Montgomery County Taxpayers League

The Voice of Taxpayers of Montgomery County, Maryland

MCGEO

Notes from the meeting of March 22, 2017

Topic: “The FY 2018 Montgomery County Budget and what it means for County Residents”

Speaker:   Jennifer Hughes, Director
Office of Management and Budget, Montgomery County

Wed., March 22, 2017  –  7:00 – 9:00 pm
Council Office Bldg. (3rd Fl. Conf. Rm.), 100 Maryland Ave., Rockville, MD 20850

Free and open to the public

Here are the 9 questions sent to the speaker in advance of the meeting and the answers supplied by the speaker at the meeting:

Q1.  Moody Analytics predicts that reductions outlined so far by the Trump administration would reduce employment in our region by 1.8%, personal income by 3.5% and lower home prices by 1.9%.  These reductions might affect Montgomery County even harder given the presence of several federal agencies and tens of thousands of employees in the county.  The budget has been touted as a “cautious” budget.  Is there room in this budget to handle what could be deep cuts later in the year?

A1. The proposed Federal budget suggests major cuts in Federal programs and employment, which will affect the county significantly. The county is home to many Federal agencies (Nuclear Regulatory Commission, National Institutes of Health, etc.). There are approximately 50,000 federal employees in Montgomery County. The county has not made any serious efforts to analyze the effects of the Federal budget so far and will wait until the federal budget picture becomes clearer.

Q2.  Can you discuss the major sources of revenue for the County, and comment on the percentage contribution of each and their volatility (unpredictability) for the last 5 years?  Are the revenue projections that underlie this budget realistic?  How so?

A2. The major source of revenue is property tax which accounts for $1.8 B (28.7%) of total revenue followed by income tax of $1.6 B ( 25.3%) and Intergovernmental which is State and Federal funds of $1.1 B almost all of which goes to the Montgomery County Public Schools (MCPS). The rest of the revenue pie consists of transfer and recordation taxes, charges for services, fines and miscellaneous and other taxes.

As to revenue projections, so far these projections have been valid.

The county’s bond rating has remained at AAA, the highest possible, allowing the county to borrow at a rate less than 1 percent. Much of the bond revenue goes to finance capital projects such as school buildings and police and fire stations.

The County Executive’s highest priorities are education and public safety. For FY 2018, 49.6% of the budget is for MCPS 12.2% for public safety and 8.4% for debt service.

Q3.   What did the property tax increase of last year actually accomplish?  Could you list the programs towards which this increase was applied and did these programs achieve the ends for which they were intended?  Given that the tax increase raised the base for these programs, how are these funds being spent in the FY 2018 budget or are these funds being used elsewhere?  

A3. Most of the tax increase went to MCPS where the Maintenance of Effort funding has remained static for at least 5 years. The increased funding was able to decrease class size by 1, though the results of reducing class size will take some time to show up.

For FY 2018, the County Executive has recommended that the property tax rate be decreased but because property values are going up, there will be a small increase in property tax revenue.

Q4.   When will we see a sunset of the energy tax which we were promised was temporary with a 2-year life ending in 2012? It is now 2017 and the energy tax lives on.  It is true that the County Council has reduced it somewhat by nibbling at the edges but the promise has not been kept.  What gives?

A4. The energy tax increase, enacted in 2010 brings in over $200 million in revenue. One advantage of this tax is that it is very broad and includes entities that pay very little or no tax such as the Federal Government and non-profit groups. There will be a problem if this tax is reduced or eliminated as it currently funds many programs. While the speaker did not address this, it is clear that a tax, once levied never goes away as this “temporary” tax increase now funds permanent programs.

Q5.  What is the rationale for increasing the MCPS budget above the maintenance of effort level, after the huge increase provided last year?  In the absence of a strategic plan to close the achievement gap, how is the Executive assured that continuing the extra spending will make a difference in academic performance?  How much of the increase for MCPS is directly related to employee salaries and benefits?

A5. About half the county budget goes to MCPS which has grown by 2,000 new students annually over the last several years. Of the entire State student population, Montgomery County accounts for 30% of the increase every year; which is the equivalent of one high school per year. This increase in student population is more than that of any of the other 23 school districts in the State. A question was raised that it appears that 25,000 of our total student population are undocumented. The number was said to be highly suspect as there are only 23,000 students in the system who qualify as English for Speakers of Other languages (ESOL)and this includes those who are here legally.

The MCPS budget is supplemented by over $250 million in additional county funds that are used for police officers in schools, nurses, health aides, debt service for school construction, IT modernization, etc. This funding does not appear in the MCPS budget.

