“We must put the County’s financial house in order…we must do more with less…”

In the face of a weakened economy, declining home sales, and less assistance from the State of Maryland, Montgomery County Executive Isiah Leggett today announced a $3.77 billion tax-supported budget for the fiscal year that begins July 1. The budget increases spending by 3.2 percent, the lowest increase by County government in 12 years. This decrease in spending follows Leggett’s earlier recommendation in January on the Capital Budget of a 1.1 percent increase, significantly down from the 25 percent increase prior to his assuming office.

The budget would abolish over 200 County government positions, reduce spending requests by $155.4 million, which includes $33.2 million in FY08 reductions, and increase property taxes by $138 on the median County home while sustaining critical County services in such areas as education, public safety, and help for needy County residents.

“Montgomery County rightfully prides itself on the investments we make year in and year out to light the lamp of learning in our schools, to help folks move around the County more efficiently, and to protect County families and their properties,” Leggett told several hundred people at a crowded Rockville news conference.

“We work to be responsible stewards of our environment, to ensure a vital community where men and women can earn a living or grow a business, and help the most needy and most vulnerable in our midst.

“The good news is that Montgomery County will continue to be a place where all that happens. But the bad news is that County government has been living beyond its means.

“Given the weakness in the housing market and in the national economy, we have a very difficult year ahead in matching our resources and our needs. But our problems don’t stop with a single year. We have a structural deficit that will only grow worse – unless we change course – and do it now.”

Under the tax-supported budget, funding for Montgomery County government increases by $20.8 million – only a 1.6 percent increase over fiscal year (FY) 2008. This is down from a 6.9 percent increase last year in Leggett’s first budget and a 14.6 percent increase in FY07.

Nearly two-thirds of the total increase in County spending requested by Leggett goes to Montgomery County Public Schools (MCPS). Tax-supported funding increases by $74.8 million – a four percent increase over FY08. The request represents nearly 98 percent of the Board of Education’s request for its anticipated 137,763 students, down from a high of 139,387 in FY06. Per pupil spending in the budget increases to a record $14,954.

Tax-supported funding for Montgomery College increases by $8.8 million, a 4.5 percent increase, while the Maryland-National Capital Park and Planning Commission (M-NCPPC) receives $4.4 million more, a 4.5 percent increase.
The total recommended County budget (which includes grants, debt service, and enterprise funds that generate their own revenue) for Fiscal Year 2009 is $4.32 billion, up $161.8 million over the FY08 Approved Budget, and a 3.9 percent increase.

Reductions to County department requests totaled $45.9 million. MCPS reductions were $51.1 million. The Montgomery College request was shaved by $9.6 million and the M-NCPPC reduction totaled $15.6 million.

“Last year, in my first budget, we faced a $200 million budget shortfall. We reduced the rate of increase in spending by County government from 14.1 percent to nearly seven percent,” said Leggett. “Although we were able to fund critical services and even hold the line on taxes, I warned that more difficult days lay ahead. In November, we got the bad news that our income taxes and recordation and transfer taxes fell far short of projections, resulting in an estimated shortfall of over $400 million.

“I have taken a hard look at how to preserve essential services and continue significant productivity improvements while finding ways to cut costs. And even with $33.2 million in spending cuts this year, a freeze on hiring, $122.2 million in reductions to FY09 requests by departments and agencies, and my six-year capital budget that increases only one percent – it’s not enough.

“I am recommending more reductions from our departments, our workforce, and certain services – with special emphasis on protecting as much as possible for our schools, public safety, and assistance for the most vulnerable. Still – even with all these and other painful measures – we must still raise property taxes to close the $400 million gap.

“I have always believed that County government must keep faith with those who pay the bills – our residents. We have an obligation to be honest with them about our challenges and be diligent about reducing spending where possible without critically affecting needed County services. Only then should there be talk about tax increases. That is the approach I have taken. I have worked to structure the increase so that it can be as progressive as possible.”

