Montgomery County Taxpayers League

The Voice of Taxpayers of Montgomery County, Maryland

Social services

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

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

“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.”


County’s Dark Economic Prospects

According to new report from the County Council’s Office of Legislative Oversight (OLO) the county faces a difficult fiscal path ahead.  Basically, income will not be enough to cover expenses.  About 88% of the county’s programs are financed by income taxes and property taxes.  Income taxes can’t be raised because the rates are at the maximum level allowed by State law.  Property taxes can be raised above the tax-cap only with the approval of all nine Council members.

“Across the four County-funded agencies, employee compensation costs (consisting of salaries and wages as well as benefits) comprise 80% of all agency operating expenditures.

“The approved Fiscal Plan projects annual average revenue growth of 2.7% through FY24. This revenue growth will be insufficient to cover projected compensation costs if wages, social security, and group insurance grow at the same rates and retirement costs are held constant.

“A budget trade-off exists costs increases for existing positions compete for finite resources against the cost of adding new positions.”


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?.




County Debt Is Serious Problem

From The Seventh State of February 21,

“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.” 


Questions for the meeting of June 14, 2017

Questions for the meeting of June 14, 2017

Topic:   Affordable Housing in Montgomery County: Vouchers or New Construction?

Speaker:  Clarence Snuggs, Director, Department of Housing and Community Affairs, Montgomery County

June 14, 2017  — Free and open to the public — 7-9 pm. —  Council Office Building

The following questions have been sent to Mr. Snuggs in advance of the meeting:

1. Could you provide us with definitions of the various categories within which you operate?

    • MPDU versus affordable housing versus low-income versus median income housing
    • – what are the income cut-offs and are they pegged to inflation?
    • – what are the other qualification requirements for each category?

2. The Department of Housing and Community Affairs (HCA) has 96 employees and a budget of $52M with an infusion of funds from HUD.  One strategy deployed is affordable housing through payments in lieu of taxes (PILOT).  Another strategy is requiring 12.5-15% of multifamily housing to be moderately priced also known as “mandatory inclusionary zoning”.  How are these strategies working?  What was HCA’s primary performance goal for FY 2017.  Did you accomplish the goal?  Have you revised your plans for FY 2018 and is this reflected in the FY 2018 budget?

3. County Executive Leggett announced a new program to help qualified applicants purchase a home with the support of the Montgomery Homeownership Program. The down payment assistance program is available for buyers with qualified incomes to purchase a Montgomery County home as their primary residence, up to a $429,000 sale price (up to $525,000, in certain neighborhoods.)  Applicants who qualify and are approved may access Down Payment Assistance loans in amounts up to $40,000 – or up to 40 percent of the household income of the prospective homeowner – whichever is less.  Approved buyers also will receive a below-market rate. Montgomery County has committed $1 million to this program.  What are your measures of success for this program and how will you handle defaults on the loans?

4. The Housing Opportunities Commission, is a different organization within the county which also deals with affordable housing, but with a much smaller budget ($6M).  Is there overlap or do each of the two organizations have separate and  distinct missions?

5. How does HCA handle reports of unlicensed rental homes?  Does HCA check to ensure that rental homes and condos using vouchers are licensed?  How does HCA determine that rental income is being declared on state and federal tax forms? How much tax revenue do you estimate we lose from unlicensed rental units? 

6. Given that most mid- and low-income homeowners/renters use the strategy “drive until you qualify”, has the county considered underutilized commercial land or vacant office parks as an avenue to increasing affordable housing?  And as transportation is a major cost concern for low- and some middle-income buyers/renters, would this mitigate the problem?

7. We understand that there are about a thousand homeless people in Montgomery County.  Several studies have shown that providing permanent housing is the solution to improving health and well being for people without homes.  What is the county doing to enable homeless individuals and families to find permanent housing?

Next Meeting: TBA