As your Comptroller and as a Montgomery County resident, this story makes me viscerally frustrated. There is no constructive purpose served by the continued existence of our government-run alcohol monopoly. It is inefficient, costly and unresponsive to the needs of its customers.
Now, at a time when our restaurants, bars and taverns are looking at possible financial ruin as a result of the COVID-19 pandemic, and are fighting a daily battle simply to survive, we get this tone-deaf ruling from the Department of Liquor Control. By prohibiting the sale of liquor and mixed drinks for carryout and home delivery, the DLC is acting in violation of both Governor Hogan’s Executive Order and a basic standard of common sense.
If there ever was a time for an outdated government agency to flaunt its administrative prerogatives, this certainly isn’t it. Hoping the DLC will reverse this ruling and do everything it possibly can to support our local, community-based businesses. Or, failing that, at least get out of the way while the rest of us help them #KeepTheLightsOn.
Franchot even took out a Facebook ad for this post. At the moment, his post has 116 reactions, 40
comments and – most critically – 27 shares.
The original blog post has been shared countless more times across
Facebook.
With outrage growing against the monopoly, it must lift
the ban or face a renewed push to abolish it.
Battered by shutdowns of dine-in service, restaurants across Maryland and beyond are taking a severe beating. As a measure of modest compensation, Governor Larry Hogan has allowed restaurants and bars to engage in something unprecedented: takeout and delivery service of alcohol. That partly applies in MoCo too, but there is a holdup.
Nepenthe Brewing Company in Baltimore advertises takeout cocktails.
The liquor monopoly enjoys a retail monopoly on spirits sales and jealously protects it. For example, after the General Assembly passed a law three years ago allowing the monopoly to contract with private stores to sell spirits, the monopoly simply refused to enter into any such contracts. Loosening its retail spirits sales monopoly might damage its profits, which are the only reason it continues to exist. (Profits are no problem at the moment as the monopoly’s business is booming while folks are stocking up.)
The issue matters because it affects the employment of a key category of personnel in the restaurant industry: bartenders. Data from the U.S. Bureau of Labor Statistics indicates that MoCo and Frederick establishments together employed 1,410 bartenders in 2017, so at least 1,000 of them work in MoCo owing to the comparative size of the counties. The two counties employed an additional 2,680 people classified as “dining room and cafeteria attendants and bartender helpers.” When takeout and delivery is restricted to beer and wine, bartenders are not needed because anyone can handle bottles and cans. But when spirits beverages are allowed, bartenders are necessary.
Clavel Mezcaleria – Taqueria in Baltimore has an online menu of pre-bottled cocktails.
One restaurant owner who contacted me put MoCo’s cocktail
ban in economic terms. “Maryland allows
it. Montgomery County does not. Baltimore can sell a margarita to go. We cannot.
That’s my point. The DLC [liquor monopoly] restricts us again. If they allowed it I could keep some of my
staff employed instead of on the unemployment line.”
So what’s more important?
The continued employment of a thousand MoCo bartenders? Or the liquor monopoly’s long-time retail
spirits monopoly? County officials, you
decide.
COVID-19 threatens to wipe out our state’s safety net
by Lintaro Donovan
Like millions of Americans, I remember my first day of swim lessons at the YMCA. As I left my grandfather’s grip and waded into the freezing-cold water, two hands gripping the tile sides of the pool, I began to cry. I felt like I would never learn to swim. But learn I did, and, although I am close to 18 now, I still consider myself a perpetual Y-Kid.
Like millions of Americans, I remember my
first day of swim lessons at the YMCA. As I left my grandfather’s grip and waded into the freezing-cold water, two hands gripping the tile sides of the pool,
I began to cry. I felt like I would never learn to swim. But
learn I did, and, although I am close to 18 now, I still consider myself a
perpetual Y-Kid.
Through
the Y’s swim programs, I found confidence in water and discovered a lifelong, lifesaving skill. Through the Y’s Youth & Government program, I serve
as Youth Governor
of Maryland and find inspiration to enter public service
at every program event. Through the Y’s diabetes prevention programming, I know I’ll find hope as the son and grandson of diabetics. But the
COVID-19 Crisis threatens to topple
the charity cornerstones of my life and our state.
The complete shutdown
in economic activity over the next weeks will prevent many
organizations, including my own Youth & Government program, from hosting the events they need
to maintain revenue streams and program
funding. An inevitable economic downturn will force many Americans to cut
their charitable giving for the year short: punching charities in the gut when
their services are needed most.
