Category Archives: Montgomery County Council

District 1, Montgomery County Council

Clash on the Issues, Part III: Blame It on the Alcohol

This is the third in a series about the issue positions of candidates in District 1 based on the debate hosted by Friends of White Flint. Today’s topic: what do the candidates think about the Montgomery County Department of Liquor Control’s alcohol monopoly?

Time to Get Off the Sauce: Candidates for Privatization

Bringing levity to the debate on several occasions, Pete Fosselman started by bluntly stating “I like my liquor” to laughter from the crowd. He proposes letting the county retain control of hard liquor but privatizing the sale of beer and wine, arguing that the change would boost in Montgomery restaurants. As an industry that makes most of their money on alcohol sales, they watch this aspect of the business carefully.

Andrew Friedson spoke passionately in favor of privatization. Fighting back against those concerned about the loss of revenue generated by the monopoly, Friedson stated “I believe government should be judged on how well it serves people, not how well it makes money.” Moreover, he argued that the monopoly costs Montgomery revenue, as it is hard to explain why alcohol sales are 41% lower here than elsewhere in the region unless you think Montgomery has “a secret temperance movement.”

Meredith Wellington agreed with Friedson, saying thoughtfully that the monopoly is a symptom of the county’s problematic approach. Arguing that government can’t do everything, Wellington said that we want entrepreneurial people in the county and need to work with them to help us market the county to businesses.

Though concerned about losing the union jobs, Reggie Oldak also thinks the county should not be in the liquor business, pointing out that $30 million is not much in a $5.5 billion budget. She shouldn’t worry so much. Private liquor distributors are also unionized. Why should the county should favor jobs with one union over another?

They Tried to Make Me Go to Rehab, I Said No, No, No: Candidates against Privatization

Bill Cook believes that privatizing the liquor industry would be a huge loss for the county because we’d lose $30 million and those “great paying union jobs.” Taking perhaps an unusual tack, he then proceeded to attack of his own potential constituents, Total Wine Co-Owner David Trone, who lives and has located the headquarters of his business in District 1.

Stating that there is “nothing wrong” with the county selling liquor and endorsed by UFCW 1994 MCGEO, Ana Sol Gutiérrez favors modernization, not privatization. She says that “significant steps have been taken” in terms of improvements. I wonder if she also thinks Metro escalators rarely break down. Gutiérrez likes that we can take on new debt by bonding the revenue stream. In other words, the county is fiscally hooked on alcohol.

Jim McGee opposes privatization but favors modernization. Unfortunately, that has been promised for years but is much like waiting for Godot. They say that it’s coming. But when is it coming? At the same time, McGee thinks it is too hard for microbreweries to distribute their product.

Share
District 1, Montgomery County Council

Clash on the Issues, Part II: is Ballooning Debt a Problem?

This is the second in a series about the issue positions of candidates in District 1 based on the debate hosted by Friends of White Flint. Today’s post looks at whether the candidates are concerned about the share of the county budget going to service debt, which is approaching 20% according to the question.

Ana Sol Gutiérrez doesn’t see County debt as a problem and views it is analogous to a home mortgage, leaving me hoping that we don’t end up under water like so many home owners. She has confidence in analyses showing the county is financially stable but also expressed interest in finding “other funding streams,” which sounds like taxes. Throughout the debate, however, she referred to mysterious state-level funds that the county had left untapped, a perplexing claim from a this long-time delegate on the appropriations committee who should be well placed to direct funds to the County.

In a similar vein, Bill Cook commended the Council for its balanced budget and well-funded rainy day fund, and blamed “reckless” development without appropriate impact taxes for placing additional burdens on county residents.

Reggie Oldak took a more centrist position, arguing that too much debt is a burden and Montgomery needs to preserve its AAA bond rating. At the same time, she agreed it is shortsighted not to spend on the safety net, leaving me a bit concerned as debt should go to capital, not operating, expenses.

Noting a lot of agreement among the candidates, Jim McGee took a similar position. He views debt as an “investment in the future” but also says we need to see the return on the investment. He also noted aptly that interest rates are rising, so debt will cost more in the future. Economic growth is the real solution to this problem.

