Monthly Archives: December 2020

Adam Pagnucco, budget, COVID-19

Follow the Money

By Adam Pagnucco.

To understand the growing strains on MoCo’s pandemic-stricken budget, it helps to follow the money. Here is an example.

Follow This Money

Last spring, the county council voted down compensation increases contained in the collective bargaining agreements negotiated by County Executive Marc Elrich with the three county employee unions: MCGEO, the fire fighters and the police. The increases totaled $22 million in the current fiscal year and $29 million annually thereafter. This was the sixth time that the county trimmed or eliminated raises for employees in the last eleven fiscal years. (The county zeroed out raises in FY11, 12, 13 and 21 and reduced collectively bargained raises in FY17 and 20.)

At around the same time, the executive granted the three unions indefinite COVID pay without seeking the consent of the council. There is no question that workers exposed to hazardous conditions deserve extra compensation. The issues are that the executive’s COVID pay far exceeds what any other government in the region (and maybe the entire nation) has granted and that it has no fixed end date. The cost of this pay is $4 million a pay period or roughly $100 million a year, more than three times the compensation increases contained in the now-abrogated contracts. Employees of the college, school district and park and planning are not getting the money. It must be noted that the president of the largest county union said two years ago, “Marc Elrich won the primary thanks to our shoe leather.” Subsequently, the inspector general found that workers were getting pay to which they were not entitled in at least one county department.

No county leaders argue that employees should get zero emergency pay. Instead, the problem now is that the county has little clue how to pay for it even as its budget has been crippled by the COVID recession. Originally, the extra pay was supposed to be mostly reimbursed by FEMA, but the county’s emergency management director called that into question in October. The emergency pay liability grows every day and the need to pay it off grows more desperate.

Now Follow This Money

The county received a $183 million allocation of federal CARES Act money last spring to help it pay for COVID expenses, including aid for pandemic-stricken residents and businesses. But there’s a catch: if the county doesn’t use the federal money for eligible purposes by December 30, it forfeits it. In October, the county council went nuclear upon finding out that the executive branch was slow to spend the federal money it had appropriated for various assistance programs, including aid for rent, food security, child care and more. Administration representatives said that they were trying to prevent fraud and waste and dealing with frustrating FEMA paperwork requirements.

Now it turns out that the money won’t all be spent by December 30. Council staff wrote last week:

CRF [Coronavirus Relief Fund] monies received by Montgomery County must be spent on costs incurred on or before December 30, 2020. Since March 2020, the County Council has enacted special appropriations to help Montgomery County residents and businesses endure the pandemic and its effects. Due to the restrictions on spending imposed by Congress, the Administration expects that $9,934,156 in CRF dollars will be unspent based on current spending patterns and demands. The list below details the special appropriations where funds will likely go unspent.

The table below shows the $9.9 million in unspent federal money by assistance program. The three biggest programs are child care, assistance to distressed common ownership communities and African American health care.

So it appears that families needing child care, residents of distressed common ownership communities and African Americans needing health care may not be getting the federal grant money the council allocated to them. (They might not be completely out of pocket as the executive has recommended the use of county reserves to help.) That said, the $9.9 million in federal grant money still needs to be used by December 30 or forfeited. What’s the administration’s plan for that?

The executive branch sent the council a resolution that says essentially: trust us. The resolution suggests a number of alternate uses for the federal grant money and then says this:

If any of the $9,934,156 is unable to be spent on the Council priority uses identified above in advance of the deadline established by Congress, these funds may also be used for any eligible expense previously authorized by the Council by Resolution 19-498.

And what does Resolution 19-498 authorize? Lots of things, including this:

Payroll expenses for public safety, public health, health care, human services, and similar employees whose services are substantially dedicated to mitigating or responding to the COVID-19 public health emergency, including any pay differential provided to employees responding to the public health crisis. [Bold added for emphasis]

Last Tuesday, the council approved the executive’s resolution to allow a potential transfer on an 8-1 vote with only Council Member Andrew Friedson dissenting.

