Council Questions Duncan Tax Proposal

Some Members Favor One-Year Credit

Some Montgomery County Council members questioned yesterday whether the county could afford to cut the property tax rate and increase spending at a time when long-term financial obligations are mounting.

County Executive Douglas M. Duncan (D) has proposed a 9.5 cent reduction in the tax rate. With the county facing a potential $800 million shortfall within six years, some council members said they favored scrapping Duncan's proposal in favor of a one-year tax credit.

Last month, Duncan drew widespread praise among council members when he unveiled his $3.9 billion spending plan for next year that funded an array of government services while reducing the tax rate.

But council budget analysts question whether Duncan's combination of spending increases and tax cuts is sustainable given the county's long-term financial outlook.

"The current fiscal plan suggests that serious challenges lie ahead," Stephen B. Farber, the council's staff director, wrote to council members this week.

Montgomery has a $300 million surplus this year, some of which has been spent in supplemental budgets. But Farber said the county might struggle in a few years to pay rising employee benefit and pension costs while maintaining the level of services Duncan proposed in his budget.

Some council members said at yesterday's meeting that they prefer a plan offered by council member Steven A. Silverman (D-At Large) to Duncan's proposed tax rate cut. Silverman's plan would give homeowners a one-time credit of up to $468 per household. Supporters of that idea said a property tax credit would offer more tax relief for lower-income residents while doing less damage to long-term finances. The county could also exempt businesses from a tax credit.

A cut in the tax rate could have longer-term financial implications: The county would lose at least $128 million a year until it increased the rate again.

"It gives us a little more flexibility in the long term," council member Nancy Floreen (D-At Large) said of a one-time tax credit.

David Weaver, a spokesman for Duncan, said the administration continues "to support property tax relief through a rate cut, but [it is] willing to work with the council on alternative approaches."

With county coffers overflowing this year, neither Duncan nor the council has made spending cuts a priority. But budget analysts said that despite the strong economy, the county might need extra money soon to maintain the size of the county budget, which has doubled since Duncan took office.

Duncan, whom some critics accuse of lavishly spreading taxpayer money around to bolster his bid for the Democratic nomination for governor, fully funded the school system and Montgomery College and proposed more than $100 million in new public safety, traffic and environmental programs.