However, there is another
staggering economic dimension to the challenge facing our charities. Payrolls in the independent sector are larger than those
even in the construction, finance,
and transportation industries. Nonprofits like the Y employ more than 12 million people who compose
the fabric of their
communities. Millions of livelihoods are now at risk of dying out.
Sooner than later, in just Montgomery County could lose their jobs. Maryland might find itself bereft of A Wider Circle, which provides homegoods, counseling, and antipoverty education to families in need. It is horrifying to imagine what my community would look like without the youth and family services provided by the Silver Spring Y or the lifesaving generosity of Manna Food Center.
I implore Congress.
Just as our elected officials
have stood up for their constituents and defended the common good on countless
other occasions, they must fight the good fight now. Nationwide nonprofits have recently released a request for the legislature to allocate $60 billion in relief for
organizations on the frontlines of the Battle Against
Coronavirus. Congress must ensure that any stimulus
package relieving corporations
decimated by the current crisis also relieves the nonprofits whose work is so vitally
important.
Congress must remember nonprofits when it comes time to vote.
Lintaro Donovan is a student at Montgomery Blair High School.
Last night, Council Member Nancy Navarro, who chairs the
council’s Government Operations Committee, wrote on my Facebook page that she
intends to introduce a council resolution on Tuesday calling for major spending
restraint in the county’s budget.
Specifically, the resolution calls for a same services budget for each
department and agency; holding Montgomery College and MCPS to maintenance of
effort (which is the state’s mandated minimum for local appropriations to those
agencies); and providing flexibility to assist residents and businesses as well
as to revisit spending after the coronavirus crisis ends. Navarro claims that Council Members Andrew
Friedson, Gabe Albornoz, Craig Rice and Hans Riemer are co-sponsoring her
resolution.
It’s worth noting that Navarro is the only current
council member who was on the council during the budget crisis of 2010.
The resolution does not yet appear on the council’s
agenda for Tuesday, but the current text as shared by Navarro appears
below.
SUBJECT: Options for the Approval of and Appropriation for the FY 2021 Operating Budget Background
1. As required by Section 303 of the County Charter, the
County Executive sent to the County Council the FY 2021 Operating Budget on
March 16, 2020.
2. As required by Section 304 of the County Charter, the
Council must hold public hearings on the proposed operating budget.
3. A new coronavirus disease, called Covid-19, has
spread extremely quickly, making its way to over 100 countries, including the
United States.
4. On March 11, the World Health Organization officially
declared the Covid-19 viral disease a pandemic.
5. The number of new cases in the United States is
growing quickly and has spread to each of the 50 States, the District of
Columbia, Puerto Rico, Guam and the US Virgin Islands.
6. To slow the spread of this communicable disease,
Governor Hogan issued several emergency orders closing all non-essential
businesses, restricting public transit, closing schools, prohibiting public gatherings
of 10 persons or more, and postponing the Presidential Primary Election in
Maryland.
7. Although County government operations are continuing
during this pandemic, County employees are using situational teleworking
wherever possible to perform their duties. Due to the need to limit person to
person contact, many County residents have lost paychecks and many County
businesses have lost revenue.
8. The Executive was required by the Charter to develop
his recommended FY2021 Operating Budget before the most recent events clarified
the full extent of the pandemic.
9. Considering this unprecedented global pandemic and
national state of emergency, the Council must move expeditiously to provide
continuity of operations in approving an operating budget for FY2021 that
provides additional flexibility to help County residents and businesses
recover.
Action
The County Council for Montgomery County, Maryland
approves the following resolution:
1. The Council directs staff to develop viable options
to streamline our budget process, so that for FY 2021, the Council may adopt an
aggregate operating budget for our departments and agencies that reflects a
continuation of the services provided at the same level as FY2020.
2. These viable options must include funding the
Operating Budgets of the County Board of Education and Montgomery College at
the required Maintenance of Effort level and should avoid funding any new programs
unrelated to relief for County residents and businesses from the Covid-19 viral
disease pandemic.
3. These viable options should include flexibility for possible
future appropriations:
a. to assist County residents and businesses to recover
from the Covid-19 viral disease pandemic; and
b. to provide additional resources for other County
programs and employee wage and benefit enhancements, if available, after the
crisis is over.
