New Report Warns of Challenges Ahead for Local Economy

Report commissioned by Empower Montgomery focuses on struggle to attract jobs, expand tax base

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The county executive candidates from top left, Roger Berliner, David Blair, Marc Elrich, George Leventhal, Bill Frick and Rose Krasnow

Provided/ file photos

A new study that paints a bleak picture of the county’s business climate will be up for discussion Friday morning during a forum for Democratic candidates in the county executive race.

The seven-page report was written by Sage Policy Group Inc., a consulting firm led by regional economist Anirban Basu. It draws upon federal labor statistics, U.S. Census data, state employment records and even an article in the local politics blog Seventh State as it describes a range of weaknesses in the local economy.

The solutions listed in the report echo many of the county executive candidates’ talking points: The county must land Amazon’s second headquarters, create a business-friendly climate, attract young families with reasonably-priced housing and invest in economic development.

“Beneath a gloss of prosperity lies a host of emerging challenges for Montgomery County. In the final analysis, this is a county that desperately needs to accelerate the growth of its tax base,” the report concludes.

Basu will be delivering a brief presentation at the beginning of the forum, scheduled to run from 8 to 10:30 a.m. at the Universities at Shady Grove in Gaithersburg. The report will be released before the forum, but Bethesda Beat obtained an advance copy.

The report written by Basu’s firm was commissioned by Empower Montgomery, a nonprofit that advocates on transportation, education and economic development. Empower Montgomery is a member of the Montgomery County Business Roundtable, which is organizing the candidate forum.

One of the county executive candidates scheduled to appear at the forum—Potomac businessman David Blair—was previously listed on Empower Montgomery’s website as a co-founder of the group, although the website no longer lists the organization’s founders. Previously, the website also listed Washington Property Co. President Charlie Nulsen, former County Council member Steve Silverman and Donohoe Cos. President Chris Bruch as founders along with Blair.

Silverman said Thursday that Blair was never a co-founder of the group and he isn’t sure why his name was previously listed on the website as one. He said he founded the group along with Bruch, Nulsen and local pollster Keith Haller.

Silverman did say Blair signed a letter the group distributed before the 2016 election that urged voters to vote on ballot initiatives such as term limits that year and he participated in some group meetings.

Silverman said the group’s views include “strong support for transportation infrastructure, additional resources for school construction and broadening the tax base for programs and services that have made Montgomery County a great place to live work and play.”

County executive candidates expected to appear at the forum include County Council members Roger Berliner, George Leventhal and Marc Elrich, state Del. Bill Frick (D-Bethesda) and former Planning Department Deputy Director Rose Krasnow as well as Blair.

The study commissioned by Empower Montgomery finds that employment growth in the county has been sluggish, stating that the county lost jobs between 2006 and 2016, even with the addition of more than 11,600 public sector positions. A lack of new businesses and a dependency on the federal government for jobs and economic support also makes the county’s economic position “precarious,” the report states.

The report includes data from the Bureau of Labor Statistics that was first cited by Seventh State. The data notes only six net new businesses were established in the county between 2011 and 2016.

That figure has been floating around in county political and business circles as an example of the lack of new business growth in the county since the local blog published it at the end of March.

On Thursday, Leventhal asked David Petr, CEO of the county’s Economic Development Corp., whether he thinks that number is accurate during a County Council committee meeting.

Petr responded that with the county’s low unemployment rate—currently at 3.5 percent—and the 33 new business projects it’s tracking, that the six number “doesn’t feel right to me.”

“Honestly, we don’t follow a lot of blogs,” Petr said. However, he did add that economic development staff looked into the assertion and found that about 422 new businesses were created if one subtracts the number of business establishments in the fourth quarter of 2011 from the fourth quarter of 2016, rather than use the annual averages as the blog did.

“That six number, I think, is not accurate,” Petr said. “I think there’s incredible interest in wanting to be [in Montgomery County].”

A table of labor statistics included in the study does show that private sector employment has increased over the past five years. While the number of private-sector jobs has decreased overall from 2006 to 2016, the sector has gained more than 12,900 jobs since 2011.

Without robust business growth, commercial property owners have struggled to fill their buildings, and the office vacancy rate stood at 14 percent at the end of 2017, according to the report. Assessed value for office buildings in the county has increased by 13.1 percent from 2006 to 2016, a slow rate of growth that represents less revenue generated for the county’s tax base, the report states.  

Meanwhile, the county also is experiencing growth in its population of elderly residents and climbing student enrollment in public schools. So far, the county has leaned on borrowing to meet the community’s needs in the absence of sufficient cash flow, the report states.

Montgomery County Empower Montgomery report

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