Montgomery looks to save $300 million

District Mayor Vincent C. Gray at the gate to his yard on April 29, 2010.
District Mayor Vincent C. Gray at the gate to his yard on April 29, 2010. (Marvin Joseph)
By Michael Laris
Washington Post Staff Writer
Wednesday, December 8, 2010

What happens when elected officials ask how they could save hundreds of millions of dollars, and their staff gives them clear answers? Montgomery County's leaders and residents are about to find out.

In the first day of a new session Tuesday, County Council members began confronting the reality of _blankthe hefty spiral-bound report they had requested from their Office of Legislative Oversight.

The analysts took pains not to endorse one item over another in their catalogue of possibilities, leaving that up to their elected bosses. But the unforgiving math they outlined speaks volumes about the seriousness of Montgomery's fiscal problems - the county faces a shortfall of more than $300 million - and underscores how the soaring costs of salaries and benefits for public employees are squeezing services for residents.

If adopted, some options could change the ways one of the nation's wealthiest counties pays its workers and serves its residents - or the report could be given a hearing and pushed aside. Several council members said they would seize on the suggestions, but there was also immediate push-back by influential labor leaders.

Deep staff cuts

Imagining how the county might close just a tenth of its budget gap shows the kind of trade-offs that are on the table. Such an exercise also illustrates the heavy costs of the county's medical and retirement benefits, which the analysts say have soared more than 120 percent in the past decade.

To save $10 million in personnel costs, the county would have to get rid of the career firefighters in Gaithersburg Station 28, Silver Spring Station 1 and Kensington Station 18, the equivalent of 89 full-time employees, according to the analysts.

Then the county would have to eliminate the staffs of the following offices and departments: Economic Development, Consumer Protection, Human Resources, Management and Budget and Legislative Oversight, as well as the workers in Regional Service Centers. That would be the equivalent of 109 more workers, saving another $10 million, the analysts said.

Finally, the county would have to lose the equivalent of 85 percent of its elementary music teachers, saving another $10 million, they said. Those three actions would bring the savings to $30 million.

Pulling back on benefits

Another initiative suggested by the analysts offers even greater savings. If the county brought the percentage that its employees pay for medical premiums roughly into line with those in private industry, the county would save $35 million in six months of the next fiscal year, the analysts said. That assumes raising the employee share of premiums to 30 percent in all county agencies.

Such a change would be controversial. Already, public schools employees generally pay a lower percentage in premiums than other government workers, the analysts said. Most public school employees pay 5 percent of premiums, and the school system pays 95 percent, according to the report; for most other Montgomery workers, the government pays 80 percent. Private employers across the board pay 71 percent for family coverage, according to a 2008 federal survey quoted by the analysts.

County officials said that pulling back on benefits costs will be an important strategy.

"Montgomery County is hemorrhaging at this point, and Band-Aids are not going to work," said council member Nancy Floreen (D-At Large), who pushed for the study during her just-ended term as council president.

Valerie Ervin (D-Silver Spring), who was unanimously elected by her colleagues Tuesday to take over as president during the new council's first year, said that "the private sector started making these kinds of cuts 25 years ago."

County residents have made it clear that they are concerned about "the unending trending up of health care and pension costs," Ervin said.

Ervin and labor interests

Ervin's experience as a labor organizer and school board member leaves her well positioned to help lead the county through what promises to be a tough political fight, some council members said.

"No one is more qualified . . . in dealing with those interrelated issues than our colleague Valerie," said Roger Berliner (D-Betheseda-Potomac), who nominated Ervin. Berliner was selected as council vice president, a position he held last year. "As a former union organizer, she has a demonstrated passion for and commitment to helping working families," he said.

But her history of organizing workers in agriculture and other industries didn't stop the head of Montgomery's government employees union, Gino Renne, from slamming Ervin's first initiative. Last month, Ervin proposed legislation that would change the way county labor negotiations are sometimes resolved.

When the county and a union can't agree on a contract, a labor arbitrator chooses the package he thinks is best. Under current law, the arbitrator may consider a half-dozen factors, such as what other unions have agreed upon. But Ervin's bill would require the arbitrator to give priority to the county's ability to pay.

The arbitrator "must first determine the ability of the County to afford any short-term and long-term expenditures" needed, according to an amendment to Ervin's bill passed by a council committee Tuesday. The arbitrator must assume no reduction in current government services and no tax increase.

Renne said that such a change would "stack the deck" in favor of the county over its employees. He said that labor leaders want to believe Ervin is a "friend of labor," but "friends don't let friends drive off the road."

"My obligation is to my members, to protect their interests, and I will do that whether it upsets any of you or not," Renne said.

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