Meredith Wellington was the first to express directly that she is very concerned about the debt gobbling up more of our budget even as revenues have not bounced back and we’ve raised taxes. She supports the affordability guidelines, even though they constrain the county’s ability to borrow, and said we need to set priorities. In short, Wellington was the first to identify rightly that growing debt and flat revenues is not a sustainable fiscal path, and that the county will have to make real choices as a result.

Andrew Friedson concurred with Wellington. He countered Gutiérrez’s home mortgage analogy directly, arguing cogently that we cannot do the equivalent of taking out a bigger mortgage or taxing our way out of it. There is certainly little appetite for increased property or income taxes in Montgomery, especially in the wake of the County’s big tax hike.

Showing his expertise on the topic, Pete Fosselman noted the $375 million paid in interest last year and the $120 million hole in the current budget. He’s concerned about the County’s AAA bond rating, arguing that we need fiscal discipline and to work better to provide services through nonprofits even as we stop funding politically connected “sock puppet nonprofits.”

Once again, voters appear to have a real choice, as candidates expressed broad differences on both debt as a problem and the solutions. All should be concerned with the county bond rating because lower bond ratings mean we pay more in interest and can afford less. As Wellington identified, and Friedson and Fosselman agreed, we are not on a sustainable fiscal path, so debt should be a real concern. The era of difficult choices is far from over.

Share
District 1, Montgomery County Council

Clash on the Issues, Part I: Recruiting Amazon

This is the first in a series about the issue positions of candidates in District 1 based on the debate hosted by Friends of White Flint. Candidates clashed greatly on whether and how to pitch White Flint as Amazon’s future location. While all touted Montgomery County’s assets, there was enormous disagreement on providing tax incentives.

Jim McGee argued against doing anything to recruit Amazon to Montgomery. He’s outraged that Jeff Bezos makes “$35 billion per year” and opposes the siting of the equivalent of “two Pentagons” here. While correct that Bezos is wealthy, though missing that it’s for creating a world-beating company, this analysis ignores both Amazon’s duty to its shareholders or the reality of its economic power to command incentives. McGee admitted candidly that he was “probably not the right guy” to make the pitch to Amazon.

Bill Cook wants the jobs but is “not willing to prostrate” before Amazon. He’d tell Jeff Bezos that he doesn’t need the money and you already have a mansion in Kalorama. Cook says he knows that Amazon is coming to Washington but won’t be going to DC or Fairfax because “the schools suck are terrible.” Neither true nor the way I’d put it. The Washington area provides three excellent candidates but Cook’s attitude would assure that Amazon doesn’t come to Maryland.

In contrast to these wildly unrealistic, populist views of the world, Reggie Oldak countered that it would be great if Amazon came, pointing out astutely that we are giving tax breaks, not subsidies, and that collecting 90% of something is better than 100% of nothing. Additionally, we’d receive transit funding from the State. Indeed, the tax breaks are spaced over many decades based on Amazon spending many times more in salaries.

Several candidates, such as Andrew Friedson, pointed out the attractiveness of our location near DC and three airports along with our transit system, educated workforce and excellent school system. Citing Montgomery as a diverse and welcoming community, Pete Fosselman argued emphatically that the tax breaks don’t outweigh the “phenomenal” long-term benefits. Fosselman also pointed out the State’s new funding for Metro along our planned BRT system as real positives in our recruitment pitch.

Demonstrating her planning skills, Wellington also emphasized our great location and said agreed with Pete Fosselman’s support for the Council’s recent zoning changes shortening the comment period for the site, perceptively pointing out the most important discussions occur before the submission of the plan. She’d work to make sure that Amazon’s new building integrate well into the community.

Ana Sol Gutiérrez said “Let’s make a deal. We can both win” but did not outline the sort of deal she’d expect or support. Gutiérrez said that the Governor is enticing Amazon with tax credits but wanted to know what we would gain from Amazon, saying that it’s not about the jobs but the diversity. I suspect most would disagree with Gutiérrez and say that it is, in fact, about the jobs, pointing out that Amazon’s arrival here would provide opportunities for our diverse workforce and assure that all people hired by Amazon, or the many businesses its arrival would spawn, would be covered by Montgomery’s protections for employees.

Unfortunately, Dalbin Osorio was ill and unable to attend the debate, which was too bad as he was a lively and interesting candidate at the first debate.

