As the COVID-19 pandemic continues in Montgomery County, government officials are looking more at the financial future. And it’s a little gray.
With no known end to the health crisis and continued blows to revenues, officials have estimated that the county could lose $1 billion in revenues over the next six years.
Rachel Silberman, an analyst with the county’s Office of Management and Budget, said Monday night that the county is focused on financial sustainability as officials form the next budget and capital improvements program (CIP). The CIP is a six-year plan with a capital budget.
A virtual fiscal year 2022 budget forum on Monday was the first of several that County Executive Marc Elrich is holding this fall.
Silberman said the COVID-19 health crisis has had a “significant” impact on the county’s budget.
“That impact was not very well understood until really the end of the county’s fiscal 2021 budget process. … There’s still quite a bit of uncertainty about what that true impact is going to be,” she said.
The county renegotiated labor agreements with unions to minimize the impact of COVID-19 differential pay, she said, referring to additional compensation workers are getting because of COVID-19 conditions.
The FY21 budgets for all agencies and departments grew 0.8%.
The County Council unanimously approved a $5.8 billion operating budget and $4.4 billion capital budget in May. The budgets were approved after officials cut around $70.3 million in proposed spending to create a “continuity of services” budget, which mostly didn’t include any new programs and initiatives.
County staff members previously projected a revenue loss of up to $600 million combined in the last and current fiscal years because of the public health crisis.
In July, Elrich and the council agreed to a savings plan that cut an additional $72 million from the current budget.
Of the cuts, $43.7 million was reduced from the operating budget and $28.3 million was reduced from the CIP.
The county has applied for federal funding to cover some pandemic-related costs from the Federal Emergency Management Agency and the CARES (Coronavirus Aid, Relief, Economic Security) Act. Some of the costs for which it could get reimbursement are COVID-19 testing, food assistance, personal protective equipment and hazard pay for employees.
So far, the county has received $222.6 million in federal aid that will likely be spread across FY20 and FY21.
Silberman said that even with federal funds, a “continuity of services” budget and a savings plan, the county might have to draw down on the county’s fund balance and reserves.
“What [federal funding] does not cover is revenue loss that the county has experienced as a result of the COVID-10 crisis,” Silberman said.
Several other factors will also affect the county’s budget, she said. Those include:
● Property tax assessments increased 2.3% in FY20
● Implementation of the master/sector plans for White Flint, Shady Grove, Great Seneca, Wheaton and the East County Science Center will ultimately increase revenues
● County revenues will be significantly affected by the MD State Comptroller v. Wynne income tax case
● Home sales have dropped 2.2% through July 2020 compared to the period of January to July 2019.
● The county’s unemployment rate was 7.4% in July 2020 compared to 3.2% in July 2019
During the forum, Elrich pushed for attendees to vote to get rid of the current county charter cap on taxes, which he said limits the growth of taxes to inflation. A question proposing removing the limit will be on the November ballot.
“We think this is the only way we’re going to start to get out of the box that we’re in,” he said.
Elrich said his CIP priorities include:
● Montgomery County Public Schools’ capital needs
● Economic development initiatives
● Transportation projects (particularly mass transit, economic development and congestion relief)
● Affordable housing
● Projects needed to address imminent safety hazards
● Projects that leverage significant outside funding
● Maintenance of core infrastructure
“We’ve worked hard to prioritize projects which we think have the most bang for the buck in the county — projects that are most likely to provide improvements for residents and that residents will be able to see at the local level, and projects that deal with our transportation shortfalls and school construction shortfalls,” Elrich said.
At the end of the forum, participants were broken out into separate chat rooms to discuss what they’d like to see in the capital budget for next year. The feedback will be given to county officials.
Elrich will provide his recommended FY22 capital budget and amendments to the FY21-26 CIP to the County Council on Jan. 15. On March 15, he will provide the council with the proposed FY22 operating budget.
The council approves the budgets at the end of May each year.
Briana Adhikusuma can be reached at firstname.lastname@example.org.