Within minutes of seeing our post on parking tickets being issued for restaurant takeout pickups, Council Member Tom Hucker asked county officials to stop the practice. When Hucker announced this on Facebook, County Executive Marc Elrich replied, “I just told DOT to stop enforcement until they have put in place pick-up zones around all the restaurants. We don’t want cars parking and not moving, at least as long as some things are open, but you can’t be ticketing people trying to pick up food after having encouraged restaurants to maintain as much service as they can through carry-out and delivery.”
All of this happened in less than an hour.
Elrich and Hucker deserve praise for acting with such speed.
Hucker’s Facebook post, along with Elrich’s comment, is reprinted below.
MoCo’s restaurant industry, which is currently limited to
takeout and delivery, is in crisis. Many
elected officials at both the state and county levels are asking constituents
to patronize the county’s restaurants to keep them afloat. And yet, one prominent restaurant – the Limerick
Pub in Wheaton – is complaining that customers who have picked up takeout food
from the pub have been issued parking tickets.
Can the elected officials and other county officials
reading this get a handle on this issue?
Let’s all agree with Limerick that now is not the time for aggressive
ticketing.
Limerick’s blast email to its customers is reprinted
below.
Wage losses in these industries are certain to show up in
reduced income tax receipts. Because of
the nature of these kinds of jobs, the affected workers will likely never
recover that income. All of this is
going to profoundly hit the county budget.
And it is coming in the middle of the county’s budget process, which
normally concludes in mid-May.
As Fred Sanford used to say, this is the big one!
We haven’t seen anything quite like the coronavirus pandemic in a century, but we have seen economic crises before. The last one MoCo encountered happened a decade ago. The Great Recession had been underway since 2008 but did not truly destroy the county’s budget until the spring of 2010. As required by the county’s charter, then-County Executive Ike Leggett released his recommended FY11 budget on March 15. Just ten days later, Leggett sent a memo to the county council explaining that circumstances had changed since his budget was transmitted. Leggett wrote:
I am sending this memorandum to recommend that we jointly take additional actions to strengthen the County’s financial position in the current fiscal year and for FY11.
There is no perfect time to formulate a budget. Since I recommended my budget earlier this month, we have already received more bad news that points to additional fiscal deterioration. This includes a dramatic increase in the County’s unemployment rate from 5.2% to 6.2% and may signal further erosion of income tax revenue. In addition, Anne Arundel County’s bond rating was recently downgraded from a AA+ to a AA rating due to several factors including the deteriorating condition of Anne Arundel’s reserves. At the same time, the Department of Finance has been in discussions with the bond rating agencies relative to an upcoming bond sale and is concerned about feedback they have received from the rating agencies on our fiscal position.
At that time, Leggett recommended increasing the energy
tax and transferring money from non-tax supported funds into the general fund,
which is the county’s main vehicle for funding most governmental functions.
On April 5, Leggett followed with a second memo explaining that the county’s March income tax distribution had fallen significantly and that Moody’s had placed the county on a watch list for a potential bond rating downgrade. Things were getting worse. Leggett wrote that he “asked the OMB and Finance Directors to meet with the department heads of all large County Government departments to identify outstanding, remaining purchases and reimbursements for FY10 or early FY11.”
On April 22, Leggett sent a third memo to the council outlining a $168 million writedown in income tax revenue and a resulting total fiscal gap of “approximately $200 million.” Leggett forwarded a long list of recommended spending cuts along with a larger increase to the energy tax to close the gap. By this point, Leggett had essentially re-written his recommended budget, which was released just 5 weeks earlier.
The resulting budget passed by the council in May was the ugliest budget in county history. It broke collective bargaining agreements, furloughed county employees, doubled the energy tax and spent 4.5% less money than the prior year’s approved budget, the first actual dollar spending cut that anyone could remember. But it did not resort to mass layoffs and the county kept its AAA bond rating. For all its fiscal brutality, this budget saved the county from financial disaster. It was Leggett’s greatest achievement and it was shared by a county council that did its job.
Today’s policy makers should heed the lessons of
2010. (The only current elected
officials who were in county office that year were Council Member Nancy Navarro
and then-Council Member Marc Elrich, who is now the executive.) Chief among them are that teamwork, honesty,
speed, an absence of finger pointing and political courage were all crucial to
success. No one was trying to score
points. Everyone was trying to do their
best. Amazingly, it all happened in an
election year.
Here is what must happen now.
1. Elrich must
stop defending his recommended budget.
It no longer matters whether it was a good budget or not. It’s not going to happen now. The actual revenues generated from the
county’s emaciated economy will not support it.
And once the council starts making changes, he has to be constructively
involved, as Leggett was. Standing aside
and taking potshots from the sidelines would be a failure of leadership.
