Montgomery County Taxpayers League

The Voice of Taxpayers of Montgomery County, Maryland

Public Schools

“Montgomery County homeowners face biggest tax hike in seven years”

From the Washington Post of May 19, 2016:

“The Montgomery County Council, citing the unmet needs of a school system facing explosive enrollment growth and a widening academic achievement gap, voted Thursday to raise the average residential property tax bill by 8.7 percent — the largest increase in seven years.

The tax hike required a unanimous 9-0 vote because it exceeds the charter limit on tax revenue the county can collect each year. That revenue will help underwrite a $5.2 billion operating budget for the fiscal year that begins July 1, with about half of the money resulting from the tax increase going to Montgomery County Public Schools.

The council set the property tax rate at $1.02 per $100 of assessed value, 3.9 cents above last year’s rate. With rising assessments, it means that the average annual residential property tax bill will rise $326, to $4,075.”

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“County Council Votes to Cut Pay Increases, Reduce Class Sizes”

From the Bethesda Beat May 16, 2016:

“The council then pledged unanimous support of a $2.45 billion schools operating budget that is nearly $90 million more than the minimum required by state law…Council members made clear the spending approved Monday is dependent on the council’s approval of a 6.4 percent property tax increase and an increase of the county’s tax on home sales,…“We are about to do three things that some of us said we would not do again,” council member Roger Berliner said, referring to the proposed property tax increase above the county’s charter limit and home sales recordation tax increase as well as funding the school system over the minimum required by the state’s maintenance of effort law.”

Message by MCTL President Opposing Tax Increase

MCTL President Joan Fidler sent the following email April 25, 2016, to Nancy Floreen, President of the County Council, asking the Council to vote against any tax increase:

MCTL Member Testifies in Opposition to FY2017 Budget

MCTL member Richard Fidler testified April 7, 2016, before the County Council in opposition to the proposed FY2017 budget: 

Testimony on Proposed FY 2017 Budget for Montgomery County

April 7, 2016 – Richard Fidler

I am Richard Fidler, and although I play second fiddle to the president of the Montgomery County Taxpayers League, I am here as a taxpaying citizen. I come not to praise the proposed tax increase but to bury it.

The proposed budget is more than $5 billion, of which about half goes to Montgomery County Public Schools (MCPS). The state requires all counties to fund the schools at the Maintenance of Effort level—no more, no less. So why are we adding another $83 million beyond the legal requirement?

What disturbs me about MCPS is the lack of accountability.

When the MCPS budget is created look who is at the table for the decisions. It’s the administrators themselves. Also around the table are representatives of the unions and the PTA. More importantly, look who is NOT at this big dance: The County Executive, who has very limited authority over the MCPS budget: He says he has approved about 99% of what they asked for. Also not at the table: You, the County Council, which by law must fund the schools budget and then figure out how to fund the request. Also not at the table: The School Board itself, amazingly—until they receive the budget as a fait accompli from the negotiators. Finally, also who is not at the table is the most important group of all: The taxpayers, who have to actually pay the piper but are not allowed to call the tune..

So what we have on the one side is the budget being formulated by a group of unelected negotiators with a strong vested interest in increasing the budget, and on the other side our elected officials who have to finance a budget they had no say in creating. And we the public peer at this Danse Macabre and wonder who choreographed it.

It is this fantasyland process which causes me to be extremely skeptical when the Superintendent of Schools says they have “cut to the bone”. What proof does the public have that in fact that is true?

But perhaps there is hope. When the Board of Education recently passed the budget it also passed a measure to move the audit function of MCPS to the Board itself. This is a step in the right direction, a recognition that MCPS actions have taxpayer reactions.

I will close by asking you not to give the Montgomery County Public Schools any more than they are legally entitled to until they agree to a complete performance audit. It is then that we will know whether the tens of billions given to the school system has produced the results for which they were intended.

Thank you.

MCTL Vice-President Testifies in Opposition to FY2017 Budget

MCTL Vice-President Gordie Brenne testified April 6, 2016, before the County Council in opposition to the proposed FY2017 budget: 

Testimony on Proposed FY 2017 Budget for Montgomery County

April 6, 2016

In the years leading up to the 2008 economic collapse, bankers, Wall Street, and mortgage originators got too greedy and were subsequently found guilty of fraud after the banks were bailed out.  Where were the regulators when this was happening?  Today, our county government is playing fast and easy with the people’s money, and the Executive has asked for a 9% property tax increase to bailout excessive payroll increases.  You, the Council are the regulators and we’re looking to you to reverse compensation contract mistakes made by MCPS and Executive management which imperil our kid’s education and bloat our payrolls.