Q6.   Given that 70+% of the county budget funds county salaries and benefits, what is the pay raise this year and how much will this pay raise alone increase pension costs over the next 10 years?  Given the collective bargaining process where the unions are much more successful in bargaining than the Administration and given the tilted playing field of arbitration, is there a likelihood that the County Executive will push to change the arbitration process that failed in the Council last year? 

A6. The pay raise for fire, police and Montgomery County Government staff is 2% for COLA, 3.5% for within-grade increases and 3.5 % for longevity. This was questioned by audience members as excessive compared to the private sector in the county.

As to the collective bargaining process and the need for public participation at least at the stage of “opening offers” and later before the “final” decision, the response was that the public might not find the process too interesting.

Q7.  Would the county consider including civics/citizens groups in the budget formulation process so that ordinary citizens and taxpayers have greater input into how their money is spent?  Also, has the County considered asking for representation in the budget formulation process for MCPS, given that it is close to half of the entire County budget.

A7. The County Executive has been very transparent and has held many meetings open to the public where he has listened to the public’s ideas on the budget. The question was raised as to why there could not be civic representation in the budget formulation process at the agency level before decisions were made by OMB and the County Executive. It was suggested to the speaker that public input could be useful in setting performance measures for the budget year linked to strategies and spending. Most performance measures are “outputs” and not “outcomes”. A discussion ensued as to whether county programs are developed and funded without performance measures established at the outset.

Q8.  The County Executive supported a 4.5% salary increase last year for the WSSC, a $1 billion bi-county enterprise with little oversight and no Inspector General.   In light of a benchmarking study last summer that showed higher than necessary staffing, and weak controls over high fixed cost reliability of service activities, and water rates that are much higher than Fairfax County for residences and businesses, how does the Executive justify a 3.5% spending increase this year.   Why is there not a freeze on spending until new cost controls are implemented?

A8. The WSSC is a bi-county organization which means that both counties have to agree on the budget proposed by the WSSC. If there is no agreement, the budget as proposed by the WSSC goes into effect automatically. Also there is quite a bit of oversight in existence at present by 4 entities – each of the county executives for Montgomery County and Prince George’s County as well as the county councils of both counties.

Q9.   Does every major department in the County Government have a strategic plan in place?  For those that have such plans, why can’t the published budget for the department include a cross-walk of the budget request to the strategic plan so that the public can see how much planned spending is related to strategies, how cost-effective those strategies are, and how much spending is for non-strategic programs and overhead activities?

A9. Will think about it.

“A County’s Self-Inflicted Compensation Crisis”

From Governing.com:

“One reason why even a large tax increase can’t cover the county’s expenses is that over the last six years deals negotiated by County Executive Isiah Leggett raised the wages of police, firefighters and other county employees by between 25.4 and 31.5 percent. Leggett says one reason for the hefty raises was his desire to avoid arbitration; the county has lost 16 of 20 arbitration decisions since 1988.”

Your comments are welcomed.

“Unions kill a smart arbitration proposal in Montgomery County”

From the Washington Post of July 29, 2016:

“OVER THE past six years, wages for Montgomery County’s about 9,000 public employees — police, firefighters, budget analysts, clerks, librarians, bus drivers, jail guards and others — have grown between 25 and 31 percent. That increase, nearly three times the inflation rate over the same period, is much greater than that enjoyed by most public- and private-sector workers, including federal workers. Montgomery taxpayers are on the hook for those raises, mainly through their property taxes, which will spike 9 percent this year.”

The proposal had its genesis in the Organizational Reform Commission report submitted to the County Council in 2011.  MCTL President Fidler was a member of the Commission.

As always we invite your comments.

 

 

 

 

Testimony by Pres. Fidler on Transparency in Labor Negotiations

Testimony Before the County Council on Expedited Bill 24-16, Collective Bargaining – Impasse Procedures – Amendments

by  Joan Fidler, President of the Montgomery County Taxpayers League, July 12, 2016:

President Floreen and members of the Council, I am Joan Fidler, president of the Montgomery County Taxpayers League and I am here to testify in support of Expedited Bill 24-16 on Collective Bargaining – Impasse Procedures.

First, we would like to thank President Floreen for proposing the bill as it reflects a degree of courage that we admire. It begins to restore the balance for the taxpayers of the county.

Bill 24-15 is a new beginning. Let us count the ways:

The bill provides transparency – it requires public disclosure at the outset of bargaining and at evidentiary hearings.