And so federal grant money set aside by the council for families needing child care, residents of distressed common ownership communities and African Americans needing health care is now subject to diversion to pay off part of the soaring emergency pay liability created by the executive. But even if that happens, it’s not the end of the story. There is only $9.9 million in unspent federal money in play here whereas the total emergency pay liability accounts for $4 million a pay period, or $100 million a year. A reallocation would buy the county about five weeks of time. After that, the liability resumes spraying red ink.

What will happen next as the day of reckoning draws near?

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Adam Pagnucco, Department of Liquor Control

Dorfman Out at Liquor Monopoly

By Adam Pagnucco.

According to a mass email sent by Deputy Chief Administrative Officer Fariba Kassiri, Alcohol Beverage Services (ABS) Director Bob Dorfman is leaving his position effective today. The email is reprinted below.

*****

Subject Line: Bob Dorfman/Acting ABS Director

From: Kassiri, Fariba
Sent: Monday, December 14 2020
To: #ABS All
Cc: #MCG.Department and Office Directors; #MCG.SeniorEAAContacts; #MCG.Legislative Branch Directors

ABS Employees,

Effective today, Bob Dorfman will be moving on from his position as Director of Alcohol Beverage Services. On behalf of the County Executive, I want to thank Bob for his 4 years of service to Montgomery County Government and acknowledge his significant accomplishments during that time. ABS would not be the success it is today without his leadership and vision. I thank him for his many contributions and wish him well in his future endeavors.

Kathie Durbin will be Acting ABS Director until a permanent director is appointed.

*****

It’s difficult to describe just how badly the liquor monopoly was doing when Dorfman, a former Mariott executive, was hired to run it four years ago. The monopoly had suffered critical delivery outages in the week between Christmas and New Year’s two years in a row. It was riddled with crime and abuse, with employees skimming booze and selling it for cash, driving drunk in county trucks and running the warehouse with sticky notes. Licensees were so upset at the monopoly’s failures, especially with regards to special orders, that Delegate Bill Frick (D-16) introduced a bill to allow county voters to end it. (I organized a coalition to support Frick’s bill.)

Dorfman’s success was to do what prior leaders had promised to do for years: run the organization like a business. Even some of the monopoly’s harshest critics conceded that, under Dorfman, the department’s delivery accuracy and service improved. Special orders were still an issue but there were no more week-long outages during holiday periods. Dorfman’s performance was good enough that pressure to abolish the monopoly eased off, at least for a little while. One caveat: Dorfman’s pursuit of the bottom line was great for the monopoly but not always for licensees. He instituted a new bottle fee for licensees at county liquor stores and blocked reform passed by the General Assembly to allow private stores to sell spirits.

Dorfman was also an aggressive defender of his organization, going after both Council Member Hans Riemer and Seventh State founder David Lublin in public. When Riemer found out that county liquor stores were losing money and suggested shutting them down, Dorfman called him “ill informed” and said he “obviously doesn’t care much” about county employees. No other department head has said such things about a sitting Council Member in recent memory!

Departing department directors often take extended departures, with their last days scheduled for weeks or months after their announcements. That’s not the case with Dorfman, who is out effective today. That makes me wonder whether he is leaving on good terms with the administration. In any case, his example offers a lesson: if the county wants the liquor monopoly to perform like a business, it has to hire someone to run it who knows how to run a business. Dorfman was that guy. We shall see if County Executive Marc Elrich heeds that lesson when hiring Dorfman’s successor.

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2018 Governor's Race, 2020 Presidential Election, Adam Pagnucco, Larry Hogan

Trump vs Hogan: Votes by MoCo Town

By Adam Pagnucco.

In what amounts to an early Christmas for this number cruncher, the State Board of Elections has released precinct voting data for candidate races and ballot questions. We are going to have a lot more of this in coming days, but here is a very quick cut comparing outgoing (yes, outgoing) President Donald Trump with Governor Larry Hogan.

In the 2020 general election, Trump received 19% of the vote in MoCo. In the 2018 general election, Hogan received 44% of the vote in MoCo, probably the highest percentage for a Republican in a MoCo gubernatorial general since Spiro Agnew won the county in 1966.

In comparing the two, there are two caveats. First, the electorate in the 2020 general election (more than 517,000 voters in MoCo) was bigger than the electorate in the 2018 general election (413,137). That means these are different groups of voters