Montgomery County Taxpayers League

The Voice of Taxpayers of Montgomery County, Maryland

Public Schools

Questions for meeting of March 20, 2019

Questions for meeting of March 20, 2019

Presentation:    “How we Plan to Govern in Montgomery County”

Speakers:  Council Member At-Large:

Gabe Albornoz, Member, Health and Human Services Committee, and Public Safety Committee

Will Jawando, Member, Planning, Housing and Economic Development Committee, and Education and Culture Committee

Following our meeting in January with new Council Members Evans and Friedson, here is an opportunity to meet with the other two new members. 

5 Questions sent to the speakers in advance of the meeting:

1. Bang Fraud – The investigation clearly showed the lack of internal controls at the Department for Economic Development.  The county government does not need another embezzlement of these proportions.  However, the County’s external audit contract does not provide for either testing of, or an opinion on, internal controls.  This is true for WSSC and MCPS audit contracts too.  Expanding the County’s external audit to include this opinion and additional testing would increase oversight of Department of Finance control activities.  It might uncover control risks in the numerous grants and contracts the County awards annually.  Would you support expanding the audit contract?

2.  Economic Development –  The Fuller Institute just reported that job growth in Montgomery (and Frederick) counties was significantly slower than DC and Northern Virginia.  In fact, over the last 5 years, DC and Northern Virginia have been creating jobs twice as fast as we have.  How do you measure the performance of the Montgomery County Economic Development Corporation and what are some of the ways in which we can compete with the success of the Fairfax County Economic Development Authority?  While we have some of the same assets as Fairfax County (education levels, highly-qualified personnel, good quality of life, good schools), why are we lagging in attracting businesses to the county?

3. Education and Health and Human Services Programs

The HHS committee controls hundreds of millions in spending to supplement the MCPS budget.  How does the committee coordinate the HHS strategic plan with MCPS planning efforts to close the achievement gap?  More spending has been planned for pre-K education which will serve a fraction of the estimated 30,000 economically disadvantaged pre-K kids.  Will the committee require rigorous academic performance measures to determine if the pre-K program has been successful 3-5 years from now?

The Council routinely approves the MCPS budget without linking spending to plans to close the achievement gap.  How would you change this?

The County Government, WSSC and the Maryland National Capital Parks and Planning Commission each have an Inspector General.  MCPS, the single largest component of the Montgomery County budget does not.  Would you support establishing an MCPS Inspector General?

4. Housing and Economic Development–  The PHED committee revised affordable housing policies a year ago to address the weak inventory which has been stagnant at 16,000 units since 2009.  The inventory is still not increasing as older MPDUs are removed as quickly as new ones are added.  In addition, our locally funded voucher program remains underfunded.   The committee also recommended a new economic development unit which is struggling to compete in our region.  How would you increase the inventory of affordable housing?

5. Public Safety– the 911 emergency response system is run by the County, and unlike the successful program in Fairfax, is slowly transitioning to rely on cell phone data for location response.  The aging system is subject to occasional breakdowns and outages, and accountability for performance is limited.  Would you support making this an independent entity to incentivize performance and reliability?   

Questions for meeting of February 20, 2019

Questions for meeting of February 20, 2019

Presentation:   “County Executive’s Transition Plan”

Speaker:  Andrew Kleine, Chief Administrative Officer, Montgomery County Government

7 Questions sent to Mr. Kleine in advance of the meeting:

1. Thriving Youths –   Will the Executive recommend an MCPS FY 2020 budget based on a review of MCPS strategies to close the achievement gap?  How?  By how much will the $400 million provided by the County to MCPS (in addition to its appropriated budget of $2.6 billion) succeed in closing the achievement gap? Will the infusion of funding for Pre-K programs be accompanied by rigorous student academic performance measures to ensure that strategies are producing results that do not disappear by 3rd grade? 

2.  Growing Economy and Tax Equity – How will transition strategies address the 2018 slump in residential and commercial development and foster balanced growth in the residential and commercial property assessment tax base?  Residential assessment base growth remains low, in part because the State Department of Assessments and Taxation (SDAT) reassessments have not kept pace with improvements to existing single family homes (“McMansions”),and also because policy treats these improvements as subject to Charter Limits.  Consequently, homeowners without improvements are subsidizing the property taxes of those homeowners with improvements who see delayed and in some cases no market-based reassessments by SDAT.  How would the Executive change this and encourage better coordination between the Department of Permitting Services, SDAT, and the Department of Finance?

