Montgomery County Executive Ike Leggett sat down with Bethesda Beat Monday, mostly to make his case for why the county shouldn’t give up its control of alcohol distribution and retail liquor sales.
But Leggett, now approaching the second year of his third term as county executive, also went into detail about the political challenges of seeking a property tax increase he has long warned could be coming next year.
He also talked about his top priorities for the remaining three years of his term and what he told Gov. Larry Hogan to convince the Republican to approve the Purple Line light-rail project.
Parts of this discussion have been edited for length and clarity.
Bethesda Beat: Have you been making your case to the state delegation about liquor control? I assume you don’t want this question to get to a referendum.
Leggett: We are getting information out on it. The challenge is that we were not given a heads up on this because we were working under the assumption of fixing the challenges people have related to the existing system, which we think was appropriate. That is special orders, those kinds of things. So we didn’t know that there was a move afoot to say, ‘OK, we’re just going to go to privatization.’
Bethesda Beat: Were you surprised when the referendum bill came forth?
Leggett: I knew that there had been, in the past, discussions about that and we had had discussions with people about it and we said, ‘OK, if we can find a way in which to transition this that does not allow the county to lose this kind of money, maybe we can sit down and talk about it.’ We had never had that conversation before. Now people will tell you, ‘Well, it’s not direct privatization,’ but by operational law, it basically would turn out to be that way. Because the practical effect would be that that’s what would happen.
So that information is not out there. And as I said before, you put it on a ballot and you’ve got a big powerful liquor industry that will throw tons of money at it. And when you first hear it, it makes sense. ‘Oh, let’s just get out.’ And people assume that, ‘Oh, we’ll make more money by sales [tax] and increased competitiveness.’
No you won’t, because that money goes to the state, that’s sales tax.
Bethesda Beat: Switching topics now, you’ve talked a lot over the past year about the possibility of raising county property taxes. Where does that stand?
Leggett: It’s still a possibility. I was saying that if you maintain the level of current services and you include all of the things that are projected to go into the budget that we’ve either enacted or in the normal increases of the cycle, there’s no way for you to balance the budget without one of two things: substantial cuts in the existing budget, because we’re now looking at almost a $200 million gap now, or additional revenue.
Bethesda Beat: Mostly because of the Wynne case?
Leggett: It’s the Wynne case, plus the change in the revenue estimates that we got form the comptroller two weeks ago.
Bethesda Beat: If the state’s revenues are up, why are county’s revenues down?
Leggett: That’s what we’re trying to figure out. It doesn’t follow the normal, logical consequences of what happens. Normally when you see increases in employment and the growth overall you should see a corresponding growth commensurate with the numbers we’ve projected.
And we don’t understand and we’re looking into it now. Why are these numbers at odds?
Bethesda Beat: Must a property tax increase rise above the Charter limit?
Leggett: In order to do any real increase it would have to be. Our budget assumptions that you've seen just assume the charter limit.
The question is, then how far do you go above that? This is why we pushed for savings back in July, we're pushing for additional savings within our budget today, trying to save as much as we can to build the reserves up so that we can respond to that potentiality. But I'm simply saying, based on the numbers today, there's no way for you to get there without either substantially reducing the budget, providing additional revenues or some combination thereof.
Bethesda Beat: You brought up the possibility of a property tax increase early this year, even mentioning it could be in play for the current budget…
Leggett: Someone asked me why I brought it up so early. Because Stevie Wonder could've seen this. This is not something that's a mystery here. I don't believe in not having a debate and a discussion about it. I wanted to be up front and honest with people.
I wanted to have the debate and discussion about it so that people understand it. Because you can't do that between the short time that you have between once you submit the budget and once you vote on it. There's not enough time to fully evaluate that. We've had the discussion now for the last six or seven months or so ongoing. In the past we had different options that we had not exercised.
For example, years ago I reduced the county's workforce by 10 percent. We reduced health, retirement contributions, we furloughed. We did all those kinds of things so you literally reduced a lot of the options that are now not on the table. Once you do them year after year after year, your options become fewer.
Bethesda Beat: How far have you gotten into the politics of getting all nine County Council members to support a potential tax increase?
Leggett: Any one person becomes a veto and that becomes a very difficult proposition. So when I'm telling you, 'I want you to vote for this.' What is the kind of normal political reaction you’re going to get?
Bethesda Beat: I might think about how it would look at election time in 2018.
Leggett: That may be a question. But something else that's more fundamental: ‘If I do this, would you put something in the budget that I need in my district or for my constituents?’ Now imagine doing that nine times.
Each person becomes a veto-proof person. You’ve got to do that potentially nine times, so that’s the difficulty with that.
Bethesda Beat: Just to be clear, you’re talking about this potential property tax increase just to plug a budget gap, not to add more spending?
Leggett: Yes, just to deal with the budget shortfall as is, you’re talking $179 million-plus, and to do that you could have to reduce substantially, and reductions become harder when you’ve had these other reductions over a long period of time.
