When Montgomery County Executive Isiah Leggett describes the budget cuts and other difficult steps he took to get his county through the Great Recession, he often includes the claim that his task was made more daunting by his predecessor and Democratic primary opponent, Doug Duncan. Leggett says Duncan left county finances in perilous shape when he exited office after three terms in 2006.
“When I assumed this office, the county was broke and getting broker,” Leggett said in his closing remarks at a Feb. 12 candidates’ forum.
Duncan scoffs at the idea.“You just have to laugh when you hear that,” he said in a recent radio interview.
At first glance, the numbers don’t support Leggett’s assertion.
In the fiscal year ending June 30, 2006 — Duncan’s last full fiscal year in office — there was $107.8 million in the county’s rainy day fund, formally known as the Revenue Stabilization Fund. The general fund — the county’s main pot of taxpayer money — had an unexpended balance of $244.8 million.
That comes to a total cash reserve of more than $350 million. Leggett drew $44.8 million from it in 2010 to help make ends meet.
Leggett might be on more defensible ground if he argued that Duncan didn’t pay sufficient attention to the ticking meter of future financial obligations running on his watch.
Duncan, who was campaigning for the Democratic gubernatorial nomination in the spring of 2006 (shortly before a diagnosis of depression caused him to withdraw from the race), exploited his cash surplus and a still-robust economy to produce his final budget, for the fiscal year beginning July 1, 2006 (FY 2007). It proposed major increases in education, public safety and transportation spending, along with a 9.5 cent reduction in the tax rate.
The County Council, which has the final say on the budget, reduced the size of the tax rate cut to 5 percent, but retained most of the major spending initiatives. County government spending increased that year by 14 percent; the general fund balance fell from $244.8 million to $110.5 million.
There were concerns raised at the time about the sustainability of spending, given a growing list of long-term expenses the county faced. Years of generous contracts Duncan negotiated with public employee unions were driving costs upward. The county was also facing a huge obligation for retiree health benefits.
In 2004, the Governmental Accounting Standards Board, which makes the rules for how governments report their financial condition, gave states and localities until July 1, 2007, (the beginning of FY 2008) to show that they were funding retiree health costs. It was estimated that Montgomery needed to set aside $160 million annually to meet its obligations.
The state of Maryland, Baltimore County and other jurisdictions started a year early, setting aside money in their FY 2007 budgets. Duncan left it to his successor, Leggett.
In an interview last week, Leggett and chief administrative officer Tim Firestine said Duncan’s failure to start paying for those benefits put the county in a serious hole.
“He was building a base that was not sustainable,” said Firestine.
But critics said the same thing about Leggett’s early labor contracts. In 2007, he agreed to a 29 percent raise over three years for police officers and 26 percent for general government workers. The next year, he signed off on a pact that provided Montgomery firefighters with a 28 percent pay increase over three years.
Some council members contended that the deals were too rich at a time when Leggett also proposed budget cuts and the largest property tax rate increase in two decades to close a projected $297 million shortfall.
As it turned out, Leggett was forced to renegotiate some of those agreements as the recession deepened. They are among the difficult decisions he now takes credit for as he led the county through the lean years.