In order to preserve essential services, Leggett is recommending an increase in property taxes of $128 million. For the median house in the County, assessed at $343,200, the homeowner will see a $138 per year hike – a 6.2 percent increase. A homeowner whose home is assessed at $220,000 (21 percent of County homes) would pay $56 less in property taxes (a 4.7 percent decrease), while a home assessed at $500,000 would pay $383 more – an 11 percent increase.

“As a start toward addressing the structural challenges we face,” he said, “I am recommending the abolishment of approximately 225 positions in County government – an estimated 50 of them through an early retirement incentive program that we estimate will save $5 million in FY09.”

The budget also proposes changing the time frame within which County agencies must “ramp up” to fund promised retiree health benefits from five years to eight years and requires all agencies to make the scheduled contributions into their retiree health benefit trust fund. This change frees up an additional $4.4 million for the operating budget.

“To approve health benefits for future retirees without funding those benefits is not responsible – it breaks faith with retirees who will need to know the money is there when it is needed,” said Leggett. “We have long accepted the concept of pre-funding of pension benefits because it is a responsible and cost-effective approach to fulfilling our promises to retirees. We need to embrace the need to realistically fund their health benefit commitment as well.”

The budget not only sustains prior investments of nearly $5 million in the County’s “Positive Youth Development” program, but also adds over $600,000 in new funding to address the growing need for out-of-school activities and to maintain the services provided by the Youth Opportunity Center in Langley Park.

During times of fiscal and economic challenges, creating affordable housing and preserving the County’s current affordable housing stock becomes even more critical. Leggett’s budget includes an investment of over $54 million in the Montgomery Housing Initiative fund for acquisition and rehabilitation of the County’s affordable housing.

The budget also sustains the most important investments made in the County’s public safety departments, including patrol and investigative staffing in the Police Department and field staffing in the Fire and Rescue Services, and minimizes staffing reduction impacts on response time or first response services. Leggett is recommending 36 new firefighter positions to staff the West Germantown Fire Station when it opens during the next fiscal year. Also included are funds to sustain the second phase of four-person staffing on fire apparatus, as well as the uniformed inspectors to enhance compliance with the Fire Safety Code.

The budget includes an Emergency Medical Services (EMS) fee to provide an estimated $6 million in additional resources over the first half-year of operation to sustain and grow the Fire and Rescue Services in the coming years. The projected level of tax-supported resources for the Fire Tax District Fund simply cannot meet the demands for apparatus management; additional staffing for new stations opening in West Germantown, East Germantown, Travilah, Clarksburg, and other locations around the County; additional resources to achieve four-person staffing of apparatus; and competitive compensation and benefits for firefighters and emergency medical technicians.

The EMS Fee will be billed directly to individuals’ health insurance companies, so no County resident without insurance will have to pay for transport to the hospital. All of the region’s surrounding jurisdictions have implemented similar programs without reducing the willingness of individuals to call for emergency services. The program will be structured to have no impact on the development capabilities of local fire and rescue departments.

To reduce pedestrian collisions and fatalities in the County, Leggett announced a comprehensive Pedestrian Safety Initiative in December that included seven strategies designed to enhance pedestrian safety and create more walkable communities. Based on the recommendations of the Initiative work group, this budget includes an additional $800,000 to conduct safety audits in areas with a high incidence of pedestrian collisions, make physical improvements to those areas, and enhance outreach and education. This additional investment will complement existing pedestrian safety and connectivity programs, which include sidewalk repair and construction, signal optimization, crosswalk installation, and outreach and education.

Due to current fiscal challenges, targeted reductions are included to certain Health and Human Services programs that sustain the County’s most important commitments and make improvements to other vital services. Staff is added to support the opening of the School Based Health Center at Summit Hall Elementary School. For the “Montgomery Cares” program of access to health care for the uninsured, this budget maintains the more than 19,000 clients served annually.

Leggett is recommending community grants totaling $4.1 million for non-profit organizations that assist County agencies in addressing human service needs. The budget includes consolidating all grants for English-as-a-Second-Language (ESOL) instructional services with the Montgomery Coalition for Adult English Literacy (MCAEL) to improve the efficiency and coordination of these services within the County.