Elrich proposes cutting $66M from budget because of pandemic impact
Asks council to approve lines of credit for first time in county history
Montgomery County Executive Marc Elrich has proposed cutting $66 million from the county's budget because of projected revenue shortfalls related to the pandemic.
This story was updated at 5:47 p.m. on July 8, 2020, to include more background on the council’s budget process.
Montgomery County Executive Marc Elrich is proposing $66 million in cuts from the county’s operating and capital budgets to save money because of financial impacts of the pandemic.
In a memorandum sent to County Council President Sidney Katz on Monday, Elrich proposed cutting $38.3 million from the $5.8 billion operating budget and $27.7 million from the capital budget.
The proposed operating budget cut includes $4.8 million that would have gone to outside agencies
“It’s not because of spending on the coronavirus,” Elrich said during a media briefing on Wednesday. “It’s because our tax revenues are definitely not going to be what had been budgeted [for tax revenue].”
The county also expects a reduction in property taxes. County staff members previously estimated that there could be a loss of up to $600 million in tax revenue for this year and next year because of the effects of the pandemic.
The biggest proposed cut to a county department is $8.5 million from the police department, eliminating five school resource officers at middle schools and more than 20 other positions.
And for the first time in its history, Montgomery County might open up lines of credit of up to $300 million. Lines of credit are used as “insurance” to address any cash flow problems.
Elrich formally requested the council to approve the lines of credit to cover operating expenses, if needed. A vote for the credit lines is scheduled for July 28.
“I do not want to and will not dismantle the county government and cut basic services to people in order to keep reserve numbers untouched,” Elrich said Wednesday. “That’s the whole point of reserves is to be able to use them in a crisis. If this isn’t a crisis, I don’t know what is.”
Elrich wrote in Monday’s memo that he would submit more revised spending plans if they were needed. He also wrote that county staff members are working on a cost efficiency study, which would include identifying at least 100 vacant positions in the executive branch that can be eliminated during the first quarter of the current fiscal year, which started July 1.
In mid-June, county departments were asked to find savings of up to 6% in budgets for FY21.
Outside agencies, such as Montgomery College and Montgomery County Public Schools, were not given a certain target for savings, but were asked to find savings where they could.
Savings from Montgomery College and the Housing Opportunities Commission are included in the revised spending plan. No savings are included in the plan for MCPS or the Maryland-National Park and Planning Commission.
“Working with the school system’s leadership, I have determined that it would be premature to identify savings from our public schools,” Elrich wrote in the memo. “Once MCPS has determined the plan for the next school year, we will work with them to determine what savings might be possible given the operational changes they are making.”
The Maryland-National Capital Park and Planning Commission plans to submit possible reductions later this week.
Council President Sidney Katz told Bethesda Beat on Wednesday afternoon that it wasn’t surprising how substantial the proposed cuts were because “we knew that we were having such difficulty and that’s why we went for a continuity of services budget.”
A “continuity of services” budget doesn’t include most new programs and initiatives.
When asked what he thought about the cuts to the police budget, Katz said they would be discussed in the Public Safety Committee.
“At this point, we don’t know what the Board of Education is going to say about the school resource officers — whether they want them to remain or not,” he said. “That will be part of the discussion as well.”
Elrich began trying to find savings by ordering a procurement and hiring freeze on March 18 for all transactions not related to the pandemic.
The largest proposed reductions that were more than $1 million include:
● Police: $8.5 million
● Mass Transit: $4.2 million ($1.9 million would have been used for purchasing new buses)
● Health and Human Services: $2.9 million
● Fire and Rescue Service: $2.3 million
● Technology Services: $2.1 million
● Transportation: $2 million
● Public Libraries: $2 million
● General Services: $1.9 million
● Recreation: $1.8 million
The three lowest proposed reductions include:
● Human Rights: $35,000
● Agriculture: $34,200
● Ethics Commission: $21,916
The recommended capital budget amendments would reduce the need for PAYGO and current revenue funding in the FY21-26 capital improvements program. PAYGO refers to the principle of not adding debt when there is an expenditure.
Those include roughly $3.1 million for Purple Line-related projects and $4.7 million in deferring the purchase of replacement buses.
In addition, reductions would be taken from the Housing Opportunities Commission ($125,00), MNCPPC ($628,000), and $100,000 for a delay in the Ovid Hazen Wells project.
An additional $528,000 could be reduced in several other projects.
On May 21, the council unanimously passed a $5.8 billion operating budget after cutting around $70.3 million in proposed spending to create a “continuity of services” budget.
They also unanimously approved a $4.4 billion capital budget.
The largest reduction from tax-supported funding in the proposed budget was $41.3 million for the school system. Around $32.4 million was taken from the county’s departmental budgets.
The approved budget funded 98.4% of Elrich’s proposed budget, which included a roughly 5-cent tax increase — most of which would go to the school system through a special 3.18-cent supplemental property tax. The council rejected the tax increase.
Briana Adhikusuma can be reached at firstname.lastname@example.org.