Keep in mind, over the last two years we have not increased the taxes above the Charter limit. Two years ago, there was about a $15 or $16 reduction. Last year, we had a $16 increase. So if you look at the last two years, it’s basically zero, whereas other jurisdictions have had substantial tax increases. We have not had that on the property tax.
Bethesda Beat: You seem to have a cordial relationship with the governor, at least compared to other local officials who have been a lot more outspoken about him. Is that true?
Leggett: Well, first of all: He’s the governor. I’m the county executive. That’s number one.
And secondly, my interest is not about me personally, it is about what we can do for Montgomery County. I have a legal and fiduciary responsibility to try to do as much as I possibly can, and I am a person who tries to some degree to find positive ways to get things done.
I believe that we can find some common ways constructively to get there. It doesn’t mean we agree philosophically on things. But I’m not going to sell short the residents of Montgomery County because of philosophical differences. So I’m willing to work with him. I’m willing to give him the benefit of the doubt and we’ll continue that progress.
So I will look to him. We’ve worked together on a number of important projects, the Purple Line of course. It was meetings that we had with him. It was my ability to come forward with resources that were necessary in order to make sure the project stayed in place.
Bethesda Beat: Was there a moment in those discussions on the Purple Line when you thought you convinced the governor to go forward with it?
Leggett: I wasn’t sure he was convinced. The approach that I took was to be honest about how I felt.
[Prince George’s County Executive] Rushern [Baker] and I agreed that I would do the bulk of the talking. I took the approach to the governor, I said, ‘Listen, this is a highly important project and some have made this project to be the most significant thing that you would ever do in your life.’
I said, ‘That’s not true.’ And I said, ‘If you decided that you didn’t want to do this project that the county and state would go to hell in a handbasket, that’s not true. And other people have argued that if you make a decision to do this that it would be the worst decision that you would ever make and that you would lose the governorship and you’d be in ruination, or whatever. None of those things are true either.’
I said, ‘I see this as an acceptable project to do. It’s not the most important thing, but it is important. And you hear all of these arguments from each side about it. But step back and look at is as an executive.’
It’s like watching the Olympics. The swimmer dives off the board and the Russian judge gives the Russian diver a 10. Someone else gives him a 1, a 2. They throw out the high score and the low score and they average everything in between. And that’s what you need to do with this project, just average the things in between.
It’s not going to produce 40,000 jobs immediately. It’s not going to generate all of the economic development things that have been stated, you’ll get a portion of that. So I went down all of those things and I discounted all the things from a positive point of view that people said would happen and then looked at the bottom end of things people said would happen.
So he said, ‘You know, I found this approach very unusual. But I think it’s been very effective. Because you’re talking to me as an executive. You’re taking out all the BS about the thing and you’ve looked at it very rationally and reasonably. I’ve got a basis on which to make a decision.’
I wasn’t sure, but based on the comments he made they were very favorable. Couple of weeks later, he decided he was going to go forward. But I don’t go for all of this hyperbole. That’s not real. And I said that we’re not going to have these extremes. It’s the Russian score and the score from wherever. You throw out the high and throw out the low and look at what’s in between.
Bethesda Beat: What’s the number one priority for the rest of your term?
Leggett: I want to make sure, number one, that we maintain financial sustainability. That’s the foundation for almost any and everything that we do going forward. There are lots of wonderful ideas that are out there about what you can do, but if you’re not financially stable and sustainable, it reduces your options.
I don’t care how efficient you are, how well you manage. At the end of the day, it’s still going to take some level of resources and unless you have that flexibility, you can’t get there.
The other thing I want to see is that we expand and embrace much more broadly the economic underpinnings of the county in the sense that economic growth and development is sound from an investment point of view. This is why I pushed hard for putting that independent economic development corporation together, workforce development and to help move us away to some degree from the federal government so that we’re in a much better position going forward and less reliant on all the government shutdowns and sequestration and all that.
Thirdly, would be to have a viable plan that enhances transportation across the board, from all of the things in mass transit to making certain that Metro is in a better position and making substantial improvements to our roads.
I want to make sure that we continue the momentum that we started. We’ve made significant progress I think in construction of affordable housing throughout the county. We’ve made a huge amount of investments and we were successful because we had some resources and we took a flexible approach toward that.
And then, of course, there is an unacceptable level of poverty in the county. We have to reduce that. Dealing with some of the societal needs in the county and, of course, the school system. We need to continue to make sure that we can adequately fund it to deal with the shortages of classrooms and to close the achievement gap.
That’s an awful lot, but as I said before, you put a big circle around all of those things and the hole of the doughnut, the hole in the middle of the circle goes back to the first thing I just described: The financial stability of the county.
And that’s why to me, having a Triple-A bond-rated county, maintaining your reserves, balancing the budget gives you at least the opportunity to start fully addressing all of those concerns.