Share
Montgomery County Council

Riemer Property Tax Reversal Begins Council Presidency

How quickly times change.

Last week, Councilmember Roger Berliner (D-1) proposed allowing Montgomery County residents to prepay their property taxes in the hopes of shielding them from the new federal tax limit of $10,000 on state, local and property tax deductions coming into force in 2018.

In Montgomery County, a proposal that shows opposition to Trump and allows many to save money on their taxes is bound to be a political winner. Putting it bluntly, supporting this proposal didn’t take a smarter political nose than the Lord gave a gopher.

Apparently, that still left not just the gophers but also Roger well ahead of his colleagues, including newly minted Council President Hans Riemer. Facing his first major public test as Council President, he explained to Bethesda Beat lo these five days ago:

“I think a lot of people felt there are so many uncertainties and unknown impacts for us to rush into this,” Riemer said.

He noted that council members would have had to support the policy without holding a public hearing or debating the measure publicly. Riemer also said the plan may result in less income tax revenue for the county.

In a memo to County Executive Ike Leggett, Riemer summarized:

[W]e believe that the serious risks of hasty action over the next ten days, for both our taxpayers and the County itself, outweigh the possible benefits.

Councilmember George Leventhal (D-At Large) strongly supported Riemer’s inaction:

“Roger jumped in with both feet,” Leventhal said. “But a majority of council members said no. We have a lot of conflicting priorities now and we’re facing a budget crunch. We’d be causing confusion and distress right before the holidays.”

This may well be the first time anyone has described having to pay less in taxes as a source of “distress” (!) Leventhal has loudly touted his opposition to all things Trump but blinked when he had a chance to take meaningful action. Councilmember Marc Elrich (D-At Large) also backed Riemer:

[Elrich] said he didn’t want to support a proposal that is predicted to mostly benefit wealthy people who own expensive properties. If the county loses revenue as a result of the policy, it would likely result in cuts to county services for low-income residents, he said.

He described the policy as a “good political gimmick,” but added, “I wouldn’t want to run a government that way.”

An avalanche of opposition to this decision led to a Christmas miracle. The magic of constituent pressure caused the impossibility of a public hearing and the “serious risks of hasty action” highlighted by Riemer to melt like so much globally-warmed snow:

Riemer said the council will introduce a bill Tuesday, hold a public hearing and vote on it to allow the prepayments. . .

“If that’s what residents want, we’re going to make it possible for them to do it,” Riemer said Saturday.

“The urgency of this issue has really grown,” Riemer said. “We totally understand there are a lot of people that want to take advantage of this opportunity if we can create it.”

The Council had no idea the level of constituency anger – not to mention threat to political futures – over failure to act on this issue. Hence the growth in urgency over just a couple of days.

Despite having authored a post entitled “They Just Don’t Get It,” it was a still a forehead-hits-keyboard moment to discover that many councilmembers didn’t grasp that residents would prefer to save substantial sums on their federal taxes or thought that they woudn’t notice that other jurisdictions didn’t find the idea of collecting early property taxes too daunting.

Yesterday, Riemer explained the Council’s reversal to Bethesda Beat:

Council President Hans Riemer said that council members initially believed only the “most affluent” would benefit from prepayment, but later came to believe “it will benefit the middle class.”

He said council members heard from retirees, teachers and others who said the benefits would be significant enough for them to rush to put together the prepayment.

This explanation is more shocking than the reasons for his initial demurral. It means that Hans and his colleagues – the people who set our tax rates – don’t have much of a sense of how much their constituents earn or pay in taxes.

Adam Pagnucco outlined the effect of Republican tax proposals in Montgomery on December 4. I did the same on September 30. Neither post was exactly a revelation on this point, but Riemer says it was news to him.

Riemer was not alone in his inelegant pirouette. Leventhal and Elrich also reversed their positions, though Elrich continued to highlight concerns regarding budgetary impacts. Berliner’s County Executive Campaign is rather understandably touting his leadership on this issue in an email blast:

Aptly,“Bravo! You were the one that made it happen,” was one of the first constituent emails in Roger’s inbox today. As a result of his hard work, 40% of our county’s residents who itemize their property taxes can prepay and potentially save thousands of dollars before the $10,000 cap goes into effect in 2018. . .