3. Non-Governmental Grants – If arts organizations are an integral part of the quality of life in Montgomery County, what are some of the results from such organizations that would qualify for funding under “outcome budgeting”?

4. Affordable County – Demand for rental housing has increased significantly in recent years, from 25% to 32% since 2008, but supply has remained limited, driving up rents.  The average cost to build an MPDU (Moderately Priced Dwelling Unit) is now $190,000, placing further pressure on supply.  A consultant studied the county’s affordable housing policies in 2017 for the Council and recommended that funding for the small but promising locally funded voucher program be increased. The Council declined.  How would the transition plan expand access? 

5. Effective, Sustainable Government – One performance measure calls for awarding more work to minority-, female- and disabled-owned and local businesses presumably to improve the cost-effectiveness of County services?  Shouldn’t a performance measure include periodically evaluating every non-core activity to determine if out-sourcing would make the service more cost-effective?  Could the County’s bond rating be improved by subjecting capital spending to rigorous return on investment analysis and ranking?  

6. WSSC-  A billion dollar operation, WSSC has water rates double those of Fairfax Water and spends on projects that have either no rate of return or one that’s lower than the cost of capital. We, as rate payers, subsidize the resulting debt service.  Consequently, we have endured a never ending spiral of above market rate increases (132% since 2003).  But WSSC continues to argue in its proposed budget (1/15/19) that it cannot calculate ROI or rank projects based on their returns.  In a 2/7 hearing about the CIP plan that involved no substantive discussion of major projects, the T&E chair remarked that he would stay in his “swim lane”, and would look to the state delegation’s Metro committee for oversight.  Does the Executive plan to also defer to the state?  Would the Executive support shifting rate-making away from local politicians to the state’s Public Service Commission?

7. Safe Neighborhoods – The Police Dept has 1/3 more officers in its Investigation Division than does Fairfax County, but does not have comparable closure rates.  Unlike Fairfax county, our 911 call system is not run by an independent agency with strong cost controls and has been slow to innovate and add features to locate cell phone callers.  How does the transition plan address performance in these areas?

OPEN TO THE PUBLIC

Notes from the meeting of Jan. 31, 2019 – Good Governance

Meeting of January 31, 2019

Topic: “Approaches to Good Governance in Montgomery County

Speakers: Evan Glass, Council Member At-Large, Member Health & Human Services Comm., Transportation & Environment Comm.

Andrew Friedson, Council Member – Dist. 1, Member Govt. Operations & Fiscal Policy Comm. ; Planning, Housing & Economic Development Committee

Because of the limited time of Council Members Glass and Friedson, they were able to respond to just 4 questions ( see highlighted areas) that had been sent to them in advance of the meeting.

1. There was a lot of discussion about the fraud at the County’s Department of Economic Development (DED). Although the fraud by Peter Bang, DED’s Chief Operating Officer, had been discovered in April 2017, the public never heard about it until November 2018, a year and a half later. A casino operator became suspicious because Bang was using large sums of money for gambling, and the casino then alerted the IRS. When asked why it took so long for the County to hear about this case, the response from the County was that it took the IRS a long time to trace the money trail, which led to South Korea. Both Messrs Glass and Friedson found this curious. There could be more fraud in that area but no one knows yet. (The 161-page report of the County’s Inspector General is available online at  www.montgomerycountymd.gov/OIG/Resources/Files/PDF/IGActivity/FY2019/mcded_mismanagement_final_report_19_nov_2018.pdf)

The County Executive is searching for a new head of Human Resources who may pursue the issue as to the status of county employees during criminal investigations. It should be noted that Mr. Bang was transferred to the payroll of the County’s Department of Finance where he remained until he was terminated in 2018.

We were told by Council Member Friedson that he formerly worked on Comptroller Franchot’s staff and thus also staffed Board of Public Finance issues. He has extensive experience in looking at contracts in general and in no-bid contracts in particular. He was involved in questioning contracts awarded to support the state’s implementation of the Affordable Care Act. Some contracts were let without competition and lacked transparency.

