

As I have previously written, MoCo government is in the throes of a dire budget crisis that rivals the near-death experience it suffered during the Great Recession. The county is looking at an estimated revenue shortfall of $522 million from FY20 through FY22. In response, the county executive announced back in March that he had “already instituted a hiring and procurement freeze for all programs not engaged in direct response to COVID-19.” The idea was to clamp down on all but the most necessary types of spending to weather the county’s pandemic-fueled budget downturn.

Nothing has improved since then. However, it’s apparent that the hiring freeze is over.

Today, I received this notice from the county’s Office of Community Partnerships that they are hiring for three community outreach positions and a program manager position.

That’s not all. The county’s online hiring system shows 43 open positions for which the county is soliciting applications, of which 22 were posted this month and 9 were posted in the last week. These positions include an adoption counselor in the Office of Animal Services, an administrative specialist in the environmental protection director’s office, a manager in the retirement plan office, a policy analyst in the budget office, a warehouse position at the liquor monopoly and three positions at the county council. It’s hard to argue that any of these positions are “engaged in direct response to COVID-19.”

So let’s add this all up. The county is facing hundreds of millions of dollars in revenue losses. Nevertheless, it has committed to open-ended COVID pay that could total $100 million over the course of the year, is spending freely from reserves and passed a cream puff savings plan full of paper “savings” from lapsed positions. The county can’t stick to its previously announced hiring freeze and is even hinting at another raid on retiree health care money. The county’s fiscal strategy, such as it is, is to pray for a federal bailout.

Maybe the county will get a bailout after all. If the feds don’t do it, will taxpayers be asked to do it next spring?

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Hogan is Lying About Question 1

By Adam Pagnucco.

Governor Larry Hogan is hopping mad about Question 1, a statewide constitutional amendment on the ballot that would curtail some of his massive budget powers. That’s understandable – any politician (and most of the rest of us) would be upset about having any of our powers taken away. But Hogan’s critique of Question 1 has careened into the territory of outright lies and he deserves to be exposed.

Question 1 has its roots in a state budget crisis way back in 1915. In those days, the state government was considerably less professional than it is now. In Fiscal Year 1915, the state ran up a general fund deficit of $1.4 million. That was pretty bad considering that the state recorded revenues of just $12.1 million.

The crisis resulted in the incorporation of an executive budget system into the state’s constitution, which gives the governor enormous powers to set the operating budget. The General Assembly is prevented from adding to or rearranging the governor’s proposed operating budget under most circumstances. The legislature can cut certain items from the governor’s budget and also fence off money, designating it for use only under certain circumstances. The governor can release the money for those purposes or save it. Over the years, the General Assembly got around the restrictions by mandating future funding for some items through statute (especially education). But in an operating budget for an upcoming fiscal year, the governor – any governor – has awesome power which dwarfs the ability of the legislature to check it.

No other state gives such budgetary authority to its governor.

In the past, the governor and the General Assembly lived with each other by negotiating (to an extent) what would appear in the governor’s budget. But Hogan and the current General Assembly tend not to negotiate with each other all that nicely. Last spring, General Assembly Democrats got fed up and passed SB 1028, a constitutional amendment that would junk the executive budget system and balance budgetary power between the governor and the General Assembly. That is now Question 1 on this year’s ballot. Here is the exact language of Question 1.

Question 01

Constitutional Amendment
(Ch. 645 of the 2020 Legislative Session)
State Budget Process

The proposed amendment authorizes the General Assembly, in enacting a balanced budget bill for fiscal year 2024 and each fiscal year thereafter, to increase, diminish, or add items, provided that the General Assembly may not exceed the total proposed budget as submitted by the Governor.

(Amending Article II Section 17 and Article III Sections 14 and 52 of the Maryland Constitution)

Additionally, the bill creating Question 1 grants the governor authority to veto any line items added by the General Assembly to executive departments. Furthermore, the bill makes clear that the changes will take effect in Fiscal Year 2024, after Hogan has left office.

Hogan despises this constitutional amendment and set up a website to oppose it. The website says, “Question 1 would upend the Maryland constitution to give career politicians in the legislature unchecked power over the budget, denying governors the chance to hold them accountable and to protect taxpayers.”

Hogan also made this video in which he claimed that Question 1 would lead to higher taxes.

Here’s the lie: Question 1 does not give the General Assembly “unchecked power over the budget.” The very language of the amendment makes clear that the legislature “may not exceed the total proposed budget as submitted by the Governor.” That means the governor still gets to set a budget ceiling that the legislature cannot exceed. Furthermore, the bill gives the governor line item veto authority over appropriations for state departments. What the bill actually does is establish a balance of power between the governor and the General Assembly that resembles the arrangement in most other states.

If Hogan wants to make an honest argument against Question 1, he can claim that the current system has worked well enough over the past century and has prevented a recurrence of the kind of budget crisis that it was designed to stop. But it’s a lie to say that it will result in higher taxes when the governor still gets to set a budget ceiling.

Readers, please take this into account when voting on Question 1.

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