Councilmember Craig Rice (D-2) was the only councilmember to stick to his guns and vote against the bill:

Rice said he opposed the bill because it will primarily benefit wealthy people. He said wealthy people already received tax breaks in the federal legislation and are going to be given another break by the county.

While probably a politically tough vote and somewhat unusual for the pro-business councilmember, Rice is at least saved from having to explain an abrupt change of heart. Moreover, Rice has a point. The people who itemize and will benefit from the deduction are unquestionably more towards the upper end of the spectrum. Those who pay higher rates will save even more by shielding income from taxation.

At the same time, that doesn’t mean that the great bulk of these people aren’t also middle class by local standards, especially when you consider the cost of living and the heaving mortgages that many people carry to buy a home here. Retirees who don’t have escrow accounts – and vote in large numbers – are also prone to notice the impact.

In the wake of the ignominious Council climb down, conservatives and business types can enjoy the spectacle of many progressive tribunes of the people, such as Councilmember Tom Hucker (D-5), loudly trumpeting how they saved you from higher taxes.

Share
2018 Elections, Montgomery County Council

Gabe Albornoz Qualifies for Matching Funds

The following is a press release from Gabe Albornoz’s campaign for an at-large seat on the Montgomery County Council:

Press Release:

FOR IMMEDIATE RELEASE: Wednesday, December 6, 2017

Gabe Albornoz Reaches Matching Funds Threshold for At-Large County Council Race

Kensington, MD – Gabe Albornoz, a Democratic candidate for an At-Large seat on the Montgomery County Council, announced that he had received over $20,000 and 250 contributions from Montgomery County residents. Albornoz’s campaign will be qualified to receive matching funds from the Montgomery County Public Campaign Financing Program upon certification by the Maryland State Board of Elections.

“I’m humbled and honored to receive this support. The Campaign Finance Program is working and has ensured that Montgomery County residents set the tone of our politics. I’m pleased that our campaign is playing a role in democratizing our county’s politics to give more power to people,” Albornoz said.

“I am very pleased to hear that Gabe has achieved this important milestone in his campaign. He has earned a reputation for strong leadership, collaboration and commitment to public service, which is why I’m happy to endorse his campaign,” said Councilmember Nancy Navarro.

At-Large candidates for County Council must receive at least 250 qualifying contributions, totaling at least $20,000, in order to qualify for a public financing, according to a law previously passed by the Council. Only contributions of up to $150 per election cycle from Montgomery County residents qualify for matching funds. Candidates in the program cannot accept any contributions from special interest groups, businesses, political action committees, unions, or political parties. Participating candidates are eligible to receive up to $250,000 in matching funds during the primary and general election campaigns.

“We are grateful to Gabe’s many supporters and their confidence in him to represent them as a member of the County Council. Gabe’s message of optimism for Montgomery County has been enthusiastically received,” said Campaign Chairman Chuck Short.

Albornoz is a lifelong Montgomery County resident and a past Chairman of the Montgomery County Democratic Central Committee. He is the current Director of the Montgomery County Recreation Department. He was appointed to that role by County Executive Ike Leggett in January 2007.

Share
Adam Pagnucco, Council At-Large, Montgomery County Council

Be Careful About Going to an All-District County Council

By Adam Pagnucco.

Recently, MoCo’s political community has been thinking of changing the structure of the County Council.  Since 1990, the council has had four at-large members and five members elected by residents of districts.  One idea is to reduce or eliminate the at-large members and replace them with more district members.  Advocates of that perspective believe the districts are too large, that district members are more responsive than at-large members and that the cost of running at-large enables interest groups to play more in those elections.  We offer no opinion on any of those theories, but prior election history points to one consequence of shifting to an all-district council.

The level of political competition will almost certainly decline.

Why do we believe that will happen?  Consider recent elections.  Below is a chart showing the results of all district council elections since 1998.  Over that period, there have been 28 district council elections, 20 of which featured incumbents.  The incumbents won 17 of 20 races, an 85% win rate.  If the Republican incumbents are omitted, the remaining Democratic incumbents won 14 of 15 elections, a 93% win rate.

