2021 | Government

UPDATE: Elrich blasts report on county’s economy; others say it raises concerns

Report says county loses tens of millions of dollars annually in lost tax revenue

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This story was updated on July 10, 2021, to correct a reference to David Blair, who is a former member of Empower Montgomery. 

A recent report by a former County Council legislative analyst paints a grim picture of Montgomery County’s recent economic performance, local political figures said Wednesday.

But County Executive Marc Elrich did not mince words about the report. “It’s a piece of garbage,” he said.

The report is titled “Jobs, Jobs, Jobs: Post-pandemic Economic Leadership for Montgomery County,” and was completed by Harpswell Strategies, a government consulting company based in Brunswick, Maine. It was commissioned by an organization called Empower Montgomery, which focuses on economic and political issues.

Jacob Sesker, a former legislative analyst for the County Council, completed the report in mid-June. In it, he highlights the following about economic growth in the county:

  • From 2007 to 2019, the county lost more than 14,000 jobs in “key industry sectors” including information technology, finance and insurance, real estate and professional, scientific and technical services to other counties in the region.
  • Because of slowing economic activity, 32 buildings were not built, representing 3.3 million square feet of office space.
  • In recent years, the economic underperformance resulted in an average of about $37 million in lost tax revenue
  • In total, the underperformance resulted in $250 million to $270 million in lost tax revenue from 2007 to 2019.

Council Member Hans Riemer, who is running for county executive against Elrich in the Democratic primary, said the report is “right on the money” and is curious to see how Elrich’s office responds to the challenges raised in it.

It highlights the high cost of doing business in the county, and that certain growing industries will locate elsewhere in the region, where the local economy has “more depth,” he said.

“I think the headline concern is the declining base in strategic industries, technology or tech centered-jobs, and financial sector jobs,” Riemer said. “These are high-wage industries that the county has had strength [with] in the past. … It’s sorted out now that those jobs are basically moving to Virginia.”

Business owner David Blair, who also is running in the Democratic primary for county executive, said the report pretty well confirmed what he already knew: that the county is losing good-paying jobs and not gaining enough businesses. Blair is a former member of Empower Montgomery, the group that commissioned the report. 

He’s concerned the county is losing jobs in critical industries, like information technology.

Overall, the report confirms that the county’s business climate is not friendly, he said. The report stated that the count lost 127 private businesses from 2007 to 2019 while neighboring jurisdictions cumulatively added thousands of businesses. 

“It’s like, what policies could we put in place so we have negative [business growth]?” Blair said. “There’s no way to squash the entrepreneurial spirit in Montgomery County, but somehow we did.”

Elrich pushed back on the report on Wednesday.

As one suggestion to improve the business climate, the report recommends reimbursing tenants for improvements to their space in office and commercial buildings, maxing out at $50 a square foot. 

But the county executive said that solution, among others, bails out developers with taxpayer dollars.

“In my world, if you can’t find someone to rent your building, I believe the market says you’re supposed to lower your price. Not go to the government and ask for a handout,” Elrich said. 

Council Member Andrew Friedson also expressed concern about the report’s findings. He said he ran for the council in 2018 on many issues related to improving the county’s business climate.

The report shows many problems with the current business environment. Fixing that will not only require incentives, but also taking advantage of the many assets in the county, including a talented, educated workforce.

“When it comes to economic reports like this, it’s more important to see what story the data is telling rather than focusing on the data itself,” Friedson said. “Montgomery County remains a place where we have some of the strongest economic bones of any place in the country, if not the world, but we are not necessarily producing an economic climate that is as strong as what we need.”

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