County Executive Ike Leggett proposed Thursday a $5.56 billion operating budget for fiscal 2019 that represents a slight increase from the current spending plan and fully funds the county school system’s request.
The budget, which covers county spending from July 1 to June 30, 2019, holds the line on property taxes. Leggett told the County Council that although the property tax rate will drop by about 2 cents to remain within the county’s charter limit, rising assessment rates will increase the average residential tax bill by about $27 for the year.
The county executive’s proposal is about 2 percent higher in tax-supported spending than the approved fiscal 2018 budget. This is the last budget Leggett will propose before he steps down at the end of year due to term limits. Seven candidates are running to replace him in the 2018 election.
Leggett’s budget includes about $2.59 billion for Montgomery County Public Schools, which is what the county’s Board of Education requested. The funding proposal represents a 3 percent increase over spending approved in the current budget and exceeds the state-mandated Maintenance of Effort requirement by $19 million.
The mandate requires jurisdictions in the state to fund schools with at least the same amount of per-pupil spending as they did the previous year, which has presented a challenge in Montgomery County where student enrollment has repeatedly increased. For the next school year, MCPS estimates enrollment will increase by nearly 2,000 students.
Leggett said he and his staff had to overcome an approximately $200 million budget gap when developing his proposed budget and he credited the council for passing a $53 million savings plan earlier this year with helping to lessen the impact on the spending plan. He noted there remains “a great deal of uncertainty” about how the new federal tax law will impact the county’s finances in the future.
“We need to look to how we can prepare ourselves for any eventualities that could come due to tax changes,” Leggett said.
Over the next two months the council will review and debate Leggett’s spending recommendations as well as make changes to the budget before formally approving it, which typically happens in May.
Leggett was able to increase funding for schools while addressing the budget shortfall partly by proposing to cut county government spending by 0.5 percent, with the exception of pre-funding retiree health benefits.
The county executive said despite the slight decrease in government spending, the county will honor its two-year agreement with county employee unions to provide a 2 percent salary increase. He noted that county employees had absorbed a significant portion of cuts during the recession when the county eliminated step increases, furloughed employees and did not provide cost-of-living adjustments.
He said he was honoring the agreement because he previously told the unions that he would restore funds when the county’s fiscal situation improved, which it has since the recession.
Leggett recommended spending $130 million to fund retiree health benefits, a decrease of about $21 million from last year’s total. That amount would leave the reserve fund with about $900 million to address the cost of aging retired employees’ medical costs in the future.
Leggett said the decrease was a one-time move and expects the next county executive to revert to previous funding rates for the retiree benefits reserve.
“We have a day of reckoning coming,” Leggett said after introducing his proposal to the council. “When you have a community that is as old as Montgomery County, health costs continue to rise … we have to maintain our reserves because we’ll have that to fall back on.” He was referring to the rising population of seniors in the county.
Leggett also included setting aside about $36 million in fiscal 2019 for the county’s reserves. That would bring the total reserves to about $493 million, or 9.4 percent of the county’s operating budget. This amount will help the next county executive to reach the 10 percent reserve level recommended by Wall Street credit rating agencies, which Leggett said would also help insulate the county against an economic downturn.
He said in 2010 the reserves fell to about $77 million—just 2.1 percent of the county’s budget—and he has since worked to increase the reserves to the level where the fund stands now.
Leggett’s proposed budget also includes:
- $323.7 million for Non-Departmental Accounts, a decrease of about $1.1 million. The account funds programs not associated with a particular department such as retiree health benefits, insurance, snow cleanup, community grants, the Arts and Humanities Council and the Working Families Income Support;
- $316.7 million for the Department of Health and Human Services, an increase of $3.7 million, most of which will go to increasing employee pay;
- $312.9 million for Montgomery College, a 1.4 percent increase;
- $279.7 million for the Department of Police, an increase of $4.1 million that is primarily being used to increase officer pay;
- $211.3 million for the Fire and Rescue Service, a $3.5 million decrease that will primarily come from eliminating three firetrucks in Germantown, Hillandale and Hyattstown;
- $151.9 million for the Park and Planning Department, an approximately 0.8 percent increase;
- $137.5 million for the Division of Transit Services, an increase of about $219,000 to increase employee pay and continue the MD 355 Ride On extRa Service;
- $109.9 million for the Division of Solid Waste Services, a $13.4 million increase partly due to a $5 million increase in the cost of the residential recycling program and a $4 million increase in the cost of operating the county’s incinerator;
- $66.2 million for the Department of Correction and Rehabilitation, a decrease of about $430,000;
- $63.9 million for the Department of Liquor Control, a decrease of $1.17 million generated mostly from cutting staff compensation. The department plans to transfer $28 million in profits to the county’s general fund next year;
- $51.9 million for the Department of Transportation, a decrease of $4.0 million that primarily comes from reducing the cost of the motor pool, which is used to maintain county vehicles;
- $50.4 million for the Department of Housing and Community Affairs, a decrease of about $1.8 million, a majority of which comes from proposed cuts to affordable housing loans and the rental assistance program;
- $42.8 million for public libraries, an increase of about $132,000;
- $40.2 million for the Department of Permitting Services, a $1.35 million increase that’s mostly to increase employee pay;
- $38.2 million for the Department of Recreation, an increase of $464,000 primarily to increase employee pay;
- $30.66 million for the Department of Environmental Protection, an increase of $387,865 mostly to enhance the stormwater management program;
- $16.2 million for the Cable Television Communications Plan;
- $11.6 million for the County Council, a decrease of about $5,100;
- $5.87 million for the Office of the County Executive, a decrease of about $212,000; and
- $4.9 million for the Economic Development Fund, an increase of $800,000 primarily to increase funds for loans to provide to local businesses.