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County Executive on Closing the Budget Gap

County

A press release received this week outlines the County Executive’s statement on the current budget woes in Montgomery County.  The entire message is posted below in the more section - apparently it takes several months for this press releases to be posted on the County Executive’s web page (current 5 months behind).  Tough times ahead for fans of county spending.  And an interesting take on the phrase “closing the gap”, where we see a $587 million budget gap is closed through a 1.9% increase in spending.

Original Message, “Isiah Leggett Reports, March 2009″, 3/17/09:

Yesterday, I sent my recommended Operating Budget for FY10 to the County Council.

I wanted to share the following release issued Monday that details the highlights of this budget and includes information and charts that I hope help explain the tough decisions that went into my recommendations.

As always, I welcome feedback and you can email me at County Executive Isiah Leggett.

Leggett Protects Vital Programs,
Closes $587 Million Budget Gap

Operating Budget Contains No COLAS for County Employees, Abolishes 400 Jobs, Protects Public Safety, Schools, Safety Net While Setting County on Sustainable Path for the Future

Faced with a $587 million budget gap in the coming year resulting from stagnant economic growth, rising unemployment, a faltering housing market and less assistance from the State of Maryland, Montgomery County Executive Isiah Leggett today announced his recommended $3.83 billion tax-supported operating budget for the fiscal year (FY10) that begins July 1.

Leggett’s budget protects public safety, education, and the County’s safety net for the most vulnerable, while cutting costs by eliminating nearly 400 government positions, providing no cost-of-living pay raises (COLAs) to public employees, realizing cost savings from all County departments and reducing expenditures in the capital budget.

This budget keeps faith with Leggett’s commitment to hold the line on property taxes at the Charter limit, including a credit of $690 to lower the burden on homeowners and maintain a more progressive property tax. Under the recommended budget, the property tax rate remains unchanged. Both the real average household County tax burden and County taxes as a share of personal income fall to their lowest levels since 2004.

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 less than zero - an actual decrease of 0.4 percent for the coming fiscal year - the lowest level in18 years.

In the three budgets Leggett has prepared, he has closed nearly $1.2 billion in shortfalls, which is unprecedented in County history.

Closing the Gap

“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 three years, I have been aggressively working 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 while preserving public safety, education, and our safety net for the most vulnerable.

“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. 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. This year, we face a daunting gap of $587 million that my recommended FY10 budget successfully closes.”

Overall, the recommended budget reduces spending for County-funded agencies by $179.2 million, which includes:

  • Nearly $50 million in reductions in FY09 for County Government, Montgomery County Public Schools (MCPS), the Maryland-National Capitol Park and Planning Commission (M-NCPPC) and Montgomery College; and
  • FY10 budget reductions of an additional $95 million, with $73.2 million from County government departments; $76.5 million from MCPS (including reductions taken in the Board’s adopted budget plus County Executive recommended reductions), $2.1 million from Montgomery College’s request and $2.4 from M-NCPPC.

“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 position.
“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 projecting a budget shortfall next year of over $370 million.”

Wages & 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 increases for any government employee. I have labored to keep from cutting County government positions. This year, however, we have few options –and so I am recommending abolishing about 400 positions. We also will introduce a new retirement incentive program to further reduce positions and save money.”

As part of closing the shortfall, Leggett recommended temporarily reducing tax supported reserves from six percent of resources to five percent, freeing up over $39 million to help balance the FY10 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.”

Leggett’s budget also saves $26 million by deferring the scheduled increase in contributions by the County to a multi-year plan to fully fund retiree health benefits, while maintaining the minimum base contribution to the fund.

Setting Priorities

Leggett sought to protect public safety, education, and the “safety net” for the County’s most vulnerable in his recommended budget. He increased funding for his bold affordable housing initiative and for pedestrian safety. He continues to invest in programs that are building more effective government, saving millions of dollars, and boosting customer service, such as CountyStat and the upcoming “311″ one-stop County phone system.

In County government, the only departments to see actual increases in their budgets this year are the Police and the Fire & Rescue Service. Leggett’s proposals sustain the most important investments in public safety, including patrol and investigative staffing for Police and field staffing for Fire and Rescue.

Police funding increases 2.7 percent, or $6.4 million, with the increase largely due to dedicated funding from the County “Safe Speed” program. Since its inception in 2007, the County’s speed camera program has contributed significantly to the advancement of traffic safety throughout the County. In FY10, speed camera resources will be used to support the funding for critical Police Department units, including the Centralized Gang Unit, a new investigator position in the Sex Offender Unit and positions in the Family Crimes and Traffic divisions.

The Fire & Rescue Service will also see a 2.7 percent increase, or $5 million. The increase - and much more - results from $14.5 million from the Emergency Medical Services Transport Fee, which will improve service and save lives at no cost to county residents.

