{"id":8627,"date":"2017-10-02T07:00:04","date_gmt":"2017-10-02T11:00:04","guid":{"rendered":"https:\/\/www.theseventhstate.com\/?p=8627"},"modified":"2018-04-26T10:32:10","modified_gmt":"2018-04-26T14:32:10","slug":"lessons-learned-from-the-giant-tax-hike-part-one","status":"publish","type":"post","link":"https:\/\/www.theseventhstate.com\/?p=8627","title":{"rendered":"Lessons Learned from the Giant Tax Hike, Part One"},"content":{"rendered":"

By Adam Pagnucco.<\/em><\/p>\n

Unfortunately for those Council Members who voted in its favor, last year\u2019s 9% property tax hike won\u2019t go away.\u00a0 The issue came up at the first County Executive forum<\/a>, at which the three Council Members who voted for it defended it under heavy criticism from their Republican rival, Robin Ficker.\u00a0 It is sure to be mentioned again as several County Council candidates, including some Democrats, are openly wary of more tax hikes.\u00a0 And there is a general sense that the 40-point passage of term limits last year was driven at least partially by the tax increase.\u00a0 All local politicians have taken notice.<\/p>\n

There is no question that the Giant Tax Hike is widely unpopular, but it cannot be undone, so let\u2019s learn from it.\u00a0 Next year, the county will have a new Executive and at least four new Council Members.\u00a0 All candidates taking office will assume responsibility for a county with needs that have not abated and a budget that remains challenging.\u00a0 What lessons can these new office holders learn from the Giant Tax Hike?\u00a0 In this series, we present three of them.<\/p>\n

Let\u2019s start with Montgomery County Public Schools (MCPS).\u00a0 Tax hike supporters point to MCPS\u2019s needs as a reason for the increase and they have a point.\u00a0 MCPS has enormous and permanent needs.\u00a0 The school system is a huge asset that requires continuous large investments to maintain.\u00a0 But while all of that is true, the sad fact is that the county imposed seven years of austerity on MCPS while lavishing double-digit increases on nearly every other function of government.\u00a0 Once MCPS\u2019s problems became too large to ignore, then and only then was the tax hike passed.<\/p>\n

MCPS\u2019s funding issues began when the Great Recession started impacting the county\u2019s budget in 2009.\u00a0 The County Council has significant power to cut most parts of the budget but the school system is an exception.\u00a0 MCPS is covered by the state\u2019s Maintenance of Effort (MOE) law, which establishes local per pupil contributions to school districts as a floor for funding levels in future years.\u00a0 The intent of the law is to prevent counties from supplanting state aid for schools by cutting their own local school funding and moving that money to other functions.\u00a0 Under the old MOE law, when a county wanted to cut its own local per pupil contribution, it needed a waiver from the State Board of Education or it would forfeit any increase in state aid for public schools.\u00a0 This penalty did not deter several counties from cutting local per pupil spending during the recession.<\/p>\n

In Montgomery\u2019s case, the county cut its per pupil contribution three times.\u00a0 In FY10, the county\u2019s cut was forgiven by legislation passed in the General Assembly.\u00a0 In FY11, the county obtained a waiver for a cut from the State Board of Education, who warned the county not to cut again.\u00a0 In FY12, the county cut its local per pupil contribution for a third time without even asking for a waiver.\u00a0 Egged on by the teachers union, the General Assembly got fed up and changed the MOE law.\u00a0 From now on, if a county tries to cut its per pupil contribution without a waiver, the state would send the county\u2019s income tax revenues directly to its school system to make it whole.\u00a0 There would be no more messing around with MOE.<\/p>\n

This presented a budgetary challenge for counties.\u00a0 From now on, increases to local per pupil contributions would be almost locked in and very difficult to escape without the cooperation of local school boards.\u00a0 The new law was a risk factor that had to be managed.\u00a0 MoCo\u2019s County Council reacted by freezing the county\u2019s per pupil contribution for four straight years after three years of cuts.\u00a0 By FY16, the county\u2019s per pupil contribution was $9,759 \u2013 well below the prior peak of $11,249 in FY09<\/a>.\u00a0 Factoring in inflation, in real terms, the county\u2019s per pupil investment in MCPS was 24% lower.<\/strong>\u00a0 That caused huge budgetary strain in the public schools.<\/p>\n

