Category Archives: budget

Adam Pagnucco, budget, taxes

Crash!

By Adam Pagnucco.

You heard that deafening noise, yeah? It came from Rockville, specifically from Monroe Street. It was the sound of the county budget being blown to smithereens. And it probably won’t be the last loud noise heard echoing from the county seat.

Why the explosion? That’s what it sounds like when the county writes down half a billion dollars over two years.

A dryly titled document known as “Update on County Tax Revenue Estimates” will be reviewed by the county council tomorrow. Budget writers tend not to be very dramatic people. That’s one reason why summer blockbusters tend not to be centered on budget analyses. But this blockbuster contains more exploding ordinance than a World War II battlefield. Ground zero is MoCo.

The COVID-19 crisis is now blowing up budget after budget all over the world and we are not immune. In FY21 (the current fiscal year), the county was supposed to receive roughly $4 billion in locally generated tax revenues. (The county gets another $2 billion in intergovernmental aid, grants and non-tax revenues). Of the $4 billion or so in local taxes, here are the projected writedowns as of last week.

FY20 (last year): $47.7 million
FY21 (this year): $192.0 million
FY22 (next year): $282.0 million
FY23: $275.9 million
FY24: $272.8 million
FY25: $225.2 million
FY26: $173.9 million

There is bound to be variation in the out years because economic forecasting is about as certain an art as selecting number one draft picks. But when combining last year, this year and next year, the total writedown is $522 million. That’s the biggest writedown since the Great Recession.

The biggest contributor by far to the shortfall is income taxes, which have been written down through FY22 by $357 million, or 68% of the total writedown. The county’s finance department reported that income tax receipts were down $19 million from their estimate in May and $20 million from their estimate in June. Finance expects personal income, wage and salary income and income from dividends, interest and rent to fall in calendar year 2020 and then rise by a fraction of their prior annual growth over the last decade in calendar year 2021. Finance also expects resident employment to fall by 1.82% in 2020 and a further 0.05% in 2021. All of these declines will hit income taxes.

Relative to their immense size, property taxes are not written down by very much (just $41 million from FY20 through FY22). The reason is because the county’s charter limit allows property tax collections (aside from new construction and a few other categories) to rise at the rate of inflation regardless of what happens to assessments. There are two wild cards here. First, what if the rate of inflation goes to zero or even goes negative because of the collapsing world economy? And second, what if massive failures to pay rent cause property owners to file more tax appeals? If the real estate market fails, that will just add to the wreckage.

Two other wild cards might be thrown the county’s way. First is Governor Larry Hogan’s plan to shift and shaft the counties, which was defeated at the Board of Public Works but may yet return at a later date. Second is the fate of additional federal aid for counties, which is backed by Democrats in Congress but draws a wary eye from Republicans (including U.S. Senate Majority Leader Mitch McConnell). The federal government has so far allocated $183 million of aid to MoCo, but it is targeted to expenses directly attributable to COVID-19. The county needs money to cover its plummeting local revenues. If Hogan and McConnell get their way, all MoCo will get is more shrapnel.

So what does all this mean? The loud noises might not be over, folks. Could we someday hear the wailing squeals of sacred cows, prodded by unforgiving steel as they are dragged away to slaughter?

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Adam Pagnucco, budget, Larry Hogan

Hogan’s Shift and Shaft

By Adam Pagnucco.

In a long-expected move, Governor Larry Hogan has submitted a long list of state budget cuts to the Board of Public Works. Cuts to state employee salaries and positions are getting a lot of attention. So is a proposed $200 million trim in state aid to public schools, although that needs the consent of the General Assembly to pass. What is less discussed is Hogan’s resumption of a time-honored practice used by higher level governments to dump their problems on lower level governments: the shift and shaft.

Here is how it works. Over the years, state governments decide that they wish to provide certain services, like schools, libraries, colleges, transportation infrastructure, public safety and so on. They could decide to provide them directly through state employees, and sometimes they do in whole or in part. But for reasons of convenience and coordination, they often choose to fund those activities through grants to counties and cities and have them provide the services to residents. Over time, state budgets get in trouble due to economic downturns so cuts are needed. State leaders don’t want to cut services, of course – they don’t want to deal with the backlash and they are happy to have counties and cities continue to provide them. They just don’t want to pay for them anymore. So they cut their grants to lower levels of government and make city and county leaders clean up the mess. (In fairness, the feds do the same things to the states.) The whole process is called “shift and shaft federalism.”

