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County Council Adopts $5.08 Billion Budget for Fiscal 2016

May 22, 2015

 

Yesterday, the Montgomery County Council adopted a $5.08 billion total County operating budget for Fiscal Year 2016. The budget reflects a 1.7 percent increase over the approved budget for FY 2015.

   “This budget effectively addresses the top priority concerns of County residents while holding the line on taxes,” said Council President George Leventhal. The Council also approved amendments to the Fiscal Years 2015-20 six-year Capital Improvements Program. The budget will go into effect on July 1.

   The total County budget, including debt service, grants and enterprise funds, will be $5.08 billion, an increase of 1.7 percent from the FY15 approved budget. The overall tax supported portion of the budget including debt service will be $4.42 billion, an increase of 1.5 percent from the FY15 budget.

   The budget also maintains property tax revenue at the Charter limit (last year’s amount plus an inflation-tied increase). It includes a $692 property tax credit for owner-occupants of principal residences. The weighted property tax rate will decrease to 98.7 cents per $100 of assessed value, down from 99.6 cents.

   “The budget proposed by the County Executive in March provided a strong foundation,” said Leventhal. “The Council has strengthened it by directing targeted additional resources to top priority concerns of our one million residents, including education, public safety, health and human services, libraries, parks, transportation, and the Public Election Fund. We have done so while holding the line on taxes.”

    County Executive Isiah Legggett said in a statement that he appreciated the hard work the County Council had done to work on the FY16 budget but was unhappy with the Council’s decision to reduce the County reserves in light of the Supreme Court of United States decision in the Wynne Case.

   In the Wynne Case, a Howard County couple, Brian and Karen Wynne, challenged the rights of local governments to tax income from out-of-state jurisdictions which have already taxed the income. On Monday, May 18, the Supreme Court ruled that Maryland’s income tax law is unconstitutional because it does not provide a full tax credit to residents for income tax paid outside the state, a ruling likely to cost Maryland counties and localities across the country millions of dollars in revenue.

   The court voted 5 to 4 to affirm a 2013 Maryland Court of Appeals ruling that the state’s practice of withholding a credit on the county segment of the state income tax wrongly exposes some residents with out-of-state income to double taxation. 

   “Unfortunately the Council opted to reduce County reserves by over $10 million to fund its reconciliation list,” said Leggett, “This is imprudent given the significant challenges facing the County in the coming years including an adverse decision in the Wynne income tax case, rising costs, and reduced state aid for education and makes it more likely that the County may have to increase property taxes over the next few years, implement unprecedented service reductions – or both.”

   The Council approved a total budget of $2.3 billion to fund the educational budget request of Montgomery County Public Schools. The total tax-supported budget for MCPS is $2.2 billion. This funding level represents an increase of $31.9 million (1.4 percent) from FY15.  The Council’s approved funding for MCPS provides a total of $1.51 billion in County funds, which includes an increase of $24.2 million to meet the State’s Maintenance of Effort requirement and a total of $44.4 million required for State retirement contributions. In addition to these County funds, the approved budget provides an additional $27.2 million of resources to fund MCPS retiree health benefit claims. Together, this meets 97.6 percent of the Board of Education’s funding request.

   The approval of the budget combined with Governor Larry Hogan announcing last Thursday, May 14 that he would not fully fund the Geographic Cost of Education Index (GCEI), has put the school district in a tight spot when it comes to their budget for next year.

   The Montgomery County Board of Education had requested a 4 percent increase, the FY2016 Operating Budget provides only a 1.4 percent increase for MCPS, which is $53 million less than the amount the School District requested.

   Board of Education President Patricia O’Neill said in a statement, “While we are disappointed that our budget was not fully funded, we understand that the County Council had to make some difficult decisions during a time of lagging tax revenues. This made state funding even more important.”

   The state funding in the form of the GCEI, which provides additional money to school districts, such as Montgomery County and Prince Georges County, where it is more expensive to provide an education. MCPS expected to receive $34 million in GCEI funds this year but, instead, will receive $17 million.

   “We are extremely disappointed that Gov. Larry Hogan has decided not to fully fund public education in Fiscal Year 2016. His decision leaves a $17 million hole in our budget that will require us to take very difficult actions that will impact every school in our district,” said O’Neill.

