When he tells the story of his two terms in office, Montgomery County Executive Isiah Leggett’s narrative often focuses on his prudent, tough-minded management of the county’s finances.
Last Sept. 24, for example, he wrote a letter to then-County Council President Nancy Navarro (D-Midcounty) that warned against taking on additional debt to finance capital improvements.
Leggett, a candidate for a third term in the June Democratic primary, said his plan for fiscal years 2015 to 2020, which called for the sale of $295 million annually in general obligation bonds, was as much as the county should borrow. As it was, he wrote, the fiscal 2014 cost of servicing the county’s debt — $309.2 million — was larger than the operating budget of any single department outside of the school system.
And, without borrowing an extra penny, debt service would increase to $392.6 million by fiscal 2019.
“ I believe this recommendation [$295 million] provides the best balance between the needs of the capital and operating budgets,” Leggett wrote. “As our debt service payments grow, crowding out programs supported through the operating budget, consideration of this balance becomes even more critical.”
Fast forward to Jan. 15. That’s when Leggett unveiled a new six-year capital spending plan that raised the bond limit to $324.5 million.
So, what happened to “the best balance?”
“This is quite surprising, since four months ago he warned the council in very strong terms not to raise the guidelines at all,” deputy County Council administrator Glenn Orlin wrote in a memo this week to the council’s Government Operations and Fiscal Policy Committee, which is scheduled to take up Leggett’s proposal today. The full council is due to vote next week.
What’s happened in the intervening four months is that Leggett has staked major political capital on a campaign to win a big school construction and renovation package from state lawmakers. Record enrollment growth over the last decade has created severe crowding in the county’s 151,000-student system.
Aides say it is important to signal Annapolis that the county is prepared to “pony up” on its own, and not merely ask for more funding.
Council member Phil Andrews (D-Rockville-Gaithersburg) one of Leggett’s two primary challengers, said the newly elastic borrowing guidelines reflect Leggett the candidate, not Leggett the executive.
“It’s an election year,” Andrews said.
Leggett spokesman Patrick Lacefield scoffed at Andrews’s analysis, suggesting that his own new proposal for public funding of county elections amounted to a campaign season infomercial.
Lacefield said Leggett’s proposal, designed to leverage additional funds from the state, is responsible policy given the crowding in county schools. The economy has improved since the September memo, Lacefield added, providing an opportunity for the county to do more.
“We think this is a reasonable thing to do,” he said. “It’s a little more in terms of debt to get a big return [from the state]”
In his memo to the committee, Orlin cited a provision of the county code that says borrowing guidelines can be changed prior to the first Tuesday in February only “to reflect a significant change” in economic conditions.
Here’s where the conversation descends into a duel of economic indicators between council staff and Leggett’s budget aides.
Late Monday evening, finance director Joseph Beach presented a list of signs that the economy has brightened. They include a decline in unemployment 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 county’s own forecasts show that there has been scant improvement. Among other factors, general fund revenue growth from fiscal 2016 to 2019 is expected to be slightly lower than last summer’s projections. Countywide personal income is projected to grow somewhat slower than forecast last winter and last summer. Inflation is projected to be slightly lower from 2015 to 2019 but somewhat higher in 2020.
“There has been no significant change in economic conditions since both last winter and last summer,” Orlin wrote.