Council Member Glass, as a former CNN journalist who covered issues on Capitol Hill, has extensive investigative experience. As a supporter of transparency, accountability and better governance, he supports an Inspector General for Montgomery County Public Schools, supported both by the Taxpayers League as well as by the Montgomery County Civic Federation.

The Office of Procurement, formerly within the Department of General Services, is now an independent office. It works with the Department of Finance’s accounts payable function to validate payment requests and to match them to existing contracts. The Department of Finance manages grants and tax credits of the Department of Economic Development. The Taxpayers League questioned the oversight exercised by the Department of Finance noting that while they operate critical internal controls, those controls are not independently tested by external auditors and thus these auditors do not render an opinion on internal controls.

2. Council Member Friedson stated that the lack of affordable housing affects the educational achievement gap. Council Member Glass said that more funding should be provided to narrow the achievement gap with the provision of more wrap-around services to the public schools. There is a $28 million carryover in the MCPS budget, which is not subject to the requirements of the Maintenance of Effort (MOE), There has been more collaboration between MCPS and the Montgomery County Education Association (teachers’ union) with the advent of the new union president. The new focus is on a more holistic approach. Everyone including educators, parents and social service providers needs to be involved. 33% of MCPS students are in the FARMS program (Free and Reduced Meals).

Council Member Friedson talked about impact fees on developers . The Taxpayers League noted that impact fee collections have dropped over the last year not only due to tax credits to developers but also due to declining development which appears to be a trend in the county. This has an adverse effect on schools as impact fees fuel tax revenue on which the public schools are dependent.

3. Council Member Friedson opined that the recent decision by Amazon not to choose Montgomery County as its second headquarters was not due to our taxes, as Long Island City in New York is a high tax district too. Businesses are hesitant to relocate to the county because the very high cost of housing makes it too expensive for the average employee. He said that the county’s economic development strategy should focus on our high quality of life to distinguish it from our competitors.

4. All agreed that affordable housing is critical and the need for it is growing. Council Member Glass noted that the percent of those residents who are renters has increased since 2008 from 24% to 32%. Council Member Friedson stated that the Bethesda Master Plan will add another 1,300 housing units and that the county has added over 37,000 affordable housing units in the last 5 years but more is needed. This number is at variance with Taxpayer League data that shows a net balance of 16,000 MPDUs in inventory. The difference may be attributable to the units that have been retired either by sale or conversion.

Popular Annual Fiscal Report – FY18

Montgomery County recently released its Popular Annual Fiscal Report (PAFR) for FY18.  Its 16 pages are full of facts about the county’s fiscal resources and expenditures. Miscellaneous data include–

—  Population: 1.057 million

—  Median Household income:   $103,178

—  Top employer:  U.S. Department of Health and Human Services  (Of the top ten employers, 4 are Federal agencies, 2 are local government, 2 are not-for-profit health services providers and two are publicly listed private businesses)

—  Average Housing Value: $460,100

—  Home ownership: 65.6%

—  Bachelor’s Degree or Higher: 58.3%, (U.S. rate: 32%)

 

 

 

“Is MoCo Becoming a Second-Class County?”

From an article by Adam Pagnucco in BethesdaMagazine.com:

“For years, county leaders have viewed the county’s budgetary, legislative and regulatory policies as separate from economic development. Let’s look at some of what our county has done. We have had nine major tax hikes in 16 fiscal years. We have led the region in passing costly new employment laws while we have been increasing those taxes, the only jurisdiction in the area to do both at the same time. Despite the tax hikes, we have suffered big budget shortfalls and are looking at more. We squeezed county per pupil spending for the public schools for seven straight years in part because our leaders did not like state law on education funding….We have increased county debt by five times the rate of inflation over the last eight years.”

 

Irresponsible budgeting?

Posted  May 23, 2018, on Seventh State:

And next year is already projected to see a $76.8 million shortfall after this year’s shortfall, which was over $100 million.

Suppose you were an elected official reading that information.  What would you do?  Perhaps you might say, “Wow, things are kind of tight.  We need to cut back a little because if there is a downturn, we are going to have a problem.”

That’s not what happened.  Instead, the council tapped a total of $77.7 million in one-time fund transfers to finance ongoing spending both this year and next year.

