Staring down a projected $135 million budget gap in fiscal 2014, Montgomery County Council members said they do not yet know how they will fill it.
“I think we have a problem folks, so let’s not keep sugar coating it,” Councilwoman Nancy Floreen said. “The question is ‘What are we going to do about it?’ We don't know.”
A packed house of civic leaders, residents and employees came to listen Nov. 29 to the council and its staff members’ budget briefing and offer comments of their own.
As in years past, the picture painted Thursday was not pretty.
Not only will a new Maryland law lock education spending going forward, but revenue wells are not expected to replenish, expenses are likely to grow and the looming fiscal cliff could directly hit the county’s taxable base.
Floreen (D-At large) of Garrett Park noted that the federal government’s budget problems could decrease jobs and increase building vacancies in the county, therefore reducing taxpayer wealth and taxable base. About 46,000 federal jobs and 19 federal agencies are based in Montgomery. Of the county’s 971,771 residents, about 72,000 work federal jobs.
County revenue is only projected to grow slightly in 2014, not enough to cover growing expenses in debt service, retiree health insurance and education enrollment. As a result, county government and park and planning were, as of Nov. 29, projected to lose 5.2 percent or $71 million in fiscal 2014.
Council Staff Director Stephen Farber said updated revenue and expenditure estimates due out Dec. 11 will show the county facing a budget gap of about $135 million, almost the exact same gap it faced going into fiscal 2013.
The county closed about $100 million of the fiscal 2013 gap by extending the bulk of its energy tax increase, originally planned to sunset at the end of fiscal 2012.
The council’s then-Vice President Nancy Navarro (D-Dist. 4) of Silver Spring said the forum was not intended for blaming the school system or teachers. MCPS and the Board of Education were criticized for making the county’s fiscal problem worse.
State lawmakers stiffened an education funding law this year by allowing the state to divert county income tax revenue directly to education if the county tried to reduce per-pupil school spending. So-called maintenence of effort funding can only reduce if enrollment drops or if the county receives a waiver from the state Board of Education. Enrollment is projected to increase.
Council members reiterated that while they pass half of county revenue directly to education each year, they have no control over how that money is spent.
Montgomery County’s Board of Education decided to give most school employees not one but two raises in the current fiscal year. Most of the second raise will be paid for in 2014.
Given the county’s situation, some at the forum called the double pay raises irresponsible, while others said it created disparity with county employees who only received a one-time $2,000 bonus.
Superintendent Joshua Starr said Monday he kept MCPS’ 2013 budget, including the pay raises, within maintenence of effort.
Because the county was not able to offer county employees the same pay increases does not mean the school system should not have given what it did to school employees, he said.
“I don’t think it’s a good and sound organizational decision to say this works for us, but because someone else is not able to do it, we won’t do it,” Starr said. “I very much take the long view, and I, again, am very, very appreciative and understanding of the difficulty of county council members’ decisions. But you can’t cut your way into the future. Our kids are too important.”
In fiscal years 2009 through 2012, only education funding grew, thanks to increased state aid and tuition at Montgomery College, whereas funding for all other county agencies fell, according to county data.
While some funding was restored for police, fire, county government and transit in the current fiscal year, Farber noted, “Key county agencies are still badly in the red.”
An October report by the Office of Legislative Oversight found county agencies will bear the risk in tough fiscal times, especially if the county meets or exceeds maintenence of effort.