2022 | Government

UPDATED: County Council staff concerned about executive branch’s revenue projections

Council members signal opposition to withdrawing $20 million from retiree trust fund

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This story was updated at 11:55 a.m. and 4 p.m. April 20, 2022, to clarify details about the proposed additional full-time equivalent employees in the operating budget. 

County Council members voted unanimously Tuesday against withdrawing $20 million from the county’s Other-Post Employment Benefits retiree trust fund. The council’s staff raised concerns in a report about that withdrawal and other aspects of County Executive Marc Elrich’s proposed operating budget for fiscal year 2023.

Elrich and his staff wanted to use the $20 million from that trust fund to pay current-year retiree health costs but council staff said that doing so “does not align with current fiscal policies.” Craig Howard, deputy director of the County County, said that Tuesday’s vote to reject the withdrawal of OPEB funds was “non-binding.” 

That means it won’t formally happen until the council votes on the proposed budget in the coming weeks. 

Howard reviewed the budget report before a broader council discussion Tuesday. The report highlighted the following concerns about Elrich’s proposed budget:

  • Withdrawing $20 million from the OPEB trust fund would be “premature” without first evaluating the long-term policy regarding how that trust fund is funded;
  • The county’s overall budget is an “historical outlier,” with projected revenues in fiscal year 2023 supported by volatile taxes like income, recordation and transfer taxes. Those taxes vary from year to year based on economic conditions; and
  • The proposed expenditures may create a “structural imbalance” as soon as fiscal year 2024. The proposed operating budget is 7% greater than the fiscal year 2022 budget, with expenditures higher than the fiscal year 2023 assumed revenue growth of 5.9%.

Howard said the council could make reductions to the budget proposal, convert expenditures in the base budget to one-time expenditures or delay consideration about others until January 2023, when the council conducts its mid-year review of the budget.

Council members agreed with council staff that withdrawing $20 million from the OPEB trust fund would be a bad policy decision. 

However, Mike Coveyou, director of the county’s Department of Finance, told the council that the money would be used to help pay retiree health care benefits for former county employees. It could be spent now, given the revenue projections, he added.

But Council Member Andrew Friedson and others said that a more thorough review of the OPEB trust fund and how it is funded is needed before county officials withdraw money from it. Doing so would be bad fiscal policy, he added.

“It’s an obligation and not an option,” Friedson said about funding OPEB. The county allocates some of its budget every year toward funding the trust fund. “The policy goes first, the action goes second, and we have got our order way out of whack here,” he added. 

Although unanimous in opposition to the proposed OPEB trust fund withdrawal, council members were divided on making overall reductions to the budget, as recommended by council staff. Council Member Will Jawando said that given the challenges many have faced during the pandemic, county officials should be investing money to lift people out of poverty rather than considering whether to cut spending.

Jawando called the council staff analysis “fear-based” and added that, given the inequities that exist in one of the richest counties in Maryland and in the United States, county officials should fund better salaries for workers, more services for those who are impoverished and similar initiatives. 

“What I think is the worst mistake, and what I think I don’t see in this presentation, is we need to continue to make investments and to grow,” Jawando said.

In a similar vein, Council Member Nancy Navarro said she had concerns about proposed cuts in the operating budget, including the discontinuation of services and providing food at the Oak Chapel United Ministries Food Hub in the Aspen Hill area.

The fact that the service hub was cut from the budget was troubling, she added.

“How does that align with racial equity and social justice in a budget like this one?” Navarro said. “I will keep an open mind, but that to me was glaring.” 

Council staff and the county’s Office of Management and Budget indicated that if fully funded, Elrich’s budget would add more than 500 full-time equivalent employees to the county’s work force, bringing the overall total to nearly 38,000. Chief Administrative Officer Rich Madaleno said in an interview that both those totals include workers in county government, public schools, Montgomery College and park and planning positions. 

OMB Director Jennifer Bryant said that well over half of the county government positions (Madaleno said this is roughly 300 full-time equivalents, in total) would be for the Department of Health and Human Services, the Department of Recreation, the county police force and the County Council.

Bryant said that DHHS needs more personnel to add mental health support in Montgomery County public schools, and to satisfy requirements of the Blueprint for Maryland’s Future, which is state legislation that also calls for more mental health services and other supports in public schools. 

She said the police department needs money to support staffing requirements of a police accountability board, and provide civilian staffing to the county’s 911 call center. That would help shift county fire and rescue service employees — who have serving the 911 call center — back into the field, Bryant said. 

She said the recreation department needs more funding to operate the South County Regional Recreation and Aquatic Center in Silver Spring that is scheduled to open next spring. The money also will pay for operating out-of-school programs, Bryant said. 

She added that additional funding for the County Council would be used to meet increased demand for services, including for when the council expands from nine to 11 members in December.

The council is expected to spend the next six weeks or so deliberating the budget proposal. It is required by the county charter to approve a budget by June 1. The next fiscal year begins July 1. 

Steve Bohnel can be reached at steve.bohnel@bethesdamagazine.com