Maryland is no stranger to this concept. The Great Recession of a decade ago hit the state budget HARD. Governor Martin O’Malley’s top priority was preserving state aid for public schools. He was able to accomplish that for the most part through a series of tax hikes, a reduction of hundreds of millions of dollars in highway user revenue funds that had gone to county and municipal transportation budgets and a partial shift of teacher pension payments to the counties. The latter shift was partly ameliorated by supplemental grants paid to the poorest counties to help them meet teacher pension obligations. The counties bitterly resisted these moves, but once the state imposed them, most responded by raising property taxes, income taxes or both.

Hogan is now going down the same road as O’Malley. His cut list includes two programs that steer money to county budgets. The first one is the state’s disparity grant program, which sends money to poorer counties in an effort to remedy local tax capacity inequities. The state’s FY21 budget includes a $12.4 million increase in disparity grants which Hogan would eliminate. The second program is the state’s teacher retirement supplemental grants, which are intended to help poorer counties pay for the teacher pension payments that the state mandated in 2012. Hogan would eliminate them too. Combining the two programs, Hogan would cut their funding by 21.5%, one of the biggest percentage cuts in his entire package and close to the 25% maximum cut that the Board of Public Works could impose.

Here is the total impact by county of Hogan’s cuts to disparity grants and teacher retirement supplemental grants.

Three things stand out. First, most of these cuts are regressive. Other than Baltimore County, these jurisdictions have low assessable bases per capita, low income per capita or both. The very reason why these programs exist is to boost poor counties, so cuts to them are bound to be regressive. Second, many of these jurisdictions are governed by Republican local officials. Hogan is cutting his own people. Third, these amounts were included in county budgets passed over the last two months. Each of these reductions blows a hole in county budgets that were already going to be subject to cuts because of declines in local revenues. The tough choices will now get even tougher.

These counties will be pleased to know that Hogan is proposing to eliminate the state’s $75 million supplemental retirement contribution. So while the counties will continue to be expected to pay for state pensions without the benefit of state assistance, the state will save money by cutting its own payments.

It is good to be at higher levels of government!

More cuts to local entities will probably be coming. Hogan proposed cutting $200 million in state aid for public schools (a move that needs General Assembly approval) and $36 million in state aid for community colleges. His package also contains another $130 million “unallocated reduction to local governments” that needs to be considered by the General Assembly. There may also be more mid-year cut packages.

Good luck to the counties. And good luck to the voters too.

Update: Comptroller Peter Franchot has come out against many of Hogan’s cuts, including the cuts to the counties. Assuming that the Board of Public Works sticks to its schedule and votes on the package tomorrow, Treasurer Nancy Kopp will decide the outcome.

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Adam Pagnucco, budget, Marc Elrich, MCPS

Elrich Asks MCPS for Cuts

By Adam Pagnucco.

In a memo to Montgomery County Public Schools (MCPS) Superintendent Jack Smith, County Executive Marc Elrich is asking MCPS to make operating budget cuts along with the rest of county government. Elrich also makes clear that the capital budget will have to be reduced. Elrich is not asking for a specific cut number yet but indicates that the county will have a clearer picture of its tax base by late August.

What is unclear is how any spending cuts to MCPS conform with state law. The county council recently funded MCPS at maintenance of effort, which is the minimum amount of local dollars allowed by the state. If the county wants to reduce MCPS below maintenance of effort, relevant state law will need to be addressed.

Elrich’s memo to Smith appears below.

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Adam Pagnucco, budget

County Government Applying for Line of Credit

By Adam Pagnucco.

For the first time in its history, the Montgomery County Government will be applying for a line of credit. That’s a sign of how seriously county officials are taking the deep economic downturn caused by the COVID-19 crisis.

MoCo’s general obligation bonds have enjoyed a AAA rating since the 1970s. The county almost lost its credit rating in 2010 but avoided that fate through doubling the energy tax, implementing massive spending cuts and passing a plan to increase reserves to 10% of revenues in ten years. (The county has since met that target.) As bad as that year and others surrounding it were, the county never had to take out a credit line.

Now it will.

County budget director Rich Madaleno confirmed that the county planned to apply for a credit line in a conversation with the county council yesterday. The county’s Office of Legislative Oversight (OLO) has posted documentation on how a credit line would function in the context of county government. County governments, especially well-managed ones, hardly ever use debt to fund operating expenses. Indeed, section 312 of the county’s charter states, “No indebtedness for a term of more than one year shall be incurred by the County to meet current operating expenses.” So if MoCo borrows against the line, it would have to pay back the money pretty quickly.

