Montgomery officials look for ways to close $300 million budget gap

By Michael Laris
Washington Post Staff Writer
Tuesday, December 7, 2010; 10:11 PM

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 the 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.

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.

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