MCPS is a snake eating its tail with solutions that fail our kids.  Payroll costs have gone up 37% over the last ten years (OLO Report, 2/23/16), in spite of the recession.  This is largely because annual step increases that will cost $55M next year, drive teachers average salaries over 12% above their peers in Fairfax and Howard counties (WABE FY2016 Guide), and force planned hiring cuts to pay for them.  When we spend more on existing teachers and overhead, there’s less money to hire new teachers.  It’s that simple.

Incredibly, there’s another step increase in this budget request, accounting for over half the increase above Maintenance of Effort (MoE), and overhead takes another 45 cents of every dollar (MCTL Study).  The problem with one-size-fits-all solutions is that more expensive teachers in west county mean fewer new teachers in east county, larger class sizes, more reliance on para-educators to tackle the achievement gap and a widening gap. Ironically, teachers on the front line for closing the gap are paid on average 6% less than teachers in our wealthier west county schools (OLO Report, 9/22/15) .

Board members will tell you that in hindsight, last year’s step increase contributed to growing student teacher ratios, yet they seem powerless to do anything about it (OLO Report 2/23/16, pg 14).  But you’re not powerless.  Ask yourself if your arguments over the last 8 years against spending above the MoE level are still valid; and, if not why not?  Our parents aren’t stupid.  Explain the value proposition to east county parents who make less than teachers and have only 10% of their kids graduate college-ready (4/14 OLO report).  Say no to more across the board pay raises.  If you can’t do that, at least tie any spending increases to a requirement that MCPS sponsor an independent review of its gap-closing plans and costs.

General county government doesn’t look any better.  Over three years (FY14-16), public safety employees have seen a 30% boost in pay, and other county employees have received 20% increases (Farber, 11/13/15 memo to Council).  (After the third round of pay raises last year the Executive was forced to implement unprecedented spending cuts to the FY’16 budget just approved.  Unfortunately, the cuts were to non-recurring expense items, postponing cuts needed to balance the FY’17 budget.  He then promised to cut spending by 2% in the FY’17 budget request, but failed to deliver, even though the Budget Director and Chief Administrative Officer reiterated this approach in the 12/8/15 Council meeting).

Where are the productivity increases to justify labor costs growing faster than inflation?  Our county’s health, transportation, and public safety haven’t seen dramatic improvements to justify big pay raises, while our safety net struggles to keep up with immigrant population growth, and our tax base hasn’t grown significantly.)

Lastly, budget request revenue projections could again prove to be too high (projections assume increases in the rate of personal income growth, 4.5% vs. 3.5% last year, that drives income tax revenues, and property tax revenues are projected to increase 10%- table pg. 3-8).  Recently projected budget shortfalls (December 2015, Dept of Finance, $179M) were largely due to overly rosy revenue projections last June, not the Wynne Case (those shortfalls were already in the June 2015 projection).  This could happen again. Scale back overly generous salary increases that keep bloating our enormous budget base and risk new budget deficits.  Be regulators, not enablers.

MCTL President Testifies in Opposition to FY2017 Budget

MCTL President Joan Fidler testified April 6, 2016, before the County Council in opposition to the proposed FY2017 budget: 

Testimony on Proposed FY 2017 Budget for Montgomery County

April 6, 2016

I am Joan Fidler, president of the Montgomery County Taxpayers League, and I am here to express our dismay and disappointment at the budget proposed by the County Executive for FY 2017.

It is indeed ironic that this budget was submitted to you on the Ides of March to which as taxpayers our reaction is: “et tu Brute”.

Built on a tax increase of 8.7% – an increase that is well over the Charter limit – the budget appeases all those in the County’s public sector who will get pay raises as well as the school system that will get its budget increased by $110 million ($83 million over the maintenance of effort level), which in so doing re-bases per pupil costs in perpetuity. As you are well aware, maintenance of effort is wholly and completely a maintenance of emolument as the effort it maintains is the salary and benefits of the employees of the school system.