   “Our budget already included more than $8 million in reductions and Interim Superintendent Larry Bowers has put spending and hiring restrictions in place that have resulted in more than $30 million in savings that will be put toward next year’s budget. Mr. Bowers has also eliminated more than 80 central office positions and is holding back more than 370 school-based positions, including teachers, ESOL instructors, special education staff, and other important positions,” said O’Neill.

   “The Governor’s decision will now require us to make even deeper cuts that could impact our ability to serve every child to the highest level possible,” continued O’Neill.

   The Council approved a total budget of $309.9 million for Montgomery College, including a tax-supported budget of $252.2 million and a total of $127.6 million in County funds. This is an increase of $12.8 million (4.3 percent) from the FY15 approved budget. The funding exceeds the State Maintenance of Effort requirement by $10.9 million.

   The tax-supported funding for the Maryland-National Capital Park and Planning Commission of $123.3 million is an increase of $2.5 million (2 percent) over the FY15 approved budget.

   The Council approved funding for the Executive’s collective bargaining agreements with the three County unions: UFCW Local 1994/Montgomery County Government Employees Organization (MCGEO), the Fraternal Order of Police Lodge 35 and the International Association of Fire Fighters Local 1664. The agreements call for general wage adjustments (COLAs) of 2.0 percent and annual service increments (steps) of 3.5 percent for eligible employees.

   The Council approved $2.71 million for 95 Council community grants to nonprofit organizations to support a variety of programs and services, including food, shelter and other safety net services. The funding also supports proposals from community nonprofit organizations to provide after-school programs for County youth, programs to help disabled residents attain employment, and programs to improve quality of life for seniors. The complete list of Council community grants can be found at: http://tinyurl.com/o3pno83.

   The Council continued its commitment to enhance library services. The approved budget of $41 million for County libraries is a 7.1 percent increase from the approved FY15 level. The Council also added $150,000 to increase the purchase of materials for libraries, including $50,000 for Spanish language materials.

   The approved budget supports the County’s public safety commitment. The budget for the Department of Police is $271 million, which is a decrease of 1.2 percent form FY2015. It funds the initiation of a body camera pilot program for patrol officers. It also funds the purchase of new bulletproof vests for officers, as well as providing $80,000 for additional pedestrian safety initiatives.

   The budget for the Montgomery County Fire and Rescue Service, $222.3 million, a decrease of 1.3 percent from last FY2015 budget. The budget does include funding for a full 35-member recruit class.

   The FY16 aggregate operating budget was approved by a vote of 8-1, with only Council Vice President Nancy Floreen voting against the budget. Floreen was the only member of the all Democratic Council that did not vote to approve the budget. 

   “While I am pleased that this budget holds the line on property taxes and limits our spending increase to 1.7 percent over last year,” said Floreen. “I remain deeply troubled by the fuel-energy tax rate. Residents and business owners will remember that we doubled this rate when we were in the throes of the recession. At that time, we promised to eliminate the increase entirely when the economy improved. To date, we have only reduced the increase by 27 percent.”

   “I am very sensitive to the cost of doing business here, and I am not willing to undercut our efforts to improve the local economy with such an onerous fuel-energy tax rate. I appreciate the work that has gone into this budget but regret that, ultimately, I cannot support it,” she said.

   Councilmember Craig Rice, who represents Germantown from District 2 was expressed disappointment in the Council’s inability to fully fund the education portion of the budget. “As chair of the Council’s Education Committee,” said Rice, “my fervent hope was to be able to fully fund the MCPS budget like we were able to do just last year. Circumstances due to reduced revenue and funding from the State caused the Council to make some very tough choices this budget year. We did the best we could in regard to our public schools and community college, and were able to provide additional funding above the County Executive’s recommendation for both institutions.”

   In March, Rice spread the message of dire need to advocate for increased funding for schools at five Budget Forums held around the County, including one in Germantown.

   “While limited resources meant that a number of excellent programs were unable to be funded this year, I am pleased that several of the Health and Human Services Committee priorities were able to be included in this budget and that we were able to add to our important pedestrian safety initiatives.”

   The Council also approved a number of amendments to the Capital Improvements Program for FY2016 including nearly $10.7 million in added funding to complete the widening of Stringertown Road and Clarksburg Road in Clarksburg. And 16.7 million added for road rehabilitation and sidewalk and curb replacements countywide.

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