Unlike in the District or in Northern Virginia’s Fairfax County, where top officials have adapted their budget proposals to address revenue holes, Elrich has not released a savings plan for the projected loss of up to $600 million caused by stringent business shutdowns.
The budget that lawmakers adopted maintains “continuity of operations” and does not include major cuts in spending, which are likely to come in the form of amendments in coming months, officials warn.
“This budget is a holding pattern,” said Montgomery County Council member Hans Riemer (D-At Large). “We didn’t raise taxes and we didn’t increase spending. . . . We’re waiting to get clarity on how much of a disaster we’re heading into.”
The spending plan includes a property tax rate of 97.85 cents per $100 of assessed value, just below the current rate of 97.86 cents.
During its budget deliberations, the council voted unanimously to reject a 3.1 cent supplemental property tax increase that Elrich said would have gone exclusively to the county’s overcrowded public schools. The council also disagreed with his proposal to interpret the county charter in a way that would have raised the property tax rate by 0.24 cents.
Half of the final budget, $2.76 billion, will still go toward the school system. This meets the maintenance-of-effort level — a state mandate that requires schools to be funded at least the same amount as in the past year — but is $44 million less than what the school system requested in February.
The council allocated $83 million for affordable housing, $2 million less than what Elrich proposed, and voted 7 to 2 to reject union-negotiated contracts that included salary increases for police, firefighters and other county employees.
“This is not about what our employees deserve. This is about what our county can afford,” Council President Sidney Katz (D-District 3) said during a recent council meeting.
Council staff estimate that depending on how long Montgomery remains under a stay-in-place order, the county may face between $150 million and $600 million in revenue losses over the next five years. Some of this shortfall may be filled with federal relief money or the county’s $500 million in general reserves, which has already been tapped to provide immediate financial relief to local businesses.
Elrich issued a hiring and procurement freeze in March but said in a statement Thursday that he does not think the county needs a savings plan in the immediate future.
“We don’t yet have a clear picture of our losses and revenues — why set things in motion that are not needed now and may not be needed?” he wrote, adding that he thinks federal and state actions may help to fill a bulk of the revenue shortfall.
Like other jurisdictions in the Washington metro area, Montgomery has yet to lift restrictions on commercial and social activity because of the high numbers of coronavirus-related infections, fatalities and hospitalizations in the county. As of Wednesday, more than 9,000 residents in the suburb of 1 million had contracted the virus, and 515 had died.
On May 16, members of the United Food and Commercial Workers Local 1994 Municipal and County Government Employees Organization (MCGEO), police and firefighter unions organized a car parade outside Riemer’s house in Takoma Park to protest the council’s rejection of labor contracts that were negotiated with Elrich, a longtime advocate for the county’s unions.
All members of the council except Council Vice President Tom Hucker (D-District 5) and Council member Will Jawando (D-At Large) voted against the contracts, but union leaders saw Riemer as leading the opposition.
“Right now we need to focus on saving jobs and rescuing our community,” Riemer said in a statement on the day of the protest. “If we weren’t in an economic collapse, we’d fund raises.”
Union leaders disagree, arguing that wage increases for nurses and police officers are needed to lower the attrition rate among government employees and provide essential services to residents.
“It’s not that [the county] can’t afford it,” MCGEO President Gino Renne said Wednesday, “it’s that their priorities are not aligned with those in the community.”
Salaries for county council members in Montgomery are pegged to the consumer price index, which means that lawmakers are scheduled to receive a pay increase at the end of the year. All nine members of the council voted on May 13 to donate their pay increases back to the county.
The budget also includes a handful of new expenses that add up to $2.6 million, including 10 school health nurses, video cameras for 100 police vehicles and a composting program.
Elrich said in his statement that layoffs or furloughs for government employees are “not on the table” at this time. If needed, he said, he would first eliminate vacant positions and tap into the county’s reserves.
“Half of our employees are front-line employees in this pandemic,” he said. “I am not going to respond to their hard work with furloughs or layoffs that we don’t need to make.”
The final budget vote came after nine weeks of tense budget discussions among members of the county council, Elrich and his budget director Richard Madaleno.
Some lawmakers accused Elrich and Madaleno of ignoring the economic realities posed by the coronavirus crisis, using $10 million in “phantom savings” to balance the budget and attempting to raise property taxes by recalculating the charter limit.
The proposed budget “wasn’t fiscally responsible and it wasn’t legally balanced,” said County Council member Andrew Friedson (D-District 1). “It forced [the council] effectively to start from scratch.”
Elrich dismissed these criticisms, noting that more than 98 percent of his original proposal ended up in the final budget. While an explanation on the new interpretation of the charter limit was not included in the budget book, Madaleno had discussed it with members of council staff, Elrich said.
He also criticized the council for canceling the traditional budget breakfast and committee sessions, which he says would have “included in-depth discussions” on lawmakers’ concerns.