When questioned about the purpose of the credit line by Council Member Andrew Friedson, Madaleno replied:

It’s to make sure in the extremely rare case that if there were a cash flow issue because of what you well know is the schedule of disbursements – we do not collect the income tax, the state does – we get them on set schedules. If we have to pay bills while two weeks before the February distribution or the November distribution you have in essence a credit card. And as any consumer knows, in these sorts of situations, you would want that credit card in hand and not be applying for it at the register because you don’t know if you’re going to get it and what the rates are going to be. This is a best practice. This is not at all, not at all and you can ask Mr. Coveyou [the county’s finance director] – this is not at all an action being taken because we are concerned about liquidity. This is a backup insurance plan as you would want a smart organization to have in its back pocket.

Let’s remember that the county has had to deal with state distribution schedules of income taxes for decades and never needed a line of credit until now. The difference between now and those other decades is the sheer havoc the COVID-19 crisis could wreak on county finances. Consider that the current worst case scenario estimates up to a $600 million revenue loss in FY20 and FY21 combined and that the current projection for ending reserves in FY21 is $554 million. No one should take comfort from those numbers, particularly given the possibility of their getting worse.

A sneak preview of a county budget briefing six months from now.

The amount of the county’s credit line has not been established but multiple sources suggest that it could be in the hundreds of millions of dollars. No information is available yet on which financial institution(s) would issue it.

Montgomery County is not alone. State and local governments around the country either have or are seeking lines of credit, including the State of New York ($3 billion), the State of Illinois ($1.2 billion), the City of Louisville in Kentucky ($240 million), the State of Rhode Island ($150 million), Cook County in Illinois ($100 million), the City of Portland in Oregon ($100 million), the City of New Orleans in Louisiana ($100 million), Fauquier County in Virginia ($50 million) and the City of Montgomery in Alabama ($35 million). By far the most cited reason for these credit lines is to hedge against the revenue impacts of COVID-19.

Madaleno could be right that this is a smart backup insurance plan. Even Friedson, who has been hammering the Elrich administration’s budgetary practices of late, called it a “prudent action.” But let’s not delude ourselves. Montgomery County Government is preparing for a serious recession.

This year’s budget is only the beginning.

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Adam Pagnucco, budget, Property Taxes, taxes

Council Rejects Hidden Tax Hike

By Adam Pagnucco.

Yesterday afternoon, the county council rejected the hidden tax hike that was buried in the county executive’s recommended budget.

The primary issue that bothered the council was the lack of transparency surrounding the tax hike. It was not mentioned in the executive’s budget but it would have raised $5.1 million next year and more money cumulatively in later years. Tax increase proposals attract major attention at budget time with much discussion and public testimony. But this one, which was not published but still included in revenue numbers, flew under the radar until near the end of the FY21 budget process.

Multiple council members complained about process issues. Council Member Hans Riemer noted the failure of the budget to mention the tax hike and said, “This is about our values and our approach to government… The reason why I am so concerned about this proposal is because I really think it flies in the face of our approach to good government and to transparency.” Council Member Andrew Friedson said, “Public policy means public input. And we cannot have transparent and accountable policy making unless there are transparent and accountable decisions for how we make those decisions, how we calculate the policies that we make.”

Council Member Evan Glass put on his CNN journalist hat to investigate what happened. Glass asked council staff how the issue surfaced. Staff replied, “I did not read anything published that this was included,” and said the issue was uncovered through discussions with executive staff. Glass then asked budget director Rich Madaleno why the administration proceeded with it. Madaleno defended the executive’s proposal as an appropriate calculation of the charter limit and said the executive would have discussed this upon release of the budget but that event was canceled because of COVID-19 concerns. Madaleno also said this:

Council Member Riemer is correct that in the final iteration of the budget book the piece that explained this was taken out for revision and did not make it back in before it went to the printer. For that I am profoundly sorry but other than that there would have been deep conversation and of course many of you have heard the county executive say over and over that he thinks the charter interpretation is wrong and has been talking about that for months.

Glass acknowledged that he had heard Elrich express various opinions at forums. (Remember those back in the good old days?) But he replied, “To say something in a forum but then not convey it to the council or not to, as you noted, not to even include the cover page in the budget for whatever reason is a problem.”