If that is not enough to prove the non-competitiveness of these elections, consider just two facts.  First, only one Democratic district incumbent has lost under our current structure, and that happened in 1998.  Second, of the last six contested district races, five saw the incumbent win by more than fifty points.

Meanwhile, the at-large races are much more competitive.  Since the current system was established in 1990, no group of at-large incumbents has ever run unopposed.  Three Democratic incumbents have lost – Blair Ewing (2002), Mike Subin (2006) and Duchy Trachtenberg (2010).  Even in the two elections in which all four incumbents ran for reelection (2010 and 2014), challengers still entered the race and one of them (Hans Riemer in 2010) knocked out an incumbent to win.

This year, those same trends continue unabated.  There are 25 at-large candidates (with more to come) running with three seats open.  Meanwhile, district incumbents Nancy Navarro (D-4) and Tom Hucker (D-5) have no opponents while Craig Rice (D-2) has token opposition in the primary.  Only Sidney Katz (D-3) has a serious challenger.  This disparity persists even in the presence of public financing, which was supposed to promote competition.

What explains this pattern?  After all, district races are theoretically cheaper than at-large races because they have fewer voters.  The reason is that one-seat races against incumbents are very different affairs than at-large contests.  A challenger running against an incumbent for one seat must show that the incumbent has committed a firing offense; otherwise, voters will support the candidate they know better.  These one-seat races can turn nasty as we have seen from recent MoCo Senate elections as well as the bitter fight between Council District 5 incumbent Derick Berlage and challenger Marc Elrich twenty years ago.  At-large races are seldom negative unless slates are formed to compete against each other.  (That hasn’t happened since 2002.)  At-large challenger Hans Riemer ran a model race in his 2010 win, promoting his policy agenda of progressivism and smart growth and never targeting any single incumbent for criticism.  Most candidates don’t have the stomach for negative elections when an open seat is available.  And in six of the last eight at-large races (including next year), at least one seat has been open.

Political competition is extremely valuable.  It should not be discarded lightly.  There may be good reasons to increase the number of districts, but if at-large members are completely eliminated, voters will pay the price with fewer choices and less accountability at election time.

Share
Adam Pagnucco, Montgomery County Council, Robin Ficker, taxes

Stop Giving Robin Ficker More Ammo

By Adam Pagnucco.

Right about now, the happiest man in Montgomery County lives in Boyds.  He is 74, a huge sports fanatic, a long time attorney, a former state Delegate, a perpetual candidate and a tireless activist.  He loves the County Council because some of its members give him endless material for use in his never-ending demagogic campaign to weaken and ultimately paralyze county government.

Yes folks, we are talking about the notorious political heckler Robin Ficker.  And he must be jumping for joy at the news that some members of the council are considering a possible new soda tax.

Ficker has been running for office and placing charter amendments on the ballot, mostly intended to limit taxes, since the 1970s.  The huge majority of his amendments have failed, often because the political establishment labeled them “Ficker amendments” to exploit the national infamy of his heckling at Washington Bullets games.  One exception was the razor-tight passage of his 2008 charter amendment mandating that all nine Council Members vote in support of exceeding the charter limit on property taxes.  But Ficker has never had more ammo than in the last four years and he has used it to push his anti-government agenda.  Consider what has happened.

The council’s approval of a large salary increase for its members in 2013 and its passage of a 9% property tax hike in 2016 gave Ficker’s term limits charter amendment momentum.  Some Council Members then used their campaign funds to finance a lawsuit to keep term limits off the ballot, which failed.  Council Member Nancy Floreen’s “exasperated” and “defensive” performance in a television debate with Ficker and Council Member George Leventhal’s comparison of term limits supporters with Brexit voters didn’t help.  Ficker predicted term limits would pass by twenty points; instead, they passed by forty.

Robin Ficker thanks MoCo voters for giving him his biggest political win ever.

That’s not all.  Ficker has enrolled in the public financing system established by the council for his latest Executive run.  And he requested the county government’s email lists after another resident obtained them under the Public Information Act.  Any competent campaigner – maybe even Ficker – should be able to use those thousands of emails to raise enough money to qualify for public matching funds.

And now we have news of the soda tax, which prompted gleeful self-promotion by Ficker in Bethesda Magazine’s comment section.  Expect a Facebook ad soon.

