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Leggett’s Proposed FY2016 Budget Cuts Include $10 Million From MCPS Budget, & $5 Million from Montgomery College

July 13, 2015

Less than a month after the County Council approved the FY2016 operating budget; County Executive Ike Leggett has proposed funding cuts to that budget. The cuts would affect almost every department of County government at some level.

   The County Council must review the proposed $51 million in reductions, which Leggett says are necessary to make up for lower tax revenues and the cost of tax refunds triggered by the Supreme Court decision in the Wynne case.

   Leggett’s proposed cuts are one percent of Montgomery County’s $5.08 billion operating budget that the County Council approved in May. The budget took effect on July 1, just seven days later on July 8, Leggett proposed the FY2016 savings plan containing the budget reductions.

   At his Monday morning press briefing, Council President George Leventhal said the County Council will approve the final savings plan at the July 28 meetings. He said the county has $373 million in approved reserves, which is $12 million more than the target the council set in 2011 and the highest amount ever in reserve.

   “We are a well-resourced county, and the bottom has not fallen out,” Leventhal said. “We’re going to be all right, but we do need to make reductions to the base to enable the decisions that we make next spring be handled in a responsible and constructive way.”

  “We are going to agree with some of Mr. Leggett’s proposals,” said Leventhal. “We are not going to agree with all of them. Committees are going to get to work, and we will review the reductions that we think we can handle.”

  The cuts include $24 million from all county departments, $10 million from Montgomery County Public Schools, $5 million from Montgomery College, $1.5 million from the Montgomery National Capital Park and Planning Commission, and finally another $10 million in current tax money used for bond-funded construction work. Click here for a complete list of cuts proposed by the County Executive.

   It is from the last bucket that Leggett plans to move $1.0 million in construction funding for the Clarksburg/Damascus Middle School. The plan amends the way a portion of the funding for the project is to be derived. Rather than using recordation tax funds the $1.0 million would come from general obligation bonds in an effort to get remove the expenditure from the FY2016 budget. The Clarksburg/Damascus Middle School remains on schedule to be completed by August 2016. The cuts Leggett has proposed would not delay construction.

  “The school is still on schedule,” said Councilmember Craig Rice who represents Germantown and the upcounty area. “It is really just an accounting switch. It is not going to change the effective opening date of the school.”

   However, Rice pointed out that things could change. He said that while there is no plans to make changes to the CIP, if the County’s economic situation remains tight the Council may decide to make changes and reprioritize the projects on the CIP.

  “I keep reminding folks,” said Rice, “that we have the Purple Line Project and folks have been asking for that to move forward, which is asking for addition CIP revenue. That $25 million to $50 million whatever that amount is, will be coming from somewhere. That money is not allocated in the current CIP. That could easily affect a number of schools.”

   For a complete list of Capital Improvement Projects which are having their funding sources amended click here.

   Leggett, in a letter to Council Members, stated that the cuts are necessary because the county’s portion of income tax revenue from the state was $21.4 million below earlier estimates.

   “Given the size of the FY2015 distribution and pattern of shortfalls we have experienced, it is unlikely that the final distribution will result in additional revenues that would significantly offset the $21.4 million shortfall. Therefore, it is prudent to assume a significant overall shortfall will continue into FY2016 and FY2017,” said Leggett in a July 8 letter to Council President Leventhal.

   The county is also facing tens of millions of dollars in reduced tax revenues over the next two years because of refunds mandated by the Supreme Court decision in Comptroller of the Treasury of Maryland v. Wynne. The decision will further reduce income tax revenues by approximately $15.1 million in FY2016 and $76.7 million in FY2017, with a cumulative revenue loss by FY2017 projected to reach well over $150 million, according to Leggett.

   The cuts include expanded library hours being cancelled; elimination of workers who provide services to the developmentally disabled; delays in providing body cameras to MCPD and 30 fewer subsidized housing units for homeless veterans and families with children.

   Other cuts include $1.7 million for a new fire engine for Hyattstown fire station 709, and new apparatus for the Kensington fire station, as well as a reduction in the size of the recruit class for both MCFRS and MCPD. The cuts would reduce the police department budget by $2 million and the fire rescue service budget by $3.9 million.

   “What I think we need in the fire department is a real look at whether we are actually saving money,” said Leventhal at his Monday morning press conference. “We can make some short-term reductions that will lead to greater long-term costs in terms of overtime and one fire station having to work harder to cover shorter responses times from other fire stations.”

    For a complete list of the County Executive's proposed cuts to County services click here.

   During the Education Committee meeting on Monday, Rice said that in May the County Council added an addition $2 million to the MCPS budget over the original County Executives budget total, now it must ask for those funds back.  “It is very uncomfortable to be in a place where we are asking (MCPS) to exact a savings of $10 million, which takes out the $2 million we added and asks for another $8 million,” said Rice to Interim Superintendent Larry Bowers.

   Bowers said that while finding the $10 million in the budget and not significantly further impacting school-level staffing will be a challenge given that the Board of Education had already cut over 300 positions from the budget. He also said that MCPS had been aware of the need for further cuts.

   “We did understand when the budget was adopted that we were going to have to consider taking some actions this year in order to make some savings,” Bowers told the County Council Education Committee on Monday. “We understood that because we knew that FY17 looked very difficult and challenging. We knew that there were two one-time sources of funding used to fund the FY16 budget that we would have to try to address. One of those being $33 million of our own fund balance. The $10 million is a target, but quite honestly, we have to get closer to $33 million than $10 million. Having said that, I don’t know if we are going to be able to get there.”

   Leventhal wants the County to take a look at the compensation of top level managers. He feels that the County’s pay structure may be too “top-heavy.”

   He said the council plans to evaluate the salaries of high-level managers. “By the time we get to FY2017 budget I hope we’ll have in place a new approach towards top-level compensation,” Leventhal said. He has asked the county’s Office of Legislative Oversight to research whether the county pays its top-level managers salaries similar to those in other comparable jurisdictions across the country.

   “We have to have a conversation over the long-term about right-sizing. I think we are compensating people very, very generously, and I’m talking about hundreds of senior-level managers,” Leventhal said.

   Leventhal said the County Council has set up a special portal on the County Council Website for residents to submit thoughts and suggestions on the FY2016 Savings Plan. “We are getting hundreds of emails a day from folks who are expressing deep concern over some of the decisions that were made in the County Executive’s proposal.”

 

 

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