The budget was only one reason for the county\u2019s behavior.\u00a0 There was also politics.\u00a0 Over the years, former Superintendent Jerry Weast had constructed a machine combining the school unions, the PTAs and the Washington Post editorial board to aid him in obtaining budget increases.\u00a0 Increasingly, the council viewed him as going too far.\u00a0 That perception became more acute when he held a meeting with union leaders at his home in 2008 and directed them to endorse Nancy Navarro in the District 4 special election<\/a>.\u00a0 Further strains appeared when Weast threatened to sue the county over MOE<\/a> and the council accused the school board of lying about its budgetary needs<\/a> in Weast\u2019s last year.\u00a0 Weast\u2019s successor, Josh Starr, was caught in the aftermath.\u00a0 He was unlucky enough to serve during MCPS\u2019s austerity years and the budget squeeze effectively sabotaged his tenure.<\/p>\n

While MCPS starved, the rest of the county government was well fed.\u00a0 Between FY10 and FY16, the county cut local funding for MCPS but increased it by double digits for most other government functions.\u00a0 The police department, the fire department, the libraries and almost every other department recovered nicely from the recession.\u00a0 The council itself enjoyed a 19% increase for its own operations.\u00a0 MCPS was almost alone in austerity.\u00a0 (Housing had a significant decline only because of a one-time large expenditure to the Housing Investment Fund in FY10).\u00a0 This profligacy throughout county government made it harder to afford an increase for MCPS without raising taxes later on.<\/p>\n

\"\"<\/a><\/p>\n

MCPS might have collapsed if it were not for state aid increases.\u00a0 Over the FY10-16 period, the county cut local operating funds for the schools by $33 million, but state operating aid went up by $192 million.<\/p>\n

\"\"<\/a><\/p>\n

Meanwhile, many other counties reacted to the new MOE law differently.\u00a0 While MoCo froze its local per pupil contribution to its schools, fifteen other counties increased their contributions during the first three years of the new law.\u00a0 Nine of these counties were controlled by Republicans.\u00a0 That\u2019s right, folks \u2013 supposedly progressive MoCo lagged Republican counties in increasing local support for schools.<\/strong><\/p>\n

\"\"<\/a><\/p>\n

After seven years of squeezing MCPS, the county finally relented and increased its per pupil contribution, but it did so with a 9% property tax increase.\u00a0 And it wasn\u2019t just the schools that got more money \u2013 once again, nearly every other department got a bump<\/a>.\u00a0 There\u2019s a lesson here for the next generation of county leaders.\u00a0 MOE does indeed present a risk for the county budget, but it\u2019s a risk that can and should be managed.\u00a0 Seven years of austerity for MCPS cannot be imposed without major strains on public school operations.\u00a0 A far better approach is to implement small but steady increases to per pupil funding while moderating growth in the rest of the government to pay for it.\u00a0 That\u2019s the best way to maintain one of the county\u2019s greatest assets without imposing giant tax hikes.<\/p>\n

In Part Two, we will look at another lesson to be learned.<\/p>\n","protected":false},"excerpt":{"rendered":"

By Adam Pagnucco. Unfortunately for those Council Members who voted in its favor, last year\u2019s 9% property tax hike won\u2019t go away.\u00a0 The issue came up at the first County Executive forum, at which the three Council Members who voted for it defended it under heavy criticism from their Republican rival, Robin Ficker.\u00a0 It is … Continue reading Lessons Learned from the Giant Tax Hike, Part One<\/span> →<\/span><\/a><\/p>\n","protected":false},"author":4,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[151,32,134],"tags":[1545,2176,1475,1539],"class_list":["post-8627","post","type-post","status-publish","format-standard","hentry","category-adam-pagnucco","category-mcps","category-taxes","tag-adam-pagnucco","tag-giant-tax-hike-series","tag-mcps","tag-taxes"],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p4mKJE-2f9","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=\/wp\/v2\/posts\/8627","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8627"}],"version-history":[{"count":2,"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=\/wp\/v2\/posts\/8627\/revisions"}],"predecessor-version":[{"id":8646,"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=\/wp\/v2\/posts\/8627\/revisions\/8646"}],"wp:attachment":[{"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8627"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8627"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.theseventhstate.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8627"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}