The Montgomery County Council tentatively approved a 2016 budget Thursday that dips into cash reserves to avoid cutting programs and to add funding for a series of items, including low-income child care, sidewalk repair, publicly financed elections and Montgomery College.
The $5 billion operating budget, effective July 1, holds overall spending close to current levels. It provides $2.3 billion for Montgomery County Public Schools, which meets minimum state funding requirements but falls $54 million short of the school system’s original request.
The budget also pays for raises negotiated with the county’s unionized police, fire and non-uniformed employees. The deal includes wage increases of 2 percent and annual longevity hikes of 3.5 percent for eligible workers.
The entire plan represents a 1.7 percent increase in spending, or about $90 million, slightly above County Executive Isiah Leggett’s (D) proposed budget, which offered a 1.4 percent hike.
Property tax bills will tick upward slightly. The owner of a $450,000 home — the average value of a Montgomery residence — will pay about $3,805 in property taxes, about $15 more than this year, according to county finance officials.
With home assessments on the rise, the tax rate was adjusted downward, from 99.6 cents per $100 of assessed value to 98.7 cents. Montgomery’s charter caps the amount of property tax revenue the county can collect each year.
The annual budget, which will receive final approval May 21, is usually an exercise in unanimity. But Thursday’s vote was 8 to 1, with at-large council member Nancy Floreen (D) protesting the council’s failure to offer any tax relief. The council voted 5 to 4 on Wednesday to retain Leggett’s proposal for no cut in the county’s energy tax, which is imposed on residential and business suppliers of fuel, oil, gas or steam.
Floreen, the council’s vice president, had favored a 10 percent cut in the levy, which would have pared about $159 from the average business or institutional bill, and $15 from the average residential bill.
“Every budget is a series of compromises,” said Floreen, citing her votes for increased spending over the past four years that also included cuts in the energy tax. But without a tax reduction, she said, her approval of even modest spending increases was not possible.
“I’m sorry, I can’t support that,” she said.
The council is withdrawing $15 million from the county’s $400 million reserve fund to restore cuts and add extra spending for various programs, a decision that drew criticism from Leggett’s administration.
The council approved a plan in 2011 to build cash reserves to 10 percent of total revenue by 2020. The fund stands at 8.3 percent, slightly ahead of the 7.9 percent specified in the plan — a difference of about $32 million.
Leggett said Thursday he was “disappointed” with the council’s decision to fund new ongoing costs with reserve funds. “That trend . . . is something I have a problem with,” he said.
In an e-mail to council members Wednesday evening, management and budget director Jennifer Hughes and finance director Joseph Beach said the fund is intended for emergencies. To use it for other purposes, they said, breaks assurances made to Wall Street rating agencies that establish the county’s creditworthiness.
“To waiver in that commitment at this point is unwise and imprudent,” Hughes and Beach wrote.
Council President George Leventhal (D) rejected any criticism about use of the reserves. “I thought we were responsible and restrained,” he said.
In all, the council added about $18 million to Leggett’s proposed budget. New spending items ranged from $130,000 to strengthen enforcement of the county’s “living wage” law to $7.9 million to help Montgomery College control tuition growth and fund staff raises.
The council added $250,000 to expand low-income child care and designate an official in the county’s department of health and human services to oversee improvements in the delivery of services.
Council members also steered about $1 million to restore cuts in sidewalk repair, traffic signal re-timing and tree stump removal, while adding funds for pedestrian safety education. Council member Roger Berliner (D-Potomac-Bethesda) called these items “basic government services our residents expect of us.”
The council also added $1 million to help launch the county’s new system of partial public finance for elections, which is due to begin in 2018.
Later Thursday afternoon, Leggett formally announced plans to transfer the county’s economic development responsibilities to a private, nonprofit entity. Leggett, who has floated the idea for several months, proposes to fold the county’s Department of Economic Development and the Montgomery Business Development Corp. — a county-funded nonprofit that works on marketing Montgomery — into one organization.
It would be run by an 11-member board of business leaders appointed by Leggett and confirmed by the council. Leggett said the county and the private sector needed to work together more closely to attract and retain jobs.
Leggett also announced four appointments, two for newly created positions. Real estate executive Michael Smith will be “development ombudsman,” charged with helping businesses navigate the county’s regulatory and land-use approval process. Smith was most recently a vice president with LCOR, a Bethesda developer. Former Montgomery County Council member Cherri Branson will head the new office of procurement, which was spun off from the department of general services.
Two acting department heads were appointed to the permanent posts: Scott Goldstein as chief of fire and rescue and Robert Green for correction and rehabilitation.