The Montgomery County Council tentatively approved a 2014 budget Thursday that will cost the average homeowner about $80 more a year in property taxes, award most unionized employees raises averaging 7 to 10 percent, and put new police officers on the streets and in the schools.
The $4.8 billion plan for the fiscal year that begins July 1 represents a 4.1 percent increase in spending from this year. It also retains most of the $100 million increase in energy taxes on homes and businesses that the council approved in 2010 during the economic downturn. The tax increase had a 2012 sunset provision, but the council instead reduced it by 10 percent, as it did last year.
The council kept the budget that County Executive Isiah Leggett (D) proposed in March essentially intact, continuing the gradual restoration he began last year to cuts in services and programs forced by the Great Recession. Council members endorsed new labor contracts he negotiated with police, fire and most non-uniform employees for their first raises in three years — at a cost of about $31.6 million.
The council also supported Leggett’s recommendation that the county school system dip into its own cash reserves for the extra $10 million it requested. Council members approved a school system budget of $2.2 billion, the largest single-line item by far. It meets the state “maintenance of effort” law, which requires that schools receive, at a minimum, the same rate of per-pupil funding as in the previous year.
Council members also supported Leggett’s proposed property tax increase of 1.8 cents per $100 of value. The owner of a $460,000 home would pay an additional $80 a year.
The budget will underwrite the hiring of 40 police officers and an additional six officers dedicated exclusively to school security.
Council members added $12.3 million in additional spending, much of it to bolster safety-net programs, including medical clinics for low-income residents, outreach to the homeless and mental health services for seniors. The council also raised the county’s matching contribution to the state’s Earned Income Tax Credit for poor families. Grants to nonprofit organizations totaled $2.2 million, reflecting a 3 percent cost-of-living adjustment.
To balance the budget, the council drew money from multiple sources, including higher-than-expected tax revenue, the county’s group insurance fund and its program for retirees’ health insurance. County officials said that even with the withdrawal, the retiree fund will still have more money — $137.9 million — next year than this fiscal year.
“Budgets are a reflection of values,” said council President Nancy Navarro (D-Mid-County). “For me, this budget represents the diverse needs of the people we serve.”
The nine-member council’s vote was unanimous but only after some behind-the-scenes scuffling over the energy tax. At the close of business Wednesday, the council had planned for a 5 percent reduction in the energy levy.
But a last-minute push by council member Roger Berliner (D-Potomac-Bethesda) to raise the cut to 10 percent touched off a round of negotiation and bargaining that went late into the night and resumed Thursday morning, postponing the start of the council session by 90 minutes.
Berliner was joined by council members Phil Andrews (D-Gaithersburg-Rockville), Nancy Floreen (D-At Large) and George L. Leventhal (D-At Large) in pushing for the 10 percent cut, equaling last year’s reduction. The dispute was more politically symbolic than substantive: Increasing the cut from 5 percent to 10 percent would boost the monthly savings of the average residential user from 65 cents to $1.29. The average nonresidential savings would grow from $6.73 to $13.47.
But the four-member bloc put Navarro in a bind. By law, any operating budget exceeding the rate of inflation — as this one does — requires six votes for approval. Navarro eventually relented to ensure its passage. A formal vote on the budget is set for next week.
In a statement late Thursday afternoon, Leggett praised the council for hewing closely to his proposals but said he was “particularly concerned” about the energy tax cut, which will cut revenue by $11.6 million next year. Leggett had recommended keeping the tax at its current level because a substantial portion comes from federal and tax-exempt properties that otherwise pay nothing to the county.
He also criticized the council’s decision to take $6.7 million from funds for retirees’ health benefits.
“Those funds will have to be repaid next year, which will result in higher future obligations,” he said.