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A tale of two counties
Some of Montgomery's problem is also structural. It has relied for more than a quarter of its revenue on a local income tax, an option available to localities in Maryland but not in Virginia. The income tax is volatile: In good times it yielded windfalls for Montgomery -- and no-holds-barred spending sprees -- but in the current downturn it has meant a cruel collapse in revenue. Over the past two years, Montgomery's take from the income tax has plummeted by $400 million -- by itself the equivalent of 10 percent of all county revenue.
The recession has had a bracing effect on Montgomery's elected officials, some of whom now express contrition about their spendthrift ways and deference to unions. This year council members, along with Mr. Leggett, by necessity turned into cost-cutters. A year ago, just one council member, Phil Andrews (D-Gaithersburg-Rockville), voted against the phantom COLAs; this month Mr. Andrews was able to muster a unanimous vote on the council to overturn them. Even Mr. Leggett, who negotiated the phantom COLAs, endorsed the council's action to scrap them -- a rare instance of government repealing an entitlement.
Contrition is fine as long as it's accompanied by concrete steps to reform. The county has just about run out of revenue-raising options, having boosted nearly its entire menu of taxes to the legal or practical limit. Montgomery's higher taxes already put it at a competitive disadvantage with Fairfax, which has a wide lead in attracting business and creating high-wage jobs; now Montgomery risks a downward spiral. To avoid that, a cultural shift must take place. Some helpful measures would include:
-- Candidates for council and school board in Montgomery should foreswear all donations to or from public employees unions. This is a minimum necessary step to sever the cozy ties that have indebted officeholders to the employees they are supposed to oversee and whose compensation forms a critical aspect of the county's fiscal integrity.
-- Candidates for public office, who are routinely asked to fill out questionnaires from public employees unions and other special interests in election years, should refuse to answer any question that would commit them to undefined future spending.
-- The county should beef up its rainy-day reserve funds as a means to protect against future downturns, provide an incentive to fiscal restraint and safeguard the county's shaky AAA bond rating.
Nancy Floreen (D-At Large), president of the County Council, has asked the county staff to prepare options for shrinking future deficits. County officials will encounter inevitable pushback from unions and other interests warning that more cost-cutting will have dire consequences. They may find that their best counter-arguments are close at hand, just across the river.