County Executive Marc Elrich’s first recommended operating budget is in and it’s time to evaluate the winners and losers. In doing so, consider the table below, which shows the increases for major departments and agencies of county government.
County employee unions
The three county employee unions – MCGEO, the firefighters and the police – are the biggest winners of this year’s budget. Despite proposing $46.5 million in mid-year budget cuts just two months ago, Elrich found enough money to give the three unions combined raises ranging from 5.9 to 9.4 percent. However, because of tight budgets at Montgomery College and public schools – see more below – the unions representing those employees may not fare as well.
Elrich was extremely generous with the Department of Housing and Community Affairs, giving it a 13.6 percent increase – the largest of any major department. County programs for multi-family housing, rental assistance, code enforcement and tenant information all received boosts. Folks who have criticized Elrich over the issue of housing should give him credit for recommending a significant increase in the context of a tight budget.
Council Member Gabe Albornoz, who served for 12 years as the county’s Director of Recreation, can attest to this fact: the recreation department was absolutely ravaged by the Great Recession. Elrich gave recreation a 12.4 percent increase in his first year, the second biggest increase of any large department. Time to go to the rec centers to celebrate!
Tax hike opponents
Council Member Craig Rice
Rice, who chairs the county council’s Education and Culture Committee, lost no time in firing away at the executive’s budget, putting out a press release saying it “puts education last” just hours after the budget was announced.
Rice got plenty of attention from Bethesda Beat and Montgomery Community Media too. Meanwhile, the rest of the council was mostly quiet. Put aside for the moment the merit of Rice’s allegation; that is examined below. Rice is term limited and has to be examining his options for 2022. Whatever he decides to do, it’s smart for Rice to position himself as the council’s principal defender of MCPS and Montgomery College. Let’s see how that plays with his colleagues.
The college was the only major agency or department that actually received a cut, although it was a small one at 1.8 percent. The reason was not the county’s contribution, which rose slightly, or state aid, which also increased. The twin causes of the college’s cut are declines in tuition and student fees (down 1.8 percent) and grant revenue (down 9.2 percent). Elrich is not responsible for either of these events.
The most worrisome trend for the college is its declining enrollment, which has fallen from 27,453 in 2012 to 21,720 in 2018 – a calamitous 21 percent drop in six years. Additionally, the fact that the college’s president just came off a six-month sabbatical and cut a video about it is not a good look. The college and its defenders need to concentrate on reversing its enrollment decline or its financial problems will continue.
Montgomery County Public Schools
MCPS was a winner in Elrich’s recommended capital budget changes as he wiped out most county road construction to preserve the school construction budget. But the schools were a loser in the operating budget. State aid and other non-local money for MCPS rose by 4.1 percent.
But county funding – which unlike state aid is subject to county control – rose by 0.9 percent. County funding per pupil went up by just $14 a student, so considering that the county spends more than $10,400 a student in local dollars, the per pupil increase is bound to be less than the rate of inflation. That’s notable for an executive who made a really big deal about “excellent schools” during last year’s campaign. It’s also ironic considering that Elrich recently called on the state to contribute more funding to schools at the teachers union’s march on Annapolis.
The Montgomery County Education Association’s endorsement was one of the biggest reasons why Elrich won the Democratic primary. Here’s a fact for the teachers to contemplate. The fiscal 2020 cost of the labor contracts for the three county employee unions, which had combined raises of 5.9 to 9.4 percent, is $29 million. The executive’s recommended budget for MCPS is $14.5 million less than the budget requested by the Board of Education. If Elrich had given the county unions raises of 3 to 4.7 percent, he could have afforded to fund the school system’s entire request.
Wall Street bond traders
For years, the county’s debt service was one of the fastest growing expenditures of government. But former County Executive Ike Leggett’s administration began to bend that curve by stopping growth in general obligation bond issues. Elrich has continued that policy, even at the cost of a tight capital budget. For the first time since Moses descended from Mount Sinai, debt service is now growing at a slightly slower rate than the overall budget. Wall Street will just have to make its money elsewhere.
County government retirees
Elrich funded his budget by diverting $90 million from the county’s retiree health benefits fund, which is only 24 percent funded. This comes a year after the county council used $62 million from this fund to close a mid-year budget gap. Grabbing retiree health benefits money is something that is normally done during recessions, but it is starting to become a pattern for funding ongoing operations. Retired county employees have a right to be worried.
The Department of Transportation’s resurfacing program is one of several items in the operating and capital budgets intended to keep county roads in top condition. Elrich level-funded it at $2,614,410. What’s really eye-opening about county road maintenance funding is what the transportation department believes will happen to county roads as a result.
In fiscal 2018, 52 percent of primary and arterial road quality was rated as good or better. By FY21, that percentage is projected to drop to 30. In fiscal 2018, 50 percent of rural and residential road quality was rated as good or better. By fiscal 2021, that percentage is projected to drop to 35. And according to the transportation department, the county is funding less than half of what is required to maintain residential road quality. See the budget extract below.
Make no mistake: if politicians aren’t filling the potholes, it doesn’t matter what else they do – they will have problems.
Elrich’s budget is not the final word since the County Council makes all ultimate spending decisions. The council, especially its four new members, has to be champing at the bit to make changes and especially additions. Good luck to them!
Adam Pagnucco is a writer, researcher and consultant who is a former chief of staff at the County Council. He has worked in the labor movement and has had clients in labor, business and politics.