“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 $14.5 million in FY10 and $62.2 million over the next four years,” said Leggett. “The funds will add 18 new firefighter positions to staff the East Germantown Fire Station when it opens during the next fiscal year; acquire and outfit 30 new ambulances to replace aging models currently in the fleet; and continue implementation of the Electronic Patient Care Reporting system to automate the medical recordkeeping of our emergency medical services personnel as required by the State.

“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.”

The facts about the EMS Transport Fee are available at: www.montgomerycountymd.gov/emstransportfee.

In order to reduce costs and minimize the need to create new firefighter positions, Leggett is also recommending the “civilianization” of several firefighter positions. FY10 will mark the first phase in the plan to redeploy firefighters from the 911 Call Center to the field and replace them with civilian call takers, as is done in the Police Department. Beginning steps will also be taken to civilianize code enforcement personnel in the Fire Marshall’s Office and redeploy these firefighters to the field.

On education, Leggett’s budget increases the Montgomery County Public Schools budget by $38.5 million - a two percent increase - and fully funds all educational programs and nearly 99 percent of the Montgomery County Public Schools request - with a different mix of state and County resources. Because MCPS is receiving $24 million in additional funding due to a State funding error last year, plus federal stimulus funds, the County will apply for a waiver from the State “maintenance of effort” requirement that will lower the County’s contribution by $50 million while fully funding schools’ needs.

Ninety-five percent of the total tax-supported County spending increase Leggett requested goes to MCPS. The budget supports an anticipated student body of 140,500. Per pupil spending increases to a record $15,149.

“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 with me.”

Leggett recommends increased funding for Montgomery College of $5.9 million or 2.8 percent. This level of support requires an increase in tuition and fees of $3 per credit hour for county residents, $6 per credit hour for Maryland residents and $9 per credit hour for students from outside the State.

While reducing the Health and Human Services Department budget, hard decisions have been made to bolster programs that assist the most vulnerable in the county. The recommended budget sustains the most important commitments and makes improvements to other vital services.

The Montgomery Cares program, which promotes access to healthcare for the uninsured and has seen a 33 percent increase in visits over the past year, will increase the number of clients served annually to about 22,500. Staff was added to support the opening of the Linkages to Learning and School-Based Health Center at New Hampshire Estates Elementary School. Two sites will be established for an expanded emergency safety net program in low-income neighborhoods to ensure that individuals and families in crisis are connected to the appropriate services.

Funding will continue for the community-based Centro Nia pre-kindergarten program for 40 three- and four-year-olds to better prepare them for school. The budget also includes funding to relocate and modernize the Outpatient Addiction Services clinic and continue support for the Family Justice Center, a one-stop assistance center for families affected by domestic violence.

Leggett is recommending community grants totaling $2.9 million for nonprofit organizations that assist County agencies in addressing human service needs. The budget continues vital services to keep seniors independent in the community for as long as possible, maintaining home aide services and providing $134,000 for over 24,000 meals at senior centers.

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 nearly $58 million in the Montgomery Housing Initiative Fund for acquisition and rehabilitation of the County’s affordable housing stock, an increase of $3 million over last year’s level.

To reduce pedestrian injuries and fatalities, Leggett is recommending speed camera funding of an additional $4.1 million ($3 million in the capital budget and $1.1 million in this operating budget) to improve safety in areas with a high incidence of pedestrian collisions; make physical enhancements to those areas; enhance outreach, education, and enforcement; and make other needed improvements.

Leggett continues his commitment to improving government and making it more efficient. The CountyStat initiative, in its first year, has successfully cut overtime hours by 21 percent, saving the County $5.3 million and saving more than $1.5 million by improving pedestrian safety and making it more cost-effective.

Leggett warned against the temptation for quick fixes to what he called a structural shortfall and a multi-year problem.

“It has not been easy to make the cuts needed to make up our budget shortfall and submit a balanced budget to the County Council. Last year, the Council passed a budget with a $16 million hole in it — with the expectation that the School Board and I would find ways to address the shortfall. We did — but I want to make it clear that this approach by the Council to the FY10 budget is unacceptable. It is poor fiscal policy that could jeopardize our bond ratings, and it is inconsistent with the County Charter.”

Leggett’s budget recommendations provide:

  • An overall tax-supported budget of $3.83 billion, representing only a 1.1 percent increase over FY09.
  • A reversal in a 10-year trend by decreasing the tax-supported Montgomery County Government budget by 0.4 percent, a reduction of $5.6 million from FY09.
  • A total recommended budget (which includes debt service, grants and enterprise funds) for FY10 of $4.42 billion, up nearly $83 million over the FY09 approved budget, and a 1.9 percent increase, the lowest level of increase in 18 years.

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