Montgomery County Executive Isiah Leggett (D) proposed a budget Tuesday that would increase the average residential property tax bill by 8.7 percent — the biggest increase in eight years — to fund a fast-growing school system and replace revenue lost when the Supreme Court ruled last year that Maryland’s income tax system was unconstitutional.
The $5.2 billion operating budget for the fiscal year beginning July 1, which goes to the County Council for consideration, increases government spending by just under 2 percent. It lifts the property tax rate by 3.94 cents per $100 of assessed value, from 98.7 cents to $1.02.
That means that taking into account rising assessments, the owner of an average home valued at $464,000 would pay an additional $325 a year in property taxes — $4,075 instead of $3,750.
Property taxes have remained relatively flat in recent years. Last year, Leggett signaled the likelihood of a significant tax increase, citing sluggish economic growth, potential losses from the income tax case and urgent needs in schools. On Tuesday, he told council members that waiting was no longer an option.
“The budgetary pressures on the County are long-term pressures and can no longer be addressed through short-term fixes,” Leggett said in a letter to Council President Nancy Floreen (D-At Large).
The proposal probably will cause political heartburn for council members, especially those who aspire to run for county executive in 2018, when Leggett is expected to retire after completing his third term.
Also lurking in the wings is a possible term-limits proposition on the ballot this fall. Boyds activist Robin Ficker said he is gathering signatures to place the issue before voters.
The measure would limit the county executive and council members to three consecutive four-year terms. A similar proposal drew 48 percent support from voters in 2004.
A tax increase this spring, combined with hostility toward “career politicians” evident in the 2016 election season, could add momentum to the measure.
The Ficker proposition would be effective retroactively, meaning that four council members known to be interested in Leggett’s job — Roger Berliner (D-Potomac-Bethesda), Marc Elrich (D-At Large), George L. Leventhal (D-At Large) and Floreen — would have to step down in 2018. They could still run for county executive.
“It’s a very large increase,” said Floreen, who will lead the council’s budget deliberations over the next several weeks. “The real issue is our calculation of what our residents can afford.”
The lion’s share of funds from the proposed tax hike would go to the 156,000-student public school system. Enrollment has mushroomed by more than 18,000 since 2007 and continues to rise by about 2,000 students a year, creating serious overcrowding in some schools. The $2.4 billion county appropriation would be nearly $90 million more than state-mandated minimum spending requirements, or “maintenance of effort.” An additional $33 million in school fund balances would be folded into the spending plan.
Per-pupil funding in the county hasn’t grown since fiscal 2009, which Leggett said was an untenable situation for a system whose challenges include a growing number of non-English-speaking students and a significant achievement gap between minority and non-minority students.
“We must provide the Board of Education with additional resources to further address many of these challenges,” Leggett said. The total increase in county funding for schools — just under $136 million — falls about $44 million short of the amount requested by the Montgomery County Board of Education. Nevertheless, Board of Education President Michael Durso said he was pleased with Leggett’s proposal.
“I don’t think it gets us as far as we wished,” he said, “but I think this is another step forward in the whole budget process . . . and I think it’s a positive step.”
Leggett’s other priority is replacing revenue lost as a result of the 5-to-4 Supreme Court decision in Comptroller of the Treasury of Maryland v. Wynne. The case was brought by a Howard County couple who challenged a provision in state law that denied residents a full credit for taxes paid on income earned outside the state. The court said the system constituted illegal double taxation and ordered the state to give refunds to residents who had filed claims.
The ruling means that the county would experience reduced revenue distributions from the state by at least $50 million in 2017 and more than an estimated $200 million over the next four years. If the Maryland General Assembly votes to slow the reduction, the proposed tax increase could be lowered, Leggett said.
The budget includes about $14 million in raises and longevity payments to police, fire and county employees that the county negotiated with the workers’ unions. The library system would get an additional $1 million, restoring some weekend hours. Also included are funding for police body cameras and protective vests for officers.
One issue the council will debate is how many votes are needed to pass the budget. A charter amendment approved by voters after a big increase in 2008 — the product of another Ficker initiative — caps the amount of property tax revenue the county can collect each year. Because Leggett’s plan breaks the cap, approval could require a unanimous council vote.
But a 2012 law carved out an exception to that rule if the new revenue is dedicated to education — an exception used last year by Prince George’s County Executive Rushern L. Baker III (D) to circumvent a county spending-limitation law in his push last year for a tax increase.
Montgomery County lawyers have advised that passing Leggett’s budget with a simple majority vote would probably be challenged in court.