The County Council continues to increase the budget in the face of falling revenues.  How long will this behavior go on?.

 

 

 

Testimony before the County Council on the Proposed FY 2019 Budget

Testimony before the County Council on the Proposed FY 2019 Budget

April 11, 2018

Thank you for the opportunity to testify on the proposed FY 2019 budget. I am Joan Fidler, president of the Montgomery County Taxpayers League.

I’d like to note that this is very definitely a $5.56 billion election year budget – no property tax increases and a decrease in the property tax rate. And kudos to the County Executive for increasing the county’s reserve fund to $492 million.

And now a cautionary note: income taxes continue to be volatile. We ask that despite pleas from many for “more money, more money, more money” that the only exceptions be for the most vulnerable in the county – the working poor, the homeless, veterans and the developmentally disabled.

Next, we believe it is extremely short-sighted and somewhat reckless to reduce the county’s contribution to the employee retirement fund by $21 million – let us not mortgage our future.

Regarding our public schools where funding has been proposed at $19 million over the mandated what we call the Maintenance of Emolument level, we ask that you require the school system to provide you with the specific goals that they plan to achieve along with performance measures and timelines. If they are unable to do so, then taxpayers are funding a budget of $2.59 billion with results of which we are unaware. The school system does have a strategic plan that I would describe as more poetry than prose.

And here are two ideas: (1) that MCPS establish at least one charter school, perhaps in easy county, focused entirely on innovation – perhaps one that attempts new ways to narrow the achievement gap, and (2) that MCPS establish an Inspector General position reporting directly to the Board of Education – MCPS is too large a system to be run by bureaucrats with no “lean, mean junkyard dog” overseeing its operations, and more important, its performance. The Board alone cannot do it.

And now to job creation. Our increase in job growth has been, let me understate this, abysmal. According to BLS, the growth of establishments in Montgomery County between 2011 and 2016 was SIX! We were dead last in the Washington region. Is the Montgomery County Economic Development Corporation really succeeding?

I end on a somewhat nostalgic note as this is the last time I will be testifying on the budget before this particular County Council. Four of you will not have to sit through such hearings again. And so we at the Taxpayers League wish council members Berliner, Elrich, Floreen and Leventhal the very best as you move on to other pursuits.

Thank you.

Questions prospective voters could ask candidates for county and state office.

Many voters have asked us to come up with thoughtful questions that they could ask of candidates for local and state offices.  Too often we hear the same promises of greater support for schools, better transportation and lower taxes.  But very little is said about how a candidate intends to achieve these goals.  Our questions below are designed for voters to ask candidates directly so they can get a specific answer as to how the candidates intend to fulfill their promises.

 

County Level:

1.  Now that debt service accounts for 10% percent of the county budget and is for all intents and purposes at its ceiling, how would you address school construction needs?

2.  The Department of Liquor Control is run by the county government and handles the purchase, warehousing and sale of liquor bringing in $28 million in revenue in a $5.5 billion county budget.  Do you believe that the county government should employ 442 county staff and cover their salaries and benefits or does this function belong in the private sector?

3.  The County Executive’s budget proposal for FY 2019 gives the school system $2.59 billion of which $19 million is over and above the mandated Maintenance of Effort level.

–  Do you believe that the school system, while it describes how it will spend the increase, should also show how the increase will produce results?  How would we know that such results have been achieved?

  • 45% of the MCPS budget is overhead (non-instruction), Should MCPS cut overhead costs before it gets an increase in county funding? By how much?
  • Public school budgets are created by non-elected public employees without formal input from the taxpaying public.  What would you do to make the taxpayers feel more confident that the schools are spending their tax dollars wisely? Is it time for an Inspector General for MCPS that would look not only at waste, fraud and abuse but also at program performance?

4.  According to Maryland’s State Department of Assessments and Taxation, there were just 19 new filing for new businesses in Montgomery County in FY16. In the year before there were 57 new business filings in the county. What specifically would you do, at the county level, to encourage business growth in Montgomery County?

5. In addition to reduced income tax forecasts, recordation/transfer and energy taxes are forecast to be lower than expected over the next 5 years.  What are some of the programs or services where you would reduce spending to balance the budget?

