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Leggett Vetoes County Minimum Wage Increase, Remains Open to Approval With Changes

January 24, 2017

 

Montgomery County Executive Ike Leggett has sent a letter to County Council President Roger Berliner stating that he has vetoed Bill 12-16 which would have gradually increased the County minimum wage to $15 per hour by 2020.

   The bill is now dead, but Leggett told Berliner and the County Council that he still supports the idea of increasing the County’s minimum wage at a slower rate and only after an economic study on how such an increase would affect both private companies and the County budget.

   Bill 12-16, which was approved by a 5-4 vote by the County Council last week, was criticized by business leaders, and those Council members voting in opposition, as being too much, too soon.

   “The only way to express my position regarding this bill at this time is to reluctantly veto and return it to you with what I believe is a more reasonable path to moving the County to a $15 wage,” wrote Leggett.

   “I support the effort to move toward $15 per hour over an appropriate timeframe and under certain conditions,” wrote Leggett. “And that sentiment was expressed to you and your Council colleagues who voted against the bill.” He noted that in 2013, the Council unanimously approved a Minimum Wage bill, which raised the minimum wage to $11.50 in the span of four years with the final increase going into effect on July 1, 2017. That bill remains in effect.

   “But this year’s effort became much more contentious and divided resulting in only a 5-4 majority. Many believed it went too far, too fast, and I am disappointed that we did not find a broader consensus,” wrote Leggett.

   Another criticism of the Bill 12-16 was that it would make the cost of doing business in and with Montgomery County too high compared to neighboring communities, with the exception of the District of Columbia which already has a higher minimum wage requirement.

    Leggett shared those concerns, “Montgomery County’s minimum wage is, and will continue to be, higher than both the federal and State minimum wage, as well as that in all surrounding jurisdictions except the District of Columbia. I remain concerned, however, about the competitive disadvantage Bill 12-16 would put the County in compared to our neighboring jurisdictions.” Leggett said that unlike other cities that have already passed a $15 minimum wage, Montgomery County is not a “destination city” like New York City or Seattle drawing a large amount of business travelers and tourists able to afford high costs for short term visits. “Our residents will essentially shoulder the bulk of the cost,” wrote Leggett.

   Leggett also raised concerns about the economic impact Bill 12-16 would have on the County budget. “I believe in an expeditious and timely study of relevant issues on the fiscal and economic impact of an increase of the minimum wage on Montgomery County, I maintain that a study will better inform the Council on the direct and indirect impacts on private employers’ bottom line as well as the impact on County government.”

   He spelled out that under the vetoed bill the County’s budget for Developmental Disability providers along would be $21.1 million over the current FY17 base of $13.8 million. “Based on current budget projections, this would be a very difficult amount to absorb, and this does not  address the challenge faced by all of our non-profit partners.”

   “I urged the Council to consider a longer timeframe for raising the minimum wage,” wrote Leggett. “While the Council provided an extension to 2022 for small employers (25 or fewer employees), the bill retained 2020 as the date for the County minimum to reach $15/hour for all other employers. I think that is too fast and believe we should not reach $15/hour for all employees until 2022. In addition, small employers will be hit particularly hard, thus should be exempt entirely from the increased minimum wage requirement.”

   Leggett is calling on the County Council include the following four recommendations to any new minimum wage bill. 1) A new bill should be based on an expeditious study and indirect financial impacts on private employers, non-profits and County government. 2) It should include an exemption for small business, the definition of which can be informed by the study. 3) It should include an exemption for youth workers. 4) It should provide for reaching $15/hour in 2022.

   Bill 12-16, which was pushed through by five members of the all-Democratic County Council was sponsored by Councilmember At-Large Marc Elrich, while Councilmembers Tom Hucker (District 5 – Takoma Park/Burtonsville), George Leventhal (At-Large), Nancy Navarro (District 4 – Olney/Wheaton) and Hans Riemer (At-Large) were co-sponsors of Bill 12-16, and all five voted to approve the amended bill. Councilmembers Roger Berliner (District 1 – Bethesda/Poolesville), Nancy Floreen (At-Large), Sidney Katz (District 3 – Rockville/Gaithersburg) and Craig Rice (District 2 – Germantown/Clarksburg/Damascus) voted against the amended bill.  

   While Katz, Floreen, and Berliner all focused their opposition to the bill on the need to further study its economic impact, Rice took a different tact, saying that increasing the minimum wage may prevent young minority residents from getting jobs. Rice said employers required to pay the higher wage could seek to hire higher-skilled workers, pushing young workers out of the job market and further impacting young blacks and Latinos who already are struggling to find jobs.

   “If I know people aren’t benefiting from the minimum wage because they’re unemployed, my duty is to get them employed first, then lift the wage,” Rice said. “In my community, there are people… who don’t have job opportunities,” said Rice. “Fifteen dollars per hour does nothing for them.”

 

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