Montgomery County Executive Isiah Leggett today announced his recommended $4.3 billion operating budget that closes a $779 million gap for fiscal year (FY) 2011 that begins July 1. Leggett’s budget focuses on protecting essential services and his priorities of education, public safety and the safety net for the most vulnerable, but includes significant reductions in services and staffing levels.
Leggett’s hard choices resulted from the continued severity of the economic recession; doubling in the local rate of unemployment; declining residential and commercial development; ongoing, sharp declines in tax revenues and state aid; and emergencies such as the H1N1 flu outbreak and snow removal from this winter’s historic blizzards.
“Our region is not immune from the tough economic times in which we live,” said Leggett. “Neither are our families. And, neither is County government. Leadership means making the hard choices now that address our current problems, without resorting to quick fixes. Leadership also means fighting to meet the challenge of putting the County on a future path that is fiscally responsible and sustainable. We need to make the right decisions now if we are to lay the groundwork for our County to come out of this downturn in the best possible position. But let there be no mistake, there is pain in this budget – for our community and for County employees.”
Leggett’s budget brings the County government’s tax-supported growth rate down from a 14.1 percent increase in FY07, the year before he took office, to an historic minus 6.1 percent in the FY11 Recommended Budget compared with the current year. The overall 3.8 percent decrease for all County agencies from all sources represents the only reduction in the annual County budget in modern County history -- since the adoption of the current charter in 1968.
In the four budgets Leggett has prepared, he has closed budget gaps of nearly $2 billion to address shortfalls every year – which is unprecedented. The magnitude of the problem is reflected in the County’s income tax revenue annual rate of growth. In FY07, income tax revenue increased by 21 percent. In FY10, it decreased by more than 15 percent.
Leggett’s previous cost reduction efforts preserved direct services as much as possible, but even these services will now be affected with this year’s looming deficit. This budget proposes cutting costs by eliminating 452 government positions, providing no pay increases of any kind for County government workers, furloughing non-public safety County employees for 10-days, realizing cost savings from all County departments, and reducing current revenue funded expenditures in the capital budget.
All told, between position abolishments, leaving positions vacant, and reductions in overtime, Leggett’s budget would reduce the County government budget by 750 work-years.
“When I first took office, Montgomery County’s spending was out of control and unsustainable,” said Leggett. “And that was before the economic downturn. It was clear that we had been living beyond our means. Over the last four years, I have worked aggressively to restore fiscal prudence to our County government by dramatically slowing the rate of growth of both the operating and capital budgets. As the economic news has worsened, I have continued to press ahead on long-term cost savings that minimize the future burden on taxpayers.”
The recommended budget keeps faith with Leggett’s commitment to continue to hold the line on property taxes at the Charter limit, including a credit of $693 to lower the burden on homeowners and maintain a more progressive property tax. Under the recommended budget, the property tax rate remains unchanged.
“Past cost reduction efforts have focused on preserving my priorities of public safety, education and the safety net for the most vulnerable,” said Leggett. “Although I reduced the budget by $1.2 billion over the last three years, the size of this year’s budget deficit leaves no alternative now but to include more reductions in County services across all programs.
“To address our long-term budget challenges, I have reached out to our partners in Montgomery County Public Schools, the Park and Planning Commission, Montgomery College and the Washington Suburban Sanitary Commission. Through 20 focus groups, a cross-agency committee collaboratively created resource-sharing and cost-cutting ideas to structurally improve the County’s budget.”
Among County government departments, the largest reductions from FY10 levels are in the Regional Service Centers and the Office of Human Resources (both 33 percent reductions), the Commission for Women (27 percent), the County Executive’s Office (26 percent), Housing and Community Affairs (24 percent), Transportation (23 percent), and Libraries (22 percent). Among the lowest reductions were Fire and Rescue (2.6 percent less than in FY10), Police (4 percent), Correction and Rehabilitation (4.5 percent), Department of Transportation/Transit Services (6.8 percent), and Health and Human Services (10.6 percent).