The bill introduces objectivity – it separates the roles of mediator and arbitrator

The bill recognizes the need for a level playing field – it replaces the single arbitrator with a 3-member panel.

There will be opposition to this bill from the labor unions. We believe that labor unions are important and so are employee rights. But taxpayers are important too and they too have rights.

So to the argument that requiring public disclosure would impede efficiency and effectiveness, we would respond that opening proposals are not exactly state secrets to be hidden from the taxpaying public and that evidentiary hearings in all trials are open to the public. Why not here?

To the argument that the transparency provisions of this bill are harmful, we would argue that the only two transparency provisions in this bill are opening positions and evidentiary hearings. Should the taxpayer be barred from those? The bill does not require any open bargaining sessions.

To the argument that using the same individual as mediator and arbitrator streamlines the process, we would argue that separating the two roles is a standard method of mediation used in our court system and in other local collective bargaining laws. Why not here?

To the argument that labor relations professionals will be replaced by retired judges, we would argue that retired judges have vast experience in assessing facts fairly. Why would we reject an experienced judge?

Most important, the current system of interest arbitration has a direct and tremendous impact on the cost of County wages and benefits. In the last 3 years most county employees have had pay raises of 21% with another 4.5% this year. The bulk of property tax increases fund the salaries and benefits of our county employees. It is said that he who pays the piper calls the tune. Could taxpayers see the arbitration sheet music before the score is settled?

We invite you to post your comments.

 

Booing and heckling against transparency in collective bargaining

President Joan Fidler of the Taxpayers League testified on July 12, 2016, before the County Council in support of Bill 24-16, Collective Bargaining – Impasse Procedures – Amendments.  She was booed and heckled by union workers during her statement in the last paragraph of her testimony where she stated “In the last three years most county employees have had pay raises of 21% with another 4.5% this year”.

For those who do not follow the minutiae of pay raise percentages, here is the source on Page 9.

http://montgomerycountymd.granicus.com/MetaViewer.php?view_id=6&clip_id=10488&meta_id=92904

Specifically “…..For merit system County Government employees not at their maximum salary (nearly three-fourths of the total), the compound pay increases negotiated by the Executive and approved by the Council for these three years” (FY 2014 – 2016) “total 20.6 percent for general government employees and still more for public safety employees eligible for make-up service increments.”

In the video of the hearing, President Fidler’s testimony begins at minute 16 and lasts for 4 minutes.

Is the Montgomery County Government a More Lucrative Workplace than the Federal Government?

Are the salaries of some of the employees of the county government too high?  We took the most highly ranked person in 8 different county departments and compared their salaries to their equivalents in the Federal Government.  We found these county employees are handsomely rewarded.  For instance the Librarian of Congress makes $183,300 while the Director of the county’s Department of Public Libraries makes $210,142—a difference of almost $27 thousand..

The complete table is here.

“George Griffin Out as Director of Department of Liquor Control”

From Bethesda Beat of January 29, 2016:

“George Griffin is no longer the director of Montgomery County’s Department of Liquor Control (DLC)….Patrick Lacefield, a spokesman for the county, confirmed Griffin was leaving the department.  “It’s time for a change,” Lacefield said. “There’s going to be a national search to replace him.”

“When asked if Griffin’s departure had to do with the problems at the department that have been detailed during County Council committee meetings and news reports over the past year, Lacefield said, “It is what it is.”

“Montgomery County unions continuing fighting the wrong battle”

 

From the Washington Post of May 8, 2013:  

MONTGOMERY COUNTY’S government unions, which for decades amassed powers unique even in the pro-labor state of Maryland, had their wings clipped when the recession forced local officials to roll back privileges — and blatant abuses — that bilked taxpayers and tied the hands of public agencies. Now, in a fit of petulance, the unions are striking back at their paymasters — elected officeholders — by boycotting and picketing the local Democratic Party’s annual fundraiser this weekend.

Read the full story at the Washington Post.

Police Promise Council “Chaos” If Demands Not Met

Pay up, or else:

“Now, not to comply with the law would be a very dangerous and short-sighted approach by Mr. Leggett because in the years when we have lost we have always honored the arbitrator’s award,” [Walter] Bader [chief negotiator and past president of the Fraternal Order of Police Lodge No. 35], said.

The union could “run to the County Council and turn the process into chaos,” he said.

No special interest left behind:

Gino Renne, president of the United Food and Commercial Workers Local 1994/Municipal and County Government Employees Organization, said he also planned to lobby the County Council to reverse Leggett’s proposals.

“It all goes to council. We’ll fight it out there,” Renne said.

Read the full article at the Gazette »