Montgomery County Taxpayers League

The Voice of Taxpayers of Montgomery County, Maryland

Sept. 22, 2011 – Richard Madaleno

MCTL Meeting of September 22, 2011

7:30 – 9:30 pm1 st floor auditorium, Stella Werner Council Office Building
100 Maryland Avenue, Rockville, MD 20850
www.mctaxpayersleague.org      

MCTL Questions and Sen. Madaleno’s Responses

  1.  Why has the state determined that Montgomery County is the only county in the entire state that must charge for Student Activity fees.  Why are all the other Maryland counties exempt?

Response: There is a “professional courtesy” among all the delegations in Annapolis. A delegation may propose a law that must be statewide in nature because of the requirements of the state constitution. But the delegation words the proposal so that it applies only to their county, and the delegations from the other jurisdictions accede to the proposing delegation.

What apparently happened in this case is that a county resident felt strongly about student activity fees but got no satisfaction from anyone at the county level. So the person could have appealed to their State Senator or Delegate for help and the county delegation obliged. See also the response to question 2.

2.  Why has the state passed legislation, that applies only to Montgomery county, prohibiting fees for transportation when a child chooses a school or program not at his/her home school?  Why are other counties in Maryland exempt?

Response: There is every incentive for a state Senator or Delegate to intervene on behalf of a constituent in proposals affecting only the county. Usually there is no impact on the state budget. And the Delegate or Senator has little direct impact on the county budget. So if the proposal costs the county more money, the funding is the responsibility of the county council not of the county delegation. See also the response to question 1.

3. State funding for Montgomery County Public Schools is only 27% of FY 2012 operating budget, the lowest share of Maryland counties.  Would you sponsor legislation to exempt Montgomery County from Maintenance of Effort requirements until the state share rises to  the average of other large counties?

Response: the current funding formula, known as the “Lee-Maurer” formula, became effective in fiscal year 1974. The Maintenance of Effort requirement came into effect with the passage of the Thornton Commission Report in 2003. It required that all jurisdictions had to at least maintain the level of per-pupil costs of the previous year. The reason was that lawmakers were afraid that as state aid for education increased, receiving jurisdictions would reduce their local taxes by an equal amount.

The basic premise of the “Lee-Maurer” formula is that wealthier jurisdictions should receive less help than poorer jurisdictions. It was meant to reduce school funding discrepancies among jurisdictions across the state. But in our current fiscal situation with state revenues down, the formula has actually exacerbated the discrepancies. Because Montgomery County has seen an increase in overall student population, in the number of students requiring special education and in the numbers of students having English as a second language combined with a precipitous decrease in county property values, state aid to our county has actually increased while aid to less wealthy counties has decreased.

While the Senator does not believe any legislation will be passed in the upcoming legislative session to overturn the MOE requirements, he believes there will be considerable discussion in the legislature concerning the problem.

The Senator believes that MOE allows to0 much intervention by the state in what should be local decisions. The system should be such to encourage collaboration among the school system and the local government in each county.

4.  Del. Cullison appears to be planning legislation forcing Montgomery County to adhere to the Maintenance of Effort requirement.  What is your position and do you sense that there will be much support from the delegation?

 Response: The senator has not yet seen an actual bill but would generally oppose such a proposal. He also believes such a proposal would not be passed by the legislature.

5. State funding for Montgomery County’s Department of Health and Human Services (DHHS) is only 21%, with 70% of the operating budget coming from local funds, the highest of all surrounding jurisdictions in Maryland, DC and Virginia.  As a result, Montgomery County’s DHHS budget is shrinking.  Spending, on average, for our 65,000 residents living in poverty ($3,844) is the lowest of surrounding jurisdictions, except for PG County, and 21% lower than Fairfax County.  Would you support legislation to peg state aid to a “per capita poverty” spending target?

 Response: Montgomery County is different from all other Maryland jurisdictions. In 1995 the county had social services provided by both the county and the state. The county then decided to consolidate both organizations into a county Department of Health and Human Services with the state providing a block grant of funding for the share of state services being delivered by the county.

An attendee added that consequently, salaries of the county’s HHS are 60% higher than any other jurisdiction in Maryland. As the state provides a set sum, there is less money going to those county residents in need, most of the funding going to salaries.

6. Most funding for public safety is covered by local taxpayers.  However, as a percentage of operating budgets Montgomery County, the largest county in the state, ranks 7th for state funding of police (6% of operating budget) behind counties like Allegheny, Carroll, Garrett, Caroline, Washington),  and 12th for local corrections.    Would you support legislation to tie state aid to population? 

