Montgomery approves budget, extends energy tax increase

May 17, 2012

Montgomery County officials voted Thursday to increase property taxes and parking rates and to extend an unpopular energy tax increase while bolstering social programs, issuing bonuses to county workers and creating a $150,000-a-year senior government position.

The County Council increased agency spending by about 6 percent from last year. But it had expected $135 million more and closed the gap by keeping nearly all of the energy tax increase and slashing an expected contribution to retiree health benefits. It also reduced government debt for construction projects by $140 million over six years. The council is expected to formalize the vote May 24.

Under the budget approved Thursday, the owner of a $250,000 property will see his annual tax bill increase by about $18. For an owner of a $1 million property, the bill would go up by $73. The Ride On monthly fee was increased to $45 from $40, while the biennial residential parking permit goes up $5 to $40. Short-term parking rates would increase by 25 cents an hour.

Because of the extended energy tax increase, the average household would pay about $140 more a year, while the average annual commercial bill would go up about $1,360 to $4,233.

The approval comes a day after the state added hundreds to thousands of dollars in income taxes to affluent Maryland residents, many of whom live in Montgomery County, under a package approved by state legislators during a special session called by Gov. Martin O’Malley (D).

The state also shifted some teacher pension costs to counties. Because of this, Montgomery is required to pay $27 million more to the school system for fiscal 2013. The state provided offsets so that county services wouldn’t be affected, but county officials said they worry that paying for ballooning pension costs will be difficult in the future.

In January, County Executive Isiah Leggett (D) proposed his own construction financing plan with a slight cut to school funding — the first decrease in recent memory. In March, he announced an operating budget that beefed up police and fire departments and library services.

Council members said they wanted to keep much of Leggett’s spending increases because residents have been negatively affected by the austerity measures the county has taken in recent years. For instance, the council rolled back health and retirement benefits for county employees by $33 million last year, riling county union leaders. Council members also restored some of the school construction funding Leggett took out in his January construction proposal.

County legislators also wanted funding for their own initiatives. For instance, Council President Roger Berliner (D-Potomac-Bethesda) pushed for a “chief innovation officer,” whose salary and benefits total $150,000. Council member George L. Leventhal (D-At Large) pushed for an employee wellness coordinator, whose salary and benefits cost $110,000.

The council approved a $2,000 one-time lump sum payment to full-time county managers and workers, but it did not approve step or cost-of-living increases. Legislators also gave $500,000 to the county’s business development corporation, a public-private partnership started last year.

Meanwhile, council members rejected a $900,000 economic development grant to defense giant Lockheed Martin. Leggett has said he wanted to reimburse the company for hotel taxes he believes it should not pay.

On the energy tax increase, council members had mixed opinions. Council member Phil Andrews (D-Gaithersburg-Rockville) has said he did not support the energy tax increase because of the disproportionate effect on county residents. Council member Marc Elrich (D-At Large) said he supported keeping the full increase.

Leggett said he would support nothing less than the full increase. In a statement released to reporters on Thursday, Leggett did not mention the energy tax increase but said the budget “begins the process of restoring resources in . . . critical areas.”

However, county officials said Berliner made a concerted effort to introduce at least a small cut. Council member Nancy Navarro (D-Midcounty) said she supported the latter approach as a “good faith effort” to bring down the tax.

The council approved a proposal by council member Craig Rice (D-Upcounty) to add $500,000 in county aid to help lower-income households pay for the energy costs.

As for construction funding, the council resisted efforts by Leggett to delay construction of a second entrance for the Bethesda Metrorail station — a key local project for the Purple Line. The council decided to start construction in fiscal 2016. Leggett administration officials have said it makes little sense to start building the entrance soon because the Purple Line may not start soon. The project hasn’t secured the necessary federal funding, county officials said.

The council also chose to build a new headquarters for the Maryland-National Capital Park and Planning Commission in downtown Wheaton as part of a broader effort to revitalize the area. This put on hold Leggett’s more ambitious proposal, which would bring in a hotel and as many as three office buildings.

Though Montgomery College received significantly less construction funding than what it proposed, it did get more than the last capital spending plan two years ago. The County Council approved construction of a new garage in its Rockville campus as well.

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