Even Council Member Gabe “Mr. Rogers” Albornoz had nothing nice to say about the process for considering the tax hike. When Mr. Rogers is unhappy, there is a problem.

Riemer proceeded to claim that the executive’s proposal was actually illegal because it allegedly violated the charter. The charter’s exact language on the property tax charter limit says:

Unless approved by an affirmative vote of all current Councilmembers, the Council shall not levy an ad valorem tax on real property to finance the budgets that will produce total revenue that exceeds the total revenue produced by the tax on real property in the preceding fiscal year plus a percentage of the previous year’s real property tax revenues that equals any increase in the Consumer Price Index as computed under this section. This limit does not apply to revenue from: (1) newly constructed property, (2) newly rezoned property, (3) property that, because of a change in state law, is assessed differently than it was assessed in the previous tax year, (4) property that has undergone a change in use, and (5) any development district tax used to fund capital improvement projects.

So the charter applies the rate of inflation to adjust “the total revenue produced by the tax on real property in the preceding fiscal year” to calculate the charter limit. The methodology used by the finance department for the last 30 years uses actual taxes paid on real property, including partial-year taxes on newly constructed property which was in use for only part of the year, to calculate current year total revenues. The executive’s new methodology would use taxes that new construction would have paid if billed on an annual basis to calculate current year revenue even though full-year taxes on those properties were not actually collected.

Riemer alleged that the use of hypothetical revenues rather than actual revenues to calculate the charter limit violates the plain language of the charter and asked a council attorney for his opinion. After explaining the technical issues and the possible steps for analysis by the courts, the council attorney replied, “My opinion is that the courts if asked – the court of appeals if asked – would ultimately rule for all the reasons I explained that this provision means actual revenue received during the relevant year for newly constructed property and not the potential revenue you could have received had everything been online for a full year.”

Riemer was bothered by both the transparency issue and the legal risks of the executive’s proposal and he linked the two.

The fundamental issue here is, given how risky it is, the fact that the county council and even more importantly, the public was not informed of this proposal is highly problematic. If you look at the county executive’s budget, you will not find an explanation of this decision. It’s not there. The county executive did not present a budget explaining this method of calculation. The fact is it is a $5 million increase in property taxes from all payers of property taxes in the county. But there is no explanation of that in the county’s budget. It is unthinkable to me that we would have a tax increase that has not actually been transparently presented to the community and, what more, is actually illegal. It is a violation of the charter. The combination of those two aspects of this proposal are just profoundly troubling.

Let’s remember that the principal charter limit activist in the county – Robin Ficker – is an attorney who has sued the county before and prevailed multiple times. A legal challenge to a change in charter limit administration is far from a hypothetical thing.

It’s not clear that a majority of the council agrees with Riemer on opposing the merits of the executive’s proposal. But there was obvious discomfort in dealing with this issue both late and without public input. That goes on top of other tensions with the executive branch on the budget and issues ranging beyond that. Add in stir craziness during the lockdown and these are strange times in Rockville.

After 40 minutes of discussion, the council killed the executive’s hidden tax hike on a 9-0 vote.

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Adam Pagnucco, budget, Property Taxes, taxes

Elrich’s Hidden Tax Hike

By Adam Pagnucco.

One month ago, I roasted the Montgomery County Republican Party for inaccurately claiming that the county was trying to “sneak in” a tax hike. At that time, the issue was a state notice requirement and not actual intent – at least not by the county council – to raise taxes. But it turns out that there actually was a hidden tax hike embedded in the budget on top of the executive’s open recommendation to raise property taxes. No one reading the budget would have found it. But county council staff did find it and now the matter is exposed.

Folks, I have been reading county budgets for almost 15 years and I don’t remember seeing anything like this.

The issue at hand is how the county calculates the charter limit on property taxes. In concept, it’s a simple procedure. The county’s finance department uses two data points: the estimated amount of real property tax revenues collected in the current fiscal year and the percentage growth of the consumer price index from the previous calendar year. Tack on inflation to the current fiscal year’s property tax revenue and that’s the charter limit for the next fiscal year. (The county can collect additional property tax revenues on a few other categories of property outside the charter limit.)