Your author does not enjoy writing this column because we find merit in this particular tax.  Sugary drinks and soda are public health menaces, especially to children.  The intended use of the money for early childhood programs is a good idea.  And the current tight budget does not give any quick or easy options for funding undeniable, but expensive, priorities like early childhood education.  But the counter-argument from Ficker, who calls Council Members “tax increase specialists,” is obvious.  “They’re not listening to you,” Ficker will tell the voters.  “You told them no more tax hikes and they’re going to do it anyway.”  Even Leventhal, who has voted for numerous tax hikes and has done as much to promote public health as any Council Member ever, has come out against the new tax.

The danger here is not that Ficker will be elected.  Voters made that mistake once all the way back in 1978 and have never come close to repeating it since.  The real problem is the next charter amendment that Ficker will inevitably introduce after his latest election campaign fails.  Whatever else Ficker is, he is an astute student of Maryland county tax policies.  He is fully aware of the taxation and spending limits in the Prince George’s County charter, such as the requirements that the property tax rate may not exceed 96 cents per $100 of assessed value and that bond issues, new taxes, other tax increases and some fee increases be approved by voters.  He is also aware of provisions in the state constitution and several county charters that forbid legislative bodies from adding spending to executive budgets.  Indeed, some of his past charter amendments have been variants of such policies.

It’s one thing to raise taxes during terrible economic downturns as the county did in 2010.  That simply had to be done.  It’s a very different thing to discuss new discretionary tax hikes in times when voters are not convinced that they are absolutely needed.  If the council would like to have more money available for worthy programs, it should focus on growing the economy, stop adding ongoing miscellaneous spending financed by one-shot revenue sources, redirect cable fund money to purposes that actually benefit the public and restrain some parts of the budget to finance expansions of others.  Doing those things will free up tens of millions of dollars, and maybe more, over time.  But constant talk, and occasional passage, of discretionary tax hikes will only help Ficker place a Prince George’s-style anti-tax doomsday charter amendment on the ballot.  Should such a thing pass, no soda tax will save us.

Hence a warning.  If you give Robin Ficker enough ammo, even he will eventually hit the target.

Share
Adam Pagnucco, budget, Montgomery County Council, taxes

Lessons Learned from the Giant Tax Hike, Part Two

By Adam Pagnucco.

The untold story of last year’s 9% property tax hike is that it was not merely the product of needed funding for public schools or the adverse consequences of a U.S. Supreme Court decision on income taxes.  It was also the product of an innate bias towards more spending built into the County Council’s budget process.  That bias created mounting pressure to fund ever-growing spending programs accumulated over many years which contributed to the tax increase.  The next generation of county elected officials must reform this process or they too will eventually feel compelled to raise taxes.

All state and local operating budgets must be balanced each year as a matter of law.  At the state level, the General Assembly may cut spending items in the Governor’s budget but they generally cannot add to them.  (The legislature can and does pass laws mandating spending on certain items in future years.)  Several counties with Executives follow the state’s model, as does the City of Baltimore.  But the Montgomery County charter grants all final budgetary authority to the County Council, which can do almost anything it wants to the Executive’s recommended budget.  It can add, subtract or rearrange spending items subject only to requirements in state law, such as mandatory minimum funding levels for public schools and the college.  Other than that, the only constraint on the council’s power is that the budget it passes must be balanced for the fiscal year.

Every March 15, the Executive is required by the charter to send a recommended budget to the council.  The council then begins its process for reviewing and changing the budget that lasts roughly two months.  The council’s vehicle for altering the Executive’s recommended budget is the reconciliation list (commonly called the rec list), which is a ledger of spending additions and deductions.  Each council committee, and the full council itself, can post additions or deductions to the rec list.  The last step in the process is figuring out how to finance some portion of the additions since they always exceed the deductions.

In theory, there are two sound places to go to fund additions to the Executive’s budget: new tax revenues or offsetting spending cuts.  In practice, the council’s use of these resources is limited.  Tax increases are typically proposed by the Executive, who distributes the revenues they generate across spending items in the recommended budget.  In such cases, the new revenue is not available for further spending desired by the council unless it alters the Executive’s choices.  The council could also cut the Executive’s spending items and use the money for its own items.  But the Executive’s spending proposals have constituencies who will squeal if they are diverted or cut.  No one likes to be the bad guy at budget time!