Response: Only six jurisdictions in the state have a police department. Most have their sheriff carry out law enforcement. Although the state provides funding for police protection on a per capita basis. The state provides additional funding to sheriffs.

7.  What is your position on in-state college tuition rates for children of undocumented residents?  How many such students are currently enrolled and what is the cost to Maryland taxpayers? 

Response: There is no cost to Maryland taxpayers statewide as state law prohibits secondary institutions from including undocumented residents in their enrollment counts. The Senator supports the Maryland Dream Act, by which anyone who has graduated from a Maryland high school and been in the state for at least three years can attend a state-supported university at the law tuition rate afforded to state resident. [The Dream Act is on hold as the result of a successful petition drive which will put the measure to voters in the 2012 elections.]

8.  For every dollar sent to Annapolis, Baltimore City receives $1.08 while Montgomery County receives 20 cents.  The Taxpayers League does not believe that this is a fair deal.  What steps has the Montgomery County delegation taken to redress this gross inequity?  

Response: This is a faulty calculation which does not tell the complete story. For instance, the state picks up the tab for the Inter-county Connector and the state’s share of the Washington Metropolitan Area Transit Authority (Metro subway and bus lines). Further, Montgomery County students are the single biggest user of the University of Maryland. Therefore, while it is true that our county gets a small direct return on our funds sent to Annapolis, in total we get considerable indirect benefits.

9.  What can the delegation do to give us more fiscal transparency and control over our Board of Education.  The BoE and MCPS hide too much of their financial information, and resent and fight against citizen efforts to learn how our money is being spent.  They behave as if there are no limits to what they can demand of the taxpayers and no requirements that they be accountable or auditable in their financial dealings.  It leaves taxpayers with the feeling that this is a part of local government with great potential for waste, fraud and abuse, and with no way for us – the taxpayers –  to get a handle on what’s going on there, much less press for improved spending and accountability.

Response: He was instrumental in getting a state law passed requiring more transparency on the part of state agencies, of which the Board of Education is one.

10.  The BoE has a master lease with Deutsche Bank for the purchase of equipment in the amount of $38 million.  The BoE is unable to provide taxpayers with the master list of equipment purchased for $38 million.  Why is this treated as sensitive information by the BoE.  Can you obtain this information for us?

Response: It is his understanding that Deutsche Bank is not the actual provider of equipment but rather the financier.

11.  Are you supporting the legislation that will raise our taxes by introducing legislation allowing the BOE to independently raise revenue.  Will this bill be re-introduced this coming year? 

Response: The Senator does believe such legislation will never pass. If proposed, the county will vigorously oppose it.

The Senator also added some background information.

Regarding state revenue, 50% comes from the state income tax. Montgomery County supplies more of that revenue than any other jurisdiction, and it mostly taxes on earned income such as wages. However, a growing portion has come from non-earned income such as capital gains and interest. The problem is that while revenue from earned income can be predicted with some confidence, it is nearly impossible to predict revenue from non-earned income. The state recently announced that income tax revenues were running about $300 million ahead of forecasts. However, the increased tax revenue is mostly attributable to non-earned income, meaning that that few jobs are being created. Montgomery, Howard and Anne Arundel Counties provide more than half of the state income tax revenue. Additional major sources of state revenue are sales taxes (30%), lotteries and corporate income tax.

Regarding expenditures, 50% goes to public education (kindergarten through 12th grade) and medical assistance. Because Montgomery County has the largest school system in the state it gets the largest amount of state education funding. A state budget deficit approaching $1 billion is predicted for fiscal 2013.

The Senator explained in some detail the rather complicated formula used by the state to apportion education funds to local jurisdictions. One reason school costs have increased is the portion of students having special needs. Decades ago children born with severe handicaps had a short life-expectancy. Those who made it to school age, were not required to be educated by public schools. Now, through advance medical treatment those children are living longer. Additionally, since 1974 Federal law has required that children with special needs must be provided a free public education by the public schools. In some instances these children require a teacher on a one-on-one basis. Often the school system then finds it to be less expensive to enroll such special needs children in private schools which are better equipped to help them.

While most of the real estate taxes go to the local jurisdiction, the state keeps 13 cents per $100 of assessed property value. This revenue is dedicated to funding state debt; it does not go into the general fund. Interestingly, Maryland is the only state that mandates a local income tax although some states allow a local tax.