Under the Recommended Budget, funding for affordable housing through the Housing Initiative Fund, a priority of the County Executive, would be reduced by $10 million as compared to FY10 levels. Noyes Library would be closed, library materials reduced, and overall library hours cut by 8.7 percent.
County recreational facilities, except for pools, would be closed one day each week. Senior mini-trips and outdoor adventure programs would be eliminated. After-school Sports Academies and Recreation Extra programs would be reduced. Eighteen Ride On routes (three weekday, 10 Saturday and five Sunday) would be eliminated and another 16 restructured, saving $2.7 million, and the Call-N-Ride program would be reduced to one coupon book a month. The County Volunteer Center would be reduced and restructured.
In public safety, one Fire and Rescue truck and one ambulance would be taken out of service and the new recruit class will be delayed. Forty Police positions, including 24 sworn officers, would be eliminated, and 16 of the 33 officers stationed in Montgomery County public schools will be cut. Nine of the 40 police positions, all non-sworn, would transfer to the MC311 Call Center. Four satellite police sub-stations would be closed. Thirty-three Corrections positions would be eliminated.
The budget includes reductions in the Montgomery Cares program that provides health care to the uninsured, as well as reductions in home care, school health aide hours and payment to disability development providers. Funding for the County’s tuition assistance program would be eliminated. Non-emergency tree maintenance would be curtailed and, except for buses, the County would purchase almost no new vehicles or computers during the coming years. Maintenance in County facilities will be reduced. Pedestrian safety education monies would be drastically curtailed.
“To those who object to these reductions, I have a simple message: I do not like these any more than you do,” said Leggett. “Hard choices must be made, and not just talked about, in this difficult economic and fiscal environment.”
Closing the Gap
“In my first budget as County Executive in FY08, we faced a $200 million budget shortfall, so I reduced the tax-supported rate of increase in spending by the County government from 14.1 percent to 6.9 percent,” said Leggett. “In FY09, the projected shortfall increased to $401 million, so we imposed a hiring freeze, produced mid-year savings of more than $30 million, abolished over 225 positions, implemented a retirement incentive program, and slowed the rate of growth to 1.6 percent. Last year, we faced a daunting gap of $590 million that was closed without a tax increase by reducing costs, abolishing nearly 400 positions and eliminating general wage adjustments for most employees. This year, we face an even more staggering deficit of $779 million that my recommended FY11 budget successfully closes.”
Overall, the recommended budget includes:
• Decreases for Montgomery County government of $76.5 million, a 6.1 percent decrease;
• Reductions of $79.5 million, a 3.9 percent decrease, for Montgomery County Public Schools (MCPS), funding 96 percent of the Board of Education’s request;
• Funding decreases for Montgomery College of $8.3 million, a 3.8 percent decrease; and
• Funding reductions for the Maryland-National Capital Park and Planning Commission of $15.1 million, a 13.5 percent decrease.
As a last resort to avoid further reductions in County services or additional layoffs, Leggett also recommended an increase in the County’s energy tax to raise an additional $50 million. The energy tax is paid by all utility users, including federal facilities in the County that pay no other major County taxes. For the average homeowner, this means an increase of about $3 a month. However, as the tax is based on consumption, the amount of the tax can be lessened through reduced energy use. To minimize the impact of this increase on low-income households, Leggett included additional funding in the County’s Energy Assistance Program
As part of closing the shortfall, Leggett recommended once again reducing tax-supported reserves from six percent of resources to five percent, freeing up approximately $37 million to help balance the FY11 budget and sustain critical services.
“I have found it necessary to recommend budgetary strategies that I have strongly resisted in the past, including temporarily reducing reserves,” said Leggett. “I take this action with the expectation that we will replace the reserves as quickly as possible and return them to the six percent policy level.
“The choices I have had to make aren’t easy – and some of them aren’t popular. But, we also have an opportunity to strengthen our financial position and take advantage of future opportunities for renewed economic growth and recovery.