Page one of the council’s final draft reconciliation list for FY18.  These are some of the new spending items the council wanted to fund last spring.  The challenge was how to pay for them.

If new taxes and spending cuts are insufficient to pay for new spending desired by the council, other funding sources must be identified.  In the past, favorite sources for funding included setting aside less reserve money than proposed by the Executive, setting aside less money for retiree health benefits, occasional transfers of cash from the capital budget and other one-time fixes.  In FY12, the Executive proposed $10 million for snow removal and the council redirected $4.1 million of that for new spending on the reconciliation list.  Snow removal costs must be paid, so if they were to ultimately prove larger than budgeted funds, the council’s action would be tantamount to a backdoor drawdown of the reserve.

Since FY05, the council has added a combined $245 million to the Executive’s budgets through its reconciliation lists.  One does not have to be a certified public accountant to see what the effect of these additions will be over time.  Many spending items added by the council are ongoing, such as hires of new employees and expansions of programs expected to continue indefinitely.  But some of the funding sources for the new spending are one-time in nature, like capital budget transfers and reserve drawdowns.  Repeated use of one-time funding sources for ongoing spending creates enormous long-term pressure on the budget.  Eventually, especially when a downturn comes, the new spending must be trimmed or taxes must be raised.  Guess which is more likely to occur?

Why does this happen?  It’s not because elected officials are stupid.  It’s because of the incentives they face.  From mid-March through mid-May every year, Council Members are besieged by requests for more spending from the community.  Every year, there are three nights of hearings jam-packed with constituents wanting more money for their favored programs.  They are followed by dozens of meetings with groups who want even more than that.  Aside from occasional admonishments from council administrator Steve Farber and Executive Branch budget officials, there are almost no voices for moderation in the budget process.  And here’s the thing: whether it’s hiring social workers, funding more childcare assistance, deploying more police officers in communities that need them, removing more tree stumps or much, much more, almost all the new spending proposals have merit.  Given the incredible pressure brought to bear by groups with genuine funding needs, it’s kind of a miracle that the budget gets balanced at all.

All of this creates serious problems for the County Executive.  The charter grants the Executive a line item veto over spending items, but this is never used because the council would simply override it.  The Executive could abstain from including the council’s new spending in next year’s budget, but again, the council could just put it back in.  For the most part, the Executive and his top aides grumble in private and put on a happy face for Wall Street, but they did go public in objecting to a $10 million draw from the reserve two years ago.  Instead of fighting the council, the Executive’s staff simply tries to figure out how to retain and pay for the council’s new spending in next year’s budget.  And each year, the job gets a little harder without new revenue.

This process is a big reason why the county has had seven major tax hikes in the last sixteen fiscal years.

Next year, a new County Executive and at least four new Council Members will take office.  This new generation of officials will have a choice.  They can keep the existing budget process and eventually come under pressure for yet another tax hike, as happened last year.  Or they can reform it by requiring that new ongoing spending be offset by actual ongoing spending cuts, not one-time measures.  Failure to learn this lesson will mean repeating history.

We will conclude with one last lesson from the Giant Tax Hike in Part Three.

Share
Adam Pagnucco, Montgomery County Council

MoCo’s Essential Man

By Adam Pagnucco.

Ever wonder why some politicians stay in office waaaaaay too long?  One reason is that some of them believe they are truly essential and that government would collapse without them.  We will give them this: some politicians really do leave a lasting mark, and even sometimes for the better!  But the true operations of government depend on legions of competent, honest and experienced public servants who are almost totally unknown to the public.  These are the essential men and women who keep the trains of government running on time.  And in Montgomery County, the most essential man of all is unquestionably Steve Farber.

Farber has one of the most mundane titles of all time: council administrator.  At first glance, such a title connotes unglamorous tasks like emptying garbage pails, cleaning windows, wiping the dais and changing toilet paper rolls.  But in fact, the position is crucial to the proper functioning of the County Council and Farber excels at it.  Unfortunately for all of us, he is retiring.

