Montgomery County Executive Isiah Leggett (D) proposed a 2016 budget Monday that keeps spending close to current levels, avoiding a possible property tax increase but prompting renewed warnings from school officials that more funding is needed to avoid cutting positions and increasing class sizes.
The $5 billion operating budget, which goes to the County Council, would raise spending by 1.4 percent — about $70 million — down from a 4 percent increase this year and 4.8 percent in fiscal 2014. The belt-tightening blueprint, which Leggett calls a “same services” budget, would close a projected $238 million budget shortfall.
Leggett said he was “tempted” to propose a major property tax hike this year. He added that declining income tax revenues, a sluggish economic recovery and possible cuts in anticipated state funding will make an increase almost unavoidable next year.
“We’ve used all of our options to not do it this year,” he said at his annual budget announcement.
The proposal includes a 2 percent wage increase for county employees along with 3.5 percent longevity hikes for some workers, $2 million for body cameras and new protective vests for police, and $44 million for affordable housing.
Property tax bills will tick slightly upward because of rising home assessments. The owner of a $455,000 home — the average value of a Montgomery residence — will pay an additional $15, or about $3,805.
The property tax rate will drop by about a penny, to 98.7 cents per $100 in assessed value. The reduction is required under Montgomery County’s charter, which caps the amount of property tax revenue the county can collect each year. With assessments on the rise, the rate needed to be adjusted downward.
Leggett’s proposal comes as other localities are coping with the challenges of a regional economy that has yet to return to its pre-recession form. On Friday, Prince George’s County Executive Rushern L. Baker III (D) proposed layoffs, furloughs and a
15 percent property tax hike to generate more funding for schools, public safety and economic development.
Leggett’s budget allocates
$2.3 billion to the 154,000-student Montgomery County school system, the minimum required by state law but
$80 million short of the Board of Education’s request.
The proposal would give the school system $27.2 million from a county trust fund for retiree health benefits to use for 2016 operations. The one-time shift in dollars allows the county to work around the maintenance-of-effort law, which requires that any new funding over the minimum be added to next year’s base.
School officials expressed disappointment with Leggett’s plan, especially because the system is facing a possible $25 million cut in anticipated state aid under Gov. Larry Hogan (R). Interim superintendent Larry A. Bowers has told principals to plan for 370 fewer school-based positions than projected.
“These are painful cuts that will impact every school in the district,” Bowers said in a statement. He said the budget proposal leaves the system with a shortfall of more than $50 million.
Montgomery College also received only a fraction of the $15 million it requested in county funding. Leggett allocated $3 million and recommended a tuition increase.
Leggett said in January that a hefty property tax increase was likely either this year or next.
Raising property taxes above the charter limit requires a 9-0 council vote, however, and council members made it clear to Leggett in recent weeks that there was no appetite for a tax hike.
In unveiling his budget proposal, Leggett said he decided to defer any proposed tax hike until the county’s financial picture becomes clearer. County officials are hoping that state lawmakers can restore some of the projected cuts in the Hogan budget.
The biggest wild card in the county budget is a case pending before the U.S. Supreme Court. It challenges a part of Maryland tax law that bars residents who earn income in other states from getting a credit for the “piggyback tax,” the segment of state income tax that Maryland collects and distributes to
23 counties and Baltimore City.
The court is expected to rule on the case this spring. Should it decide that Maryland improperly withheld the tax credit, Montgomery could lose
$25 million annually and be liable for an estimated $150 million in back claims.
Last year, the county held
$110 million in reserve in anticipation of an unfavorable court decision. There is no contingency plan in this year’s budget proposal, officials said, meaning that an adverse opinion would heighten the likelihood of a tax increase during the next fiscal year or the following year.
Given the uncertainties, Leggett said, he thought the best approach was to defer any proposed property tax hike and instead submit a budget of “restraint and minor adjustment.”
“I just thought I should wait until we have a better picture,” he said.