2. The finance
department must revise its revenue estimates, especially for income taxes. Leggett’s finance department was able to see
a deterioration in income tax receipts within three weeks of the release of his
recommended budget. Today’s finance
department must react with the same speed.
3. The office of management and budget must prepare a menu of savings options for the council. Everything – Elrich’s collective bargaining agreements (which now contain raises of up to 7-8%), hiring freezes, attrition and more – needs to be on the table. The council must know what number it needs to hit and they need to have choices on how to get there.
4. A discussion must take place about the county’s reserves. As of FY20, the county’s reserves (including its agencies) were estimated to be more than $500 million, or 10.5% of revenues. That’s a lot higher than the 6% reserve level possessed by the county in 2010 and is a direct result of Leggett’s long-term plan to bolster reserves and maintain the bond rating. It’s a great goal to have a 10% reserve, but that money is kept available for emergencies – and that’s exactly what we have now. County leaders should discuss whether we need to maintain reserves at that level or if they can be used to plug government spending holes and/or to fortify the economy. Comptroller Peter Franchot has already recommended that $500 million be allocated from the state’s rainy day fund to assist small businesses.
5. With public participation in the budget process limited by the coronavirus, the county must keep residents and businesses informed of the latest budgetary and economic developments. The county has a large media apparatus that it can tap for doing so.
Ike Leggett proved that he was up to the task of dealing
with a crisis. Now it’s time for today’s
elected officials to show that they are too.
Short hair Corona iPic Spring weddings Socializing Giving up social media President Donald Trump The Buck Stops Here Viral marketing 90-day session Eating out Montgomery Mall Early voting Trump Revolution Public transit Charmin Ultra Please Like Me Handing in papers Jared Kushner Tom Steyer Family time Premieres Tax cuts Covids 1 through 18 Hooking up Shaking hands Airline travel CEOs Stockbrokers Washington Sports Emissions tests Apple Stores Beltway traffic Casual Friday Café Deluxe Barnes & Noble Tulsi Gabbard MGM National Harbor Employees washing hands Rainy day funds Glad you got a raise Watching sports Buying homes Sneaking In Bill de Blasio TicketMaster Trump Bashing Mexico Door Handles Burr & Loeffler Kale Open Table Vacation Superman Greeting Cards Purell Peapod Social Safeway Friendship Heights Giant ESPN Panic Buying Block Parties
IN
Long hair Denizens Delivery Netflix December birthdays Social media Tweeting too much Governors Larry Hogan I’m Not Responsible at All Going digital Sine die Take out Amazon Absentee voting Biden Results Private transit Martha Stewart’s DIY TP Everything’s Gonna Be OK Online submission Anthony Fauci Andrew Yang Go play with the iPad Straight to video Sending checks Covid-19 Sexting Waving goodbye Armchair travel Garbage collectors Nurses and Doctors Peleton COVID-19 tests Apple Pay Telecommuting Working in Pajamas Q by Peter Chang Politics & Prose Katie Porter Binge Online Shopping Everyone washing hands Rain Glad you have a job Xbox Refinancing Sneaking Out Andrew Cuomo Matt & Noah Colvin Trump Bashing China Automatic Doors Schiff & AOC Canned Peas Door Dash Staycation UPS Driver E-Cards New York State Clean Giant Delivers Social Distancing Safeway Pescadeli & Butchers Alley C-SPAN Cherry Blossoms Gardening
Buried in the fine print of County Executive Marc Elrich’s recommended FY21 operating budget is a shocking revelation: the executive claims that a mistake made by county revenue estimators two years ago has caused tens of millions of dollars in losses for the county. One reason why the Elrich administration is proposing a tax hike now is to recover that money.
To understand what happened, we have to understand how the county’s charter limit on property taxes functions. Here is the exact text of the charter limit.
Unless approved by an affirmative vote of all current Councilmembers, the Council shall not levy an ad valorem tax on real property to finance the budgets that will produce total revenue that exceeds the total revenue produced by the tax on real property in the preceding fiscal year plus a percentage of the previous year’s real property tax revenues that equals any increase in the Consumer Price Index as computed under this section. This limit does not apply to revenue from: (1) newly constructed property, (2) newly rezoned property, (3) property that, because of a change in state law, is assessed differently than it was assessed in the previous tax year, (4) property that has undergone a change in use, and (5) any development district tax used to fund capital improvement projects.
