Future of Two-Year Budgeting Still Unclear in Montgomery County

Future of Two-Year Budgeting Still Unclear in Montgomery County

County executive, council disagree on when to implement the system

| Published:
Elrich-Navarro

Montgomery County Council President Nancy Navarro and County Executive Marc Elrich

Photos courtesy of Montgomery County

County Executive Marc Elrich wants to move toward two-year budget cycles, a method of financial planning that he says could free up time to assess departmental performances and ensure that funds are being used effectively.

But his plans to implement the system are facing resistance from the Montgomery County Council, who were surprised when Elrich proposed a plan to begin two-year budgeting for several major departments in the next fiscal year.

The council’s resistance could lead to a stalemate in March when the administration submits its upcoming budget for review. Under the county executive’s plan, council members would approve a multi-year financial blueprint rather than starting the budget from scratch each year — something the council has firmly opposed until the administration provides a clear plan for the transition.

The latest back-and-forth began Sept. 12, when Elrich sent a memo to Council President Nancy Navarro. The letter reiterated his support for two-year budgeting and proposed a pilot implementation for several county departments.

Those departments — Police, Corrections, and Transportation — fell under the categories of “Safe Neighborhoods” and “Easier Commutes,” two of seven executive priorities Elrich announced at the start of his term.

“Frankly, I was surprised to get that letter,” Navarro said.

Chief Administrative Officer Andrew Kleine had already briefed the council on two-year budgeting at a summer work session. Navarro said she requested the session to get more information on how the administration planned to execute the change.

“At the time, I think the council felt strongly that this was not an initiative that was ready to be implemented, and we told them that,” Navarro continued. Members raised several concerns about the legality of the switch under state law and the county charter, both of which require annual budgeting cycles.

Navarro also felt the move was premature given that two of the included departments — Police and Transportation — don’t have long-term directors. Elrich named Marcus Jones as his nominee for police chief in September, but the County Council has not confirmed him. There is currently no confirmed nominee for transportation director.

Last week, she responded to Elrich’s Sept. 12 letter, writing that “the Council will not endorse the implementation of a two-year operating budget cycle in any form, until we receive adequate answers to our questions.”

But Elrich has already directed executive departments to submit two-year budget projections, he said, and has tentative plans to include them in his proposed budget for fiscal year 2021.

“I haven’t decided on what the final form will be, but they’ll get the budget they get,” he said. “The objections make no sense to me. It might show a two-year projection, but that doesn’t obligate anybody to anything.”

The impasse casts doubt on the future of two-year budgeting, which would require collaboration between the county executive and the County Council. The county executive is responsible for drafting an annual budget, but the council has full control over amending and passing a final version in late May.

The current legal restrictions on two-year budgeting make collaboration even more important. Maryland law requires that counties operate on an annual budgeting system, according to a September memo from County Attorney Marc Hansen. The county charter also mandates the current system, as do state laws governing Montgomery County Public Schools, which receive state and county funding on an annual basis.

The only way for the county to implement two-year budgeting without changing those laws is for the council to approve a nonbinding plan for the second year, Hansen wrote.

But some council members are reluctant to consider a two-year cycle given their lingering questions about the process, Council Member Hans Riemer said.

“If the executive branch wants to prepare a two-year or 200-year budget for their own purposes, that’s on them,” he added. “But I can tell you there’s no way we’re going to step back from scrutinizing those budgets every year.”

For Elrich, the purpose of a two-year budget is to save time for both elected officials and county employees, who spend months drafting and analyzing a yearly financial plan. The county executive’s office typically begins drafting a proposed budget over the spring and submits it to the County Council in March of the following year. The council then spends about two months reviewing and amending the budget plan.

Under the current annual process, Elrich said, administrators spend most of their time reallocating the same funding instead of thinking of new ways to cut costs or improve results.

“I mean, you’re working on the next year’s budget before you can evaluate what the current year’s budget is actually doing,” he said. “I’ve been on the council and I know everyone complains about a lack of metrics, a lack of good measurements, a lack of accountability. But that lack of accountability is because there isn’t time to put any new systems in place.”

Navarro isn’t opposed to a two-year budgeting system, she said, but has serious reservations about implementing the policy so quickly into Elrich’s first term. The administration still hasn’t addressed how it would incorporate annual MCPS requirements into a two-year plan, and executive employees are still considering the issue, Budget Director Rich Madaleno said.

School funding would be especially tricky to factor into a two-year plan, he added, because the state ties education aid to an annual enrollment count conducted at the end of September.

“So, any projection that’s ahead an additional year would be difficult,” Madaleno said. “But I don’t think the perfect should be the enemy of the good. Right now, we’re trying to pull this off for the Montgomery County government and county departments.”

Other council members still doubt the basic effectiveness of two-year budgeting cycles. Riemer described the move as a way to “consolidate power in the executive branch,” and disagreed with Elrich’s assessment that annual budgets reduce accountability.

“What might result is that you’re not holding departments’ feet to the fire on a regular, annual basis,” he said. “We’re already constantly evaluating what’s working and what changes need to be made.”

“I get that they don’t like preparing budgets all the time and this would be a time-saver for them,” Riemer continued. “But they shouldn’t frame it as something the council needs to be doing.”

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