“We have to keep in mind that the economy has not yet bottomed out. More state budget cuts may be on the horizon. And, even if the Council approves my recommended budget just as it is, we are already projecting a fifth straight year of budget shortfalls next year of over $200 million.”
Wages and Benefits
“Wages and benefits for County employees represent 80 percent of our budget,” said Leggett. “I am very proud of our workforce – its professionalism, dedication, and work ethic. However, fiscal prudence dictates hard choices in reducing compensation costs.
“That’s why this budget includes no cost-of-living or service increment increases for any County government employee. I regret that I have to take this action because I know how hard county employees work, how seriously they take their service to the public, and the difficult conditions under which they must provide public services.
“I am also recommending abolishing 452 positions, bringing the total of positions I have abolished to nearly 1,000 over the past three years. Of the 452 positions, 232 of them are currently filled. We will continue the hiring freeze instituted over two years ago. We will implement a 10-day furlough for non-public safety government employees and recommend that the other County funded agencies also adopt this cost reduction strategy. We will introduce a new retirement incentive program targeted at those positions abolished to lessen the impact on affected employees.”
Leggett’s budget also saves $64 million by deferring the scheduled increase in contributions by the County to a multi-year plan to fully fund retiree health benefits.
Faced with tough choices for public safety, this budget averts more serious reductions in first response Fire and Rescue Emergency Medical Services (EMS), because it includes instituting an Emergency Medical Services Transport Fee that will provide an estimated $62.2 million over the next four years.
“Without the EMS Fee, there is simply not enough money to meet the demands for fire equipment, additional staff for new stations, volunteer enhancement, recruitment and retention, additional staff for four-person staffing of equipment and compensation, and benefits for firefighters and emergency medical technicians.
“The EMS Fee will be billed directly to an individual’s health insurance, Medicaid, or Medicare. Because County residents already pay taxes to support EMS service, no County resident will pay a dime, or even receive a bill. No County resident who is unable to pay will have any out-of-pocket expense for transport to the hospital. The program also will be structured to have no impact on the development and growth capabilities of local volunteer fire and rescue departments.
“Nearly all our surrounding jurisdictions have a similar fee and are using those resources to improve service and save lives – with no adverse effects. Montgomery County should do the same instead of leaving tens of millions of dollars in insurance reimbursements uncollected.”
The facts about the EMS Transport Fee are available at: www.montgomerycountymd.gov/emstransportfee.
On education, Leggett’s budget meets 96 percent of the Board of Education’s request. The County will again this year apply for a waiver from the State “maintenance of effort” requirement that will lower the County’s contribution by $58.2 million and still qualify for increased state K-12 education aid.
“Superintendent Dr. Jerry Weast, the Board of Education, and the MCPS employee organizations have contributed significantly in helping to close the shortfall we all face,” said Leggett. “I appreciate their close collaboration.”
Leggett continues to invest in programs that are building more effective government, saving millions of dollars, boosting customer service, and restructuring government through reorganizations and modernization of core business systems.
“Our approach to balancing the budget should not strictly be a matter of cost reduction, but we should make every effort to make our operations more efficient, productive, and cost effective. To accomplish these objectives, I have instituted several measures to make Montgomery County government even better and more efficient in how we operate and provide services to the community.”
For example, the CountyStat initiative has successfully cut overtime hours by 19 percent, saving the County $7.8 million. A paper reduction initiative saved more than $1 million over the last year. Implementation of the 311 Call Center later this year will significantly enhance community services and provide the County with important information that will guide future decisions about the use of scarce resources.
“Despite the extraordinary challenges we are currently facing, I remain very optimistic about the future of our County. We will continue to take advantage of every opportunity to produce savings and preserve and enhance services for the residents of this County.”
To view the budget highlights and the full budget, go to the Office of Management and Budget homepage on the County’s website at www.montgomerycountymd.gov/omb.
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