Part of Farber’s job is to be the leader of the council’s Fifth Floor staff.  These employees are not part of the personal staff retained by Council Members in their offices but are rather central, merit system analysts who advise the institution as a whole.  They are subject matter experts, each overseeing the operations of a few departments and/or agencies on behalf of the council.  When legislation is introduced, briefings are held or budget items are considered, the Fifth Floor analyst who covers the relevant subject areas gathers pertinent information and writes it up for the council to consider.  Occasionally, the analyst will make recommendations with the understanding that Council Members have the final word.  At its best, the Fifth Floor acts as a check and balance on the views of the departments and agencies overseen by the council.  It is hugely important for Council Members to have their own independent sources of expertise; otherwise, they might tend to see primarily what the Executive Branch and the agencies want them to see.  The Fifth Floor predated Farber’s arrival, but he expanded their ranks, protects their independence and champions their contributions.

But Farber is so much more than the merit staff’s leader.  He is the ultimate consigliere, the quiet adviser in the shadows who knows all and says little – at least in public.  His immense and largely secret power derives from three sources.

Institutional Knowledge

Farber has been at the council since 1991 and has an incredible memory.  No matter what the council deals with in the present, he has seen something like it in the past and recalls it like yesterday.  Names, dates, policies, documents – whatever it is, Farber either knows it or knows how to get it.  Few people in county government compare to him on this measure and no Council Member comes anywhere close.  That gap in knowledge can put Farber in the driver’s seat when no one can really see that he’s driving.

Cautious Use of Political Capital

Another secret of Farber’s success is that he spends his political capital very carefully.  He is concerned with budgetary and fiscal issues, especially ones affecting long-term sustainability and the bond rating, but it is otherwise rare for him to weigh in directly on legislation or policy issues.  By picking his spots carefully and not squandering his power, Farber maximizes his ability to influence the big picture events that he cares about most.

Finding Money for the Reconciliation List

Every year, the council proposes to add millions of dollars to the Executive’s recommended budget.  Their vehicle is the reconciliation list, which is a ledger of spending additions and reductions that must be balanced out at the end.  One of Farber’s tasks is to find a way to pay for this list.  No one else in the building fully understands how he does this.  His unique, encyclopedic knowledge of the county budget enables him to locate money under the couch cushions that few others know about.  Try as they might, it is impossible for the Executive Branch to hide money from Farber.  He never funds the entire reconciliation list – and constantly warns the Council Members (often futilely) not to overstock it – but he finances enough of it that the council is usually satisfied.  It’s an incredible and invisible source of power.

How does he pull all of this off?  It’s a great mystery, but sometimes there are clues.  First, he never gets involved in politics, NEVER.  He never takes sides in spats between Council Members or tries to steer politically sensitive things like who gets selected as Council President.  Second, he never takes credit for anything.  If you listen to Farber, he has never had a good idea.  Instead, it’s Council Members from the past who have done great things – even if they really originated with Farber.  When he talks to current Council Members, he will remind them of these past accomplishments and suggest similar monumental undertakings.  If a Council Member agrees, then the idea becomes his or hers – and not Farber’s.  The consigliere will then praise the enlightened ideas of the boss!  Third, he never makes arguments based on personal or political concerns, only on facts – of which he is the undisputed master.  And fourth, his discretion is second to none.  The CIA could waterboard every person in the council building and Farber is the one who would never talk.  Everyone knows this.  That’s why they talk to him.  And that’s why the consigliere knows more than the rest of them.

For all his greatness, Farber has had ups and downs like everybody.  For many years, he was a lonely voice calling for fiscal restraint, occasionally joined by Council Members Phil Andrews and Marilyn Praisner.  That earned him the resentment of union leaders and agency heads who prefer loose purse strings.  Farber got his way during the Great Recession, when the council had little choice but to cut spending and abrogate labor contracts, and he played a big role in saving the county’s bond rating.  But the subsequent easing of fiscal pressure allowed the council to start spending again, resulting in the Giant Tax Hike and the passage of term limits.  If the council had listened to Farber all along and passed regular modest, restrained budgets, there’s a chance those things may not have happened.

County residents have benefited mightily from Farber’s service even though the huge majority of them have no idea who he is.  His dedication to facts over rhetoric, his devotion to sound fiscal management, his work to have the council act as a real check on the Executive Branch and above all his iron integrity have made county government more honest and efficient than it would otherwise be.

Farewell to MoCo’s Essential Man.

Share