Montgomery County Executive Marc Elrich is working on measures to save the county money this year, as the coronavirus continues to spread and hurt the economy.
Next year, the outlook on the budget is grim, Elrich wrote in a letter to the County Council on Monday, suggesting that it might not be possible to keep services at the same level.
He suggested that he might have to reconsider his plan for next year, but he did not specifically mention whether he might pull back on tax increases he has proposed.
County Council leaders said they are looking at the possibility of an economic crisis.
On March 16, Elrich released his proposed budget for FY21 with a tax increase.
Eight members of the council, excluding Council Vice President Tom Hucker, released a joint statement that denounced a property tax increase proposed in the budget.
The majority of the tax hike was a recommended 3.1-cent supplemental property tax to be used exclusively for public schools. Overall, the property tax rate would go up about 5 cents per $100 of assessed value.
The current rate is roughly 98 cents. The new rate is proposed at $1.03.
In his letter to the council, Elrich did not address the proposed supplemental property, the main target of the council’s criticism when he unveiled his budget plan.
When asked by Bethesda Beat on Friday whether he’d considering removing the tax increase from the proposed budget in light of the council’s objection and the faltering economy, Elrich didn’t give a direct answer and said schools remain a priority for the county.
In his letter to the council, Elrich said he instituted a hiring and procurement freeze for all programs not related to coronavirus response. The policy will be reviewed in four weeks.
“While there is so much still unknown about the crisis, it is clear we are facing a fiscal emergency unlike any we have faced before,” he wrote.
Elrich said he began restricting the use of overtime to necessary emergency response departments.
In addition, he directed the finance department to develop an initial estimate of the crisis’ impact on county revenues. Part of the income tax revenues expected for this fiscal year might be pushed into the next fiscal year because of the federal tax filing deadline being moved to July 15.
Elrich directed the budget and management staff to work with county departments and the council staff to revise the current fiscal year’s budget and the proposal for next year. The review will include the FY21-FY26 Capital Improvement Program.
Council Member Nancy Navarro suggested at Tuesday’s council meeting a budget that continues services at the same level next year, rather than allowing any increases.
The resolution called for flexibility for potential appropriations, such as assisting residents and businesses recovering from the public health crisis. More resources could be directed later to programs and for employee wage and benefit enhancements after the health emergency ends.
“The idea is for us to be able to consider different scenarios,” Navarro said.
She also recommended funding no higher than the minimum required level for Montgomery County Public Schools and Montgomery College.
“This resolution provides flexibility to the council to reevaluate resources and spending after the COVID-19 pandemic concludes,” she said.
Navarro said it’s not an attempt to cut from the budget, but to have flexibility as needed.
The resolution passed unanimously.
Council Member Hans Riemer said the council should consider the potential multiyear slowdown of revenues. He said he was glad to receive Elrich’s letter.
“I think the original budget we received was kind of in an opposite direction,” he said. “It was starting to ramp up expectations and long-term commitments that I thought, frankly, were going to be unsustainable without the crisis that we suddenly find ourselves in.”
Council Member Andrew Friedson said the budget decisions will be “extremely challenging” and require collaboration between county leaders and staff.
“We are going to be in an economic calamity that results from [the public health crisis] and we’re going to have to step up to figure out how we meet the immediate needs that we have to address this crisis: how we can keep core government sources operating and running, and how we balance meeting the moment that we’re in and meeting the moments that are going to follow,” he said. “That is not going to be easy.”
Council Member Evan Glass said the council should “use a scalpel … not a hammer” when looking at the budget.
“I think we have to have a lot of conversations to make sure that we are fiscally sound and that we get through this as a community by being able to provide all the needs that Montgomery County residents have come to love,” Glass said.
Council Member Gabe Albornoz said many of the county leaders and the staff have weathered the recession before and can contribute to methods of handling the budget.
“I daresay that what we experienced in 2009 feels like it may not be comparable to what we’re going to experience this time around, which is terrible to say,” he said. “But I think we need to be honest about that and manage expectations of our community and all of those key stakeholders moving forward.”
Council President Sidney Katz said he was hopeful that the county could manage with a “same-service” budget, but he was doubtful.
“I don’t know whether we are going to be able to do a same-service budget right now. The best scenario we could have would be a same-service budget for the immediate [future],” he said. “I don’t know that the revenues will support it and we are certainly going to have many more expenses than we’ve ever had in other areas.”
Briana Adhikusuma can be reached at firstname.lastname@example.org.