Sounds easy, yeah? But what about taxes collected from properties newly built during the current fiscal year? For the last 30 years, the county’s finance department has included the actual taxes paid on those properties in its calculation of current year revenues. So if a property was built halfway through the fiscal year, half of its annual tax bill is included in current year revenues. If a property was built nine months into the fiscal year, then one-quarter of its annual tax bill is counted. And so on. Add in these pro-rated tax bills to full-year tax bills for existing properties and that’s the current year property tax collections. Tack on inflation and that’s the charter limit.

The Elrich administration used a new methodology to calculate the charter limit in its FY21 recommended budget. Instead of using the actual tax bills paid by newly built properties in the current fiscal year, it included full-year tax bills in its estimate of current revenues even though those bills were not actually paid for the full year. That allowed the administration to calculate slightly higher current year property tax revenues. Tack on inflation and the charter limit is slightly higher. And so there is more room to raise the property tax rate than there would be otherwise.

In other words, it’s a tax hike.

It’s not a very large tax hike. Council staff estimates that the new methodology allows the county to raise an extra $5.1 million in the FY21 budget, or 0.24 cents per $100 of assessed value. (By contrast, the executive’s openly recommended tax hike was 3.18 cents.) But if this new methodology is adopted, it will compound over time and eventually raise tens of millions of dollars more than under the old methodology.

Basing tax estimates on taxes not actually received is a questionable practice at best, but let’s set aside the merits of the policy for now. The disturbing thing about this is that it was not disclosed to the public through the budget. Search the county’s 831 page budget for “charter limit” and you won’t find any discussion of this methodology change. Instead, the matter first surfaced in a council staff memo released late last week. The council held a closed session to discuss the legal ramifications of the change on Wednesday. The council will now decide the matter today.

Regardless of how one feels about taxes, let’s agree that decisions concerning them are important and warrant public scrutiny and participation. The issue was not publicly known when testimony was heard on the budget, so residents were denied the opportunity to weigh in. That is a direct result of the administration’s failure to disclose the issue in its published budget.

We deserve better.

Let’s see what the council makes of this.

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Adam Pagnucco, budget

Magic Asterisk in Elrich Budget Blows Open $10 Million Hole

By Adam Pagnucco.

There are many reasons to read government budgets. They illuminate the structure, function and priority of governments. They reflect what politicians actually do vs what they say. They lend themselves to making marvelous spreadsheets. And once in a while, you find something a little odd. Maybe something weird. And on rare occasions, something wilder than a jungle full of battling predators.

This is one of those rare occasions!

The item at hand is a non-departmental account (NDA) buried on page 70-28 in the county executive’s recommended budget. NDAs are expenditures that fall outside individual departments or apply across multiple departments. (Here’s a secret: these are some of the most fascinating items in the entire budget!) One new NDA recommended by the executive is called “Productivity Improvements.” Here is how the executive’s budget describes it.

This NDA recognizes cost efficiencies identified by Montgomery County Government staff through the evaluation of service delivery models, supervisory/management and workforce structures, relevant tools, equipment, and technologies, operating budgets, and contracts with outside vendors. The critical assessment of these factors and formulation of strategies to maintain, increase, or improve service delivery at a lower cost is a pillar of good government, especially in a fiscally challenging environment. The productivity and performance improvement effort is a collaborative initiative that involves County leadership, management, and represented employees.

The appropriation amount for this NDA is negative $10 million. You read that correctly. It’s not $10 million. It’s negative $10 million. That’s because the administration thinks it can save $10 million through “cost efficiencies.” What are these efficiencies exactly?

It’s not clear.

These “cost efficiencies” are definitely not achieved through government restructuring that saves a lot of money, a major campaign promise by the executive that has not been kept. Neither are they achieved through trimming employees since the executive’s budget adds 184 full-time-equivalent positions.

Council Member Hans Riemer called it a “$10 million magic asterisk funding item” and compared it to the deficit-exploding budget chicanery of the Reagan administration. Council Member Andrew Friedson called it a “phantom negative appropriation” and added, “Hoping for cuts is not a strategy. Asking for cuts to be made at a later date, for efficiencies to be found at a future time is not an appropriate way to pass a budget… We can’t just rhetoric our way out of this. We need results to get our way out of this. And we need reality to be part of this. And a $10 million phantom possibility to be named at a later date is not reality. It’s fantasy.”

When asked what this “magic asterisk” actually was, Council Staff Director Marlene Michaelson replied that it was “anticipated efficiencies that may be identified.” Michaelson added, “So from our perspective it means that there is a $10 million hole that the council needs to now fill either through additional reductions or additional resources. And given the signal that the council has already sent us about not wanting to try and increase taxes, it really is going to be additional reductions that need to be identified.”

