The Montgomery County Council unanimously passed a budget Thursday that rolls back health and retirement benefits and raises the prospect of a prolonged period of labor discord.
The $4.37 billion budget cuts benefits for government and school employees by $33 million, a fraction of what the county spends each year on health care and retirement. But the impact on individual workers could be significant. County salaries vary widely, from $38,000 a year for a bus driver to $172,000 for a child psychiatrist, and the health component alone could reduce take-home pay for many employees by more than $1,000.
Given the county’s history, the survival of the cuts is significant. But the way they were passed shows what happens when a wealthy, liberal county is forced to confront years of political accommodation and generous spending.
In the lead-up to Thursday’s vote, County Executive Isiah Leggett (D) had insisted that he was not bound by the county’s collective bargaining process in proposing a budget and won a resulting court fight. Union leaders say they plan to appeal, and some have raised the specter of possible strikes.
Republicans on Capitol Hill and in statehouses in Wisconsin, Ohio and elsewhere have targeted public employee unions and government-guaranteed pensions, moves that partisans hope will fuel frustration over spending on the right or energize labor supporters on the left. But in Montgomery, where Democrats hold every seat on the County Council and in the General Assembly, it has been an internecine fight, pitting public employees against historic allies.
During a rushed round of bargaining in recent days, union leaders said they were confused about who was in charge. Gino Renne, head of the Municipal and County Government Employees Organization, said the council told union leaders to bargain with Leggett’s staff, only to have Leggett’s staff say its hands were tied by the council.
“Right now, things are chaotic. . . . The whole point of arbitration is it’s final and binding,” said Dale Belman, a labor relations professor at Michigan State University who remembers a teachers strike from his years growing up in Bethesda. “The council and county executive are both trying to pass the ball back and forth.”
The consequences could be far-reaching. Union officials said that police are worried about losing take-home pay and paying their residential electric bills. Without a reliable line of communication to management, worker morale will fall, and services will deteriorate, union officials said.
But county officials said there was no way to ignore the ballooning costs of benefits, which have more than doubled in a decade.
“It’s time for all of us to live within our means,” said Council President Valerie Ervin (D-Silver Spring). “Today is a watershed moment for the County Council, because we are not just passing next year’s budget; we are creating a blueprint for addressing our long-term structural deficit.”
With the new spending plan, the county closes a $300 million shortfall. Prince George’s County had to close a $77 million budget gap. And the District is wrestling with a $322 million deficit.
The budget passed Thursday includes a 4.2-cent increase in the propery tax rate and cuts the county’s contribution to the schools budget by $25 million, part of an effort the council said was intended to spread the pain countywide. The overall schools budget, including additional state funds, will be more than $2 billion. The fates of other departments were mixed. Libraries lost several hundred thousand dollars, but the police department gained nearly $3 million. A final vote on the budget, which will take effect July 1, is scheduled for Thursday.
For years, county spending rose steadily and generously, sustained by the surging home values that marked much of the past decade. Then the economic downturn hit.
As recently as four years ago, income tax revenue jumped 21 percent in one year. But by last year, the income tax haul fell by 19 percent in a single year. A swing of that magnitude was hard for many officials to process. Officials accustomed to giving their employees and constituents largely what they want have had to confront a different landscape since the recession.
The current budget was the first in at least 40 years to be less than the previous year’s. (With the budget passed Thursday, the county is again increasing spending.)
Robin Ficker, who has often run for office as a Republican, began collecting signatures in the past few weeks to put an initiative on the ballot next year seeking to get rid of collective bargaining. He says the council’s benefit cuts are like a football player who drinks a diet soda after gorging at a hot-wings contest, then says he’s concerned about his weight.
“It’s way too little way too late,” said Ficker, who argued that public employee unions have an outsize influence on county elections and helped bring about the need for the property tax increase that was part of the budget passed Thursday. “They should be holding the line. The reason they are raising them is to pay the folks who control the primaries and finance their campaigns.”
But this is Montgomery, not Wisconsin. Collective bargaining is almost certainly not going anywhere. The question is what is going to emerge.
There are prospects.
Belman said one Montgomery move — the council’s decision to set up a task force with labor, management and others to tackle long-term health-care costs — is part of a national trend of finding ways to augment collective bargaining for some intractable problems. He said the county is in a good position to be a leader on that front, if tempers cool.
“It may be this is part of some real rethinking, and real rethinking is a tough process,” Belman said, adding that involving employees from the start is vital. “You want them to be full partners. It’s a lot easier. Health care is a killer. There are no happy decisions about health care.”
It won’t be easy.
In an exchange of proposals with union leaders this week, the Leggett administration said that if the health task force is successful in identifying quantifiable savings, it could reduce the extra amount that employees would have to pay for health insurance.
If the parties agree to such a deal and savings are found, “the county will implement premium holidays up to the increased employee cost share,” according to a confidential proposal. The increase in employee health-care premiums of 5 percent — except for HMOs — is to kick in Jan. 1.
Council member Roger Berliner (D-Bethesda) said that the council is open to better ways of saving money and that his colleagues are not “doctrinaire.”
Other officials said they thought the idea of the task force was to find additional savings.
But Renne said he opposes the “premium holiday” idea because he sees it as “temporary relief in the face of permanent reductions” in their take-home pay.
Leggett said the county will continue to seek new savings. “I see very good prospects for us if we maintain this path were on. We can’t stop at this,” Leggett said.