In plain English, what this means is that the county’s
real property tax receipts (with a few exceptions) may not rise at an annual
rate exceeding inflation unless the entire council votes to exceed it.
Calculating the charter limit involves three basic steps. First, one must estimate the value of the assessable base subject to the charter limit. Second, one must calculate the value of the many property tax credits offered by the county. Third, one must calculate the levels of real property tax rates that, when applied to the assessable base and taking account of the credits, produce an increase in receipts equal to the rate of inflation.
Hence, estimating the size of the assessable base is
critical. If it is underestimated,
property tax rates will be set too high and the charter limit will be
violated. If it is overestimated,
property tax rates will be set too low and the county will not collect as much
revenue as it could at the charter limit.
These are extremely technical considerations but this affects tens of
millions of dollars (at least) for the county budget.
In his recommended budget, the county executive makes
this statement:
I am proposing this supplemental tax rate this year to partially offset an unexpected underperformance of the property tax for the last two years. In preparing the FY19 County budget, the taxable property base of the County was overvalued. As a result, the property tax rate needed to generate revenues at the Charter limit for the past two years was set too low. This resulted in lost revenues of $80 million, now permanently embedded in our revenue projections.
The amount of revenue lost by this mistake was $35
million in FY19 and $45 million in FY20.
Because of compounding, the lost revenue will rise each year unless it
is recovered.
It’s important to note that Elrich was not yet the county
executive when the FY19 charter limit was estimated. That was done by the finance department in
former County Executive Ike Leggett’s last year.
Must the losses be stanched? The county usually allows property tax receipts to rise up to the charter limit each year, but there is nothing in county law requiring that. For example, in FY13, Leggett recommended level-funding of property tax receipts, which actually kept them below the charter limit. The amount of forgone revenue was estimated at $26 million that year, which would have risen in subsequent years. However, this was not the result of an estimation mistake. The county had doubled the energy tax two years before and had not sunset it as was promised. Forgoing a bit of property taxes was something of a consolation.
This issue must be frustrating for all concerned. County leaders have a choice. They can live with the mistake and move on. Or they can tell voters, “We screwed up and
now we need to raise your taxes.”
If option number two is selected, how do you think folks
will respond to that?
Dear reader, if you are someone who is considering
running for office someday, remember this story. Something terrible could happen to you when
you run.
Montgomery County Board of Education President Shebra Evans and Montgomery County Public Schools Superintendent Jack Smith released the following statement in response to County Executive Marc Elrich’s recommended Fiscal Year 2021 Operating Budget:
“We are in unique times facing an unprecedented challenge. We greatly appreciate County Executive Marc Elrich’s understanding of the need to face the challenges of today while planning for the future for our children and community. His recommend budget nearly equals the Board of Education’s requested budget and is more than $35 million over Maintenance of Effort. This investment is especially significant given the financial uncertainty our county and country face as we combat the COVID-19 pandemic. It is important to remember that investments in our students now will ensure a strong future economy for our county that will thrive in good times and can weather crises. The County Council has had enduring support for public education in our county. We look forward to working with the councilmembers in the coming weeks to discuss how our operating budget will continue to meet the unique needs of each of our 166,000-plus students.”
In February, The Board of Education voted unanimously to adopt a $2.805 billion budget for Fiscal Year (FY) 2021. This includes an increase of $124.1 million from FY 2020. The budget will allow Montgomery County Public Schools (MCPS) to manage significant enrollment growth and focus on strategic investments to address disparities in student achievement.
The budget includes funding to expand and implement strategic key bodies of work. This includes:
Additional English for Speakers of Other Languages teachers and counselors;
The expansion of prekindergarten seats;
Increasing exposure to language opportunities;
Creation of three new regional International Baccalaureate centers to provide more access to rigorous coursework;
Addition of mental health support staff to support student mental health and well-being;
Opening of upcounty career readiness hub at the new Seneca Valley High School;
Providing additional support for language and science, technology, engineering and mathematics programming;
Equity and innovation initiatives; and
An expansion and enhancement of teacher recruitment and retention efforts to ensure all classrooms have highly qualified teachers from a diversity of backgrounds.
Additional positions based on student enrollment adjustments;
Accelerators for Learning, Accountability and Results and Operational Excellence strategies;
Blueprint for Maryland’s Future legislation-directed grants; and
Additional identified savings.
The Montgomery County Council will hold public hearings on the county budget in April before passing a final budget on May 21, 2020. After the County Council’s action, the Board of Education will vote on June 11, 2020, for final adoption of the FY 2021 operating budget.