Why does the magic asterisk create a $10 million hole? It turns out that it violates the county’s charter. Back in May 2008, the council resolved a disagreement over a property tax hike by reducing its size and passing a budget resolution calling on the executive to trim $13 million through unspecified efficiencies. Council staff uncovered a 2009 memo from County Attorney Marc Hansen concluding that such a negative appropriation violated the county’s charter. Hansen wrote:

A negative appropriation is not consistent with the Charter. A negative appropriation acts as a general command to the Executive to reduce appropriations made elsewhere in the budget. This is not consistent with the Charter, because the Charter requires the Council to adopt a budget that includes appropriations of specific amounts for specific purposes for the ensuing fiscal year.

Hansen remains the County Attorney today. It is unknown why the executive branch apparently did not know of this legal determination when formulating its budget.

Productivity improvements are great things when they are REAL. And when they are real, they can be booked inside departmental budgets. Is there new technology in the libraries that increases productivity? Great, then you can ask for $42 million for the libraries instead of $43 million. Is there new scheduling software in the fire department that can control overtime? Great, then you can ask for $227 million for fire services instead of $229 million. (OK, maybe we should not discuss fire department overtime.) The point is that there is a big difference between REAL productivity improvements and “anticipated efficiencies that may be identified.”

And so the magic asterisk has created a $10 million hole in the budget that the council must now close. The coronavirus crisis ensured that this year’s budget was going to be very tough. Now it’s a little bit tougher.

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budget, Fire Fighters, Marc Elrich, MCGEO, MoCo Police

Elrich Agrees to Give Unions COVID-19 Differential Pay

By Adam Pagnucco.

County Executive Marc Elrich has reached agreement with the three county employee unions (MCGEO, the fire fighters and the police) to provide additional pay related to the COVID-19 crisis to their members. The additional pay will range up to $10 per hour, is retroactive to March 29 and will last for at least six pay periods. Elrich’s press release appears below.

*****

County and Labor Representatives Reach Agreement on Recognizing the Risks of On-site Employees

For Immediate Release: Friday, April 10, 2020

County Executive Marc Elrich is pleased to announce that the County has completed its negotiations with all three County unions and agreed upon COVID-19 differential pay to recognize the unusual risks employees now face in leaving their homes and delivering vital services to the public. These agreements are significant because the union representatives worked with management during this crisis time to achieve an agreement that ensures that critical services are maintained, employees are taken care of and fiscal realities are addressed. The three unions are the International Association of Fire Fighters, Local 1664; the Fraternal Order of Police, Lodge 35; and, the United Food and Commercial Workers, Local 1994 (MCGEO).

“I appreciate the work and the willingness of our union representatives to join with us in a collaborative approach to bargaining, to achieve an agreement that respects the increased risk for our workers who are continuing to do their jobs and respects our budgetary obligations,” County Executive Elrich said.

This agreement recognizes the increased risk of the work done by our first responders – firefighters and police officers during this pandemic. It also recognizes that other employees are doing work that requires public interaction – and therefore increased risk, including work by corrections officers, bus drivers, nurses, and social workers.

The County Executive noted that under provisions of existing county bargaining agreements (which were negotiated years ago), the unions could have insisted on much larger benefits, but they understood the importance of the ongoing fiscal health of the county. The County Executive also noted the progressive nature of the agreement, which gave dollar, rather than percentage, differential payments.

The County Executive acknowledged that the County has nonprofit partners serving on the front lines of the Corona-19 response and will work with them to find possible ways to help them maintain necessary staffing.

After teams of management, in close coordination with union representatives, identified the critical core services that would need to continue for the next eight weeks, the likely minimum duration of the COVID-19 crisis. This COVID-19 differential pay would apply to those front-facing and back-office onsite employees who are required to come to work to respond to COVID-19 or provide County’s selected critical core services. Those who must work onsite are in the following two categories:

Front Facing Onsite: work that cannot be performed by telework, involves physical interaction with the public and cannot be performed with appropriate social distancing.

Back Office Onsite: work that cannot be performed by telework and does not involve regular physical interaction with the public.
The broad details of the COVID-19 pay differential are as follows:

The differential pay will be uniform for FOP and IAFF members. For MCGEO-represented and GSS employees, the differential will distinguish between front-facing onsite and back office onsite work. The differential pay for all impacted employees are retroactive to March 29, the beginning of the current pay period.

