After a brief skirmish by budget analysts with opposing views, the Montgomery County Council on Tuesday approved County Executive Isiah Leggett’s proposal to raise the ceiling on the amount of bonds that can be sold to finance capital improvements.
Council staff had raised questions about Leggett’s proposed new six-year capital spending plan, which increases borrowing from $295 million to $324.5 million annually. The centerpiece of the revised capital budget is a major boost in local funding for public school construction, intended to relieve serious overcrowding in the 151,000-student system.
The recommended boost in bond sales comes five months after Leggett told the council that anything in excess of $295 million would add too much to the county’s debt service, which is already larger than the operating budget of any single department outside of the school system.
Even at $295 million, Leggett wrote in September, debt payments would increase from $309 million to $392.6 million annually over the next several years.
In a memo to members, Deputy County Council administrator Glenn Orlin called the proposed increase “quite surprising,” given that economic conditions hadn’t changed significantly since Leggett’s September message.
Orlin proposed an alternate method of reaching the same level of funding, by increasing “PAYGO” --tax funds from the operating budget that supplement money borrowed for capital projects--by $80 million over the six years of the capital plan.
But Leggett told the council in a letter this week that increased PAYGO was “not realistic and not sustainable” because of spending priorities in the operating budget he will introduce this spring.
Orlin and Leggett aides squared off at Tuesday’s council session. Management and budget director Jennifer Hughes said Orlin’s PAYGO approach would cost more in the long run than retiring the additional debt Leggett proposes to add. Aides also challenged Orlin’s contention that economic conditions haven’t brightened, citing a lower unemployment rate (down to 4.5 percent from 5 percent last summer to 4.5 percent in November); a rise in income tax revenues; significant growth in housing starts; greater federal budget certainty with recent congressional passage of the bipartisan spending plan; and lighter-than-expected damage from last year’s federal sequester.
Orlin said the question was not whether some indicators are up, but how they’ve gone up in relation to rising debt service. In that context, he said, the rise in borrowing was not justified.
Hughes drew a mild rebuke from Council member Nancy Floreen (D-At Large) when she derided Orlin’s spending scenario as “magic.” Floreen cautioned that fiscal sleights of hand were part of budgeting in both the legislative and executive branches.
“I’d be careful on both sides of the street of that subject,” Floreen said.
Council member Phil Andrews (D-Rockville-Gaithersburg), who is challenging Leggett in the June Democratic primary, suggested last week that Leggett’s proposal was inspired by an election year urgency surrounding school overcrowding . That, in turn, drew rebuttals from Leggett’s camp, which said Andrews’ proposal for public financing of local elections, introduced on Tuesday, has been timed as an extended campaign ad.
Council member George Leventhal (D-At Large) lamented the political shin-kicking and urged both sides to stand down.
“I don’t think it’s really legitimate to suggest that policy proposals from either side of the street that happen to be made every four years are not legitimate and serious because they coincide with an election.” he said.
The council voted 7-to-2 to approve Leggett’s borrowing plan. Andrews and Council member Hans Riemer (D-At-Large) opposed the measure.