6.  County employees will get a 2% cost-of-living increase along with a 3.5% “step” increase in FY 2019.  Do you believe this comports with wages in the private sector in Montgomery County?

7. It has been said that collective bargaining gives unions an unfair advantage in arbitration, leading to pay raises way above market and the highest paid employees in the region.  Would you support changing the arbitration rules? Also would you support more transparency in collective bargaining negotiations so that the public is aware of the “going in” positions of labor and management and is allowed to express their opinions at a public hearing before the agreement is finalized?

8. County income taxes have varied significantly from forecast for the last 2 years.  Property taxes are less volatile, but stagnant, and subject to Charter limits.  Would you support increasing property taxes on home improvements by treating them as “new construction” and thus gaining more for the county in property taxes – without Charter limit restrictions? In other words, do you support the inequity of property owners of unimproved properties supporting those who have made major improvements to theirs?

9.  WSSC, the largest monopoly in the state of Maryland, has prepared a six-year fiscal plan that requires 6% rate increases to maintain the debt service it has accrued to meet its net revenues.  WSSC also has ad valorem taxing authority to raise county property taxes. What oversight would you propose to make WSSC an efficient and effective monopoly to avoid these annual rate increases or even an increase in property taxes? 

10. What specific experience do you bring to the office to which you wish to be elected which demonstrates your development or implementation of a program in the public sector.

State Level

1.  The Maryland State Retirement and Pension System has $20 billion in unfunded liabilities.  The last time the State fully funded the system was in 2000.  Further, the State pays $500 million a year to financial management firms to manage pension investments at no higher a return than low-cost index funds.  Should we continue to pay out $500 million a year to these firms?

2.  For every $1 that Montgomery County taxpayers send to Annapolis, we get 20 cents in return in direct aid.  Howard County, a wealthier county than ours gets 24 cents on every dollar.  How would you get us, at least, to Howard County levels?

3.  Our delegates to Annapolis inform us, every year, that they have passed a “balanced” budget.  True, in one sense.  However it excludes long-term liabilities which in pensions alone exceed 10s of billions.  How would you provide transparency in budgeting?

4. According to the State Department of Assessments and Taxation there were just nineteen new business filings in Montgomery County in FY16.  In the year before, there were 57 new business filings in the county.  What specifically would you do, at the state level, to encourage more business growth in the county?

5. Would you support Maryland Public Service Commission oversight of the WSSC, the largest monopoly in Maryland? Would you support privatizing the WSSC?

6. Do you favor the modernization of the state’s laws governing breweries? Breweries—most of which are small businesses—are limited to 2,000 barrels of beer they can sell to visitors in their tasting rooms. They can sell an additional 1000 barrels but only by adhering to a “buy back” provision requiring that they sell the extra beer to a distributor and then buy back their very own beer. This puts our breweries at a competitive disadvantage regarding surrounding states and hinders job growth and the concomitant increased tax revenue.

Next Meeting: Monday, April 9, 2018 – 7:30 – 9:30 pm

 Montgomery County Taxpayers League

 in partnership with

 Montgomery County Civic Federation

 

Monday, April 9, 2018  –  7:30 – 9:30 pm

Lobby Level Auditorium, Executive Office Building

101 Monroe Street, Rockville, MD 20850
PLEASE NOTE NEW TIME AND VENUE

Free and open to the public

                                                                       

Topic:   “ The Taxpayers’ Take on the FY 2019 Montgomery County Budget”
 
Speaker:  Alexandre Espinosa, Director, Department of Finance,  Montgomery County Government
 
The meeting will start with a presentation of the taxpayers’ view of the budget followed by a Q and A session with the Director, Department of Finance, Montgomery County.  Please bring your questions to the meeting. 

 

County Debt Is Serious Problem

From The Seventh State of February 21, 2018:bethesdamagazine.com:

“Over the last eight years, the county’s debt has been growing by more than 5 times the rate of inflation….Relative to the size of the population, the debt has been rising too.  When we compared the county’s total debt levels to population estimates from the U.S. Bureau of Economic Analysis, we found that total debt per capita has grown from $1,370 in 1997 to $3,768 in 2017….As for debt service, it has risen from $140 million in FY97 to $408 million in FY18.  If debt service was a county agency, it would be the largest agency in county government other than MCPS.”