The front-facing onsite employees will receive an additional $10/hr and the back-office onsite will receive $3/hr.

Additionally, this week masks will be distributed to employees who do not have them, and administrative leave will be given to high risk employees who cannot telework and do not feel safe working on site.

The agreements cover six pay periods, which started on March 29, or until the Maryland State of Emergency is lifted. If the State of Emergency is still in effect at the end of the six pay periods, the agreements will be revisited.

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budget, Montgomery County

Council En Masse Sheds Progressive Mantle

Many anticipated that the new Montgomery County Council, filled with fresh new faces who ran on a progressive platform, would be markedly more left wing.

The Council has now disabused us of this notion. While willing to undertake vocal left-wing symbolic gestures, even mildly progressive stances have sent the Council running away.

Consider the reaction to County Executive Marc Elrich’s budget. The county executive proposed a very mild tax increase. A homeowner with a $500,000 home would have seen taxes rise by $46. People with $1 million homes would see a rise of $192. The purpose was to increase spending on affordable housing and education and Montgomeryites would have been paying this increased rate for years but for a mistake by county estimators.

Hardly a big enough increase to give one the vapors. Based on the increasingly hardline progressive rhetoric, one might have thought that Elrich would have been slammed by progressives for not increasing taxes or spending on progressive goals enough.

Elrich’s decision to maintain reserves at a high rate could have been cast as caving to big banks. He planned to increase spending for the county government by a whopping 0.8%. So much for out of control spending. It would have been easier to cast this budget as Tory austerity.

Nevertheless, the Council immediately repudiated these rather tepid measures and allied themselves with those criticizing the country executive for breaking his promise not to raise taxes, even by a small amount. All members of the Council, except Tom Hucker, signed on to a statement repudiating the property tax increase. And even Hucker demurred.

In News of the Weird, Councilmember Will Jawando then put out a statement the following day demanding more progressive taxation after repudiating this far milder tax increase.

The Council put out the statement so fast that I assume no time was left for racial equity and social justice analysis as demanded by legislation supported by the same exact Council. No one can seriously think such an analysis would conclude this mild tax increase didn’t advance either principle viewed through a progressive lens.

This isn’t the first time that Council symbolic politics ran aground on the rocks of reality.

The Council may lay this decision on the county coping with the very early stages of the COVID-19 pandemic but why the rush? It quickly became abundantly clear that the budget would need to be radically revamped in light of our new serious economic and health challenges. Surely, all councilmembers knew that this was already happening.

But instead of taking a deep breath, the Council rushed to attack the executive for plans that one might have thought they would support based on all the loud progressive claims made during the 2018 elections. Such a statement could have easily been issued by former Councilmember Nancy Floreen, who abandoned the Democrats to run an centrist independent against Elrich in 2018.

After this initial statement, the Council then moved on to pass a resolution on the county budget. Resolutions are legislative “sound and fury signifying nothing” with apologies to Faulkner. At best they are aspirational. In the midst of the general call for fiscal restraint, they did take the time to ask specifically for no increases above those mandated by the state in education. Again, hardly smacking of the progressive wish list.

How you view the Council’s actions will largely depend on your politics. Either way, in their rush to denounce his budget’s mild progressive moves, let’s be clear that the Council has now entirely ceded the progressive mantle to Marc Elrich.

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Adam Pagnucco, budget, Marc Elrich, Rich Madaleno

Elrich Sends Budget Letter to the Council

By Adam Pagnucco.

Facing severe crises to public health, the county’s economy and its budget, County Executive Marc Elrich sent the letter below to the county council about the budget.  The main takeaways are:

1. The executive has instituted freezes on hiring and procurement for functions not related to COVID-19 response.  Overtime has also been restricted to COVID-19 response departments.

2. The finance department has begun estimating the crisis’s impact on county revenues.

3. The executive has begun talking to the county’s unions about “a range of compensation issues.”  No further details were provided.

4. Office of Management and Budget Director Rich Madaleno has been designated as the liaison to the council on “issues related to fiscal response and recovery.”  When Madaleno was a State Senator, he was a key player in working on the state’s budget problems during the Great Recession.  Few people in Maryland understand the state budget better than Madaleno.

We reprint Elrich’s letter below.  Bethesda Beat has reactions from some members of the county council.

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