Thus you will hear fulsome testimony from those who will benefit greatly from this largesse. They will all push to make the pie bigger. However, we at the Taxpayers League believe that a bigger pie leads to tax obesity. And in that spirit, we ask that you consider these questions while you deliberate over this unsustainable, unsupportable budget::

  1. How much of this proposed 8.7% tax increase is to cover the salaries and benefits of county government and school system employees? Are these compensation increases and generous pension benefits, especially those in the school system, similar to those in the tax-paying private sector of the county? How many in the private sector have pension benefits based on “defined benefits” rather than “defined contributions”? Is it fair to raise taxes to provide perks to county and school employees not provided to those in the tax-paying private sector?
  1. Have you considered what the overpayment of $83 million to the school system will cost taxpayers over our lifetimes and to what extent this re-basing of per pupil costs will mortgage our future?
  1. Is the increase proposed for the school system based on evidence-based results? Is the school system able to identify such evidence? Will you question the effectiveness of MCPS programs and provide or delete funding accordingly?
  1. And finally, we support your proposal to defer increases in property taxes for poor seniors until they sell their homes. It is a pity that you had to do so due to this unusually high tax increase. Kill the tax increase – we will all benefit, both seniors and juniors.

Remember the motto of Montgomery County:- “gardez bien”. Well, here is the taxpayers motto: “miserere nobiscum.”




Taxpayers League Quoted in Bethesda Beat

At our meeting of March 23 a reporter from Bethesda Beat was present. His story started thusly:

The county’s budget chief last week faced probably the toughest crowd possible at the toughest time possible.

Just a week after County Executive Ike Leggett proposed an 8.6 percent property tax increase for next fiscal year, Office of Management and Budget [OMB] Director Jennifer Hughes was the guest at the Wednesday meeting of the Montgomery County Taxpayers League, a small but diligent group of residents known for proposing ways for the county to save money and trim its more than $5 billion annual operating budget.

Read the whole story.

The County Council will hold budget hearings as follows.

Apr 5, 2016 @ 7:00 pm (Sign up to testify by 4/5/16 at 10 am)

Apr 6, 2016 @ 1:30 pm (Sign up to testify by 4/5/16 at  5 pm)

Apr 6, 2016 @ 7:00 pm (Sign up to testify by 4/6/16 at 10 am)

Apr 7, 2016 @ 1:30 pm (Sign up to testify by 4/6/16 at  5 pm)

Apr 7, 2016 @ 7:00 pm (Sign up to testify by 4/7/16 at 10 am)

To testify call (240) 777-7803

County Council budget hearings April 5-7

The County Executive announced his Recommended FY 2017 Operating Budget on March 15.

“My recommended budget assumes a property tax rate of $1.0264 per $100 of assessed value. This rate is 3.94 cents above the current rate. Over the last three years, the net property tax rate increase is 1.6cents. I am recommending a property tax rate which exceeds the Charter Limit…”

The County Council will hold hearings on the FY 2017 Operating Budget for three days in April:

Tuesday,       April 5 at 7 p.m.
Wednesday, April 6 at 1:30 p.m. and 7 p.m.
Thursday,    April 7 at 1:30 p.m. and 7 p.m.

If you are interested in testifying, call 240-777-7803 to sign up to speak. You can also sign up online.

Questions for Meeting of March 23, 2016

Questions sent to the speakers in advance of the MCTL meeting of March 23, 2016

Topic:   “FY 2017 Budget for Montgomery County – Straight Talk”

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

1.  The FY 2017 proposed budget for Montgomery County increases taxes by 8.6%.  What is the projected rate of inflation for FY 2017?  What is the percentage population increase for the county for FY 2017?

2.  In June 2016, projections for income tax revenues were rosy.  Yet the December projections showed combined revenues for FY’16 and ’17 were $135M lower than those June projections and continuing over the next 5 years.  Despite these projected shortfalls, the Finance Department is projecting 4.4% gains in taxpayer wages and salaries this year. So on what projection is this budget based: The projected revenue shortfalls? Or the projected revenue gains?

3.  County Government salaries and benefits account for 80% of the budget.  For Montgomery County Public Schools (MCPS) the percentage is 90%.  How much will each of these entities cost taxpayers in salaries and benefits in FY 2017?  Negotiated collective bargaining agreements provide for pay raises of county government and MCPS employees.  What has been the percentage pay raise increase for each of these entities for each of the last 10 years and what has been the percentage increase for County residents receiving social security benefits over the same time period?   How much of the budget gap is related to negotiated salaries and benefits increases?

4.  Could you list the major cuts to County Government programs in the FY 2017 budget?  By what percentage have you reduced programs from the FY 2016 budget?  Were reduction decisions the result of performance audits?  Does the County conduct such audits?

5.  The proposed budget gives the school system $89.3 million over and above that required by the Maintenance of Effort (MoE) law.  How much of the $89.3 million overage will be used to cover salaries and benefits?  How much will be used to reduce class sizes?  How much will be used to close the achievement gap which has been growing over the last many years?  What are the expectations of the County Executive that this increase of $89.3 million over the MoE limit will provide results?

6.  MCPS ties spending to programs and strategies in its Program Budget.  The county does not have a similar budget presentation.  Only one Department (HHS) has a strategic plan that can be linked to spending where it is possible to identify non-strategic spending and overhead thus helping towards  informed budget decisions.  Can a budget presentation linked to strategies be developed for the FY’18 budget request for all County Government agencies?

Questions for Meeting of September 16, 2015

                    Montgomery County Taxpayers League Meeting
                               Wednesday, September 16, 2015  –  7:00 – 9:00 pm (note time  change)
                                                 3rd Floor Conference Room,  Council Office Building
                    100 Maryland Avenue, Rockville, MD 20850
Questions sent to the speakers in advance of the meeting of September 16, 2015.

Topic:        “Smash the Charter Limit on Property Taxes? Or Decelerate Spending?”

Speakers:  Steve Farber, Council Administrator, Montgomery County Council
                  Joseph Beach, Director of Finance, Montgomery County Government

1.       There is a widely held belief that Montgomery County has been an ardent follower of Parkinson’s Law:  “expenditure rises to meet income”.  Now that the income situation is bleak, what are the approaches being used by the County Executive and the County Council to cut expenditures.  Are there any analyses of programs that have outlived their original intent but continue to linger on?  Are most budget reductions just a nibbling around the edges?  What are some of the criteria used to analyzing existing programs?  How many programs have actually been cut by more than 50%?  How many exist despite those cuts?

2(a).   Personnel costs are growing faster than inflation.  The savings plan proposed by the Executive and the plan adopted by the County Council provide little relief from ever climbing  personnel costs and have focused instead on non-recurring costs like the Capital Improvement Plan projects funded with current revenues, new programs and special project costs.  How should the 2016 budget process and contract negotiations address out of control personnel costs to avoid the need for bigger cuts to services or possible furloughs?

2(b).   Most retiree taxpayers will likely not receive any increase in 2016 retirement annuities due to a negative or flat Consumer Price Index (CPI).  Most working taxpayers will not receive generous salary increases.  The current system of contract negotiations with unions is tilted heavily in favor of the unions as there is no representation by the taxpaying public.  Collective bargaining has an enormous impact on the County’s fiscal situation.  How open is the County Executive and the County Council to making these negotiations more transparent and to including a few taxpayers in the negotiations process?

3.       Income tax revenue increases are driven largely by capital gains, which have been in a slump since the 30% run up in the S&P index in 2013.  Recent stock market indications point to even lower results for 2016, creating a need for further spending cuts or property tax increases above the charter limit.  How much in further spending cuts are needed in FY 2016 to avoid busting the charter limit, assuming Wynne case projections are correct and income tax shortfalls are the same as last year?  Regarding the Wynne decision, where Maryland was found to be double-taxing business owners, does the political leadership find it ironic that this ill-conceived decision to double tax might lead to even greater taxation of all taxpayers to fill the gap?

4.      Taxpayers have suffered from slow economic growth and reductions in their investments and are aging, which reduces their ability to pay higher property taxes.  We have seen our county grow dependent on income tax revenues, bloated by non-recurring capital gains not economic development, to annually increase operating budget and CIP expansion driven debt service costs.  Now that the income tax revenue strategy has collapsed, the County Executive is talking about a 10% property tax increase, and even creating a new Transit Authority that would circumvent the charter limit.  Taxpayers are losing confidence in the budget process and spending controls.  How can the budget process for FY 2016 be changed to cut inefficient and ineffective spending and to make these allocation decisions more transparent?

5.      County taxpayers are providing funding for migrant support services for education, affordable housing, food stamps and medical services.  While these are seen as legitimate needs and the County has stepped up to this responsibility, how much of the county budget goes towards funding these needs?  How much does the County get reimbursed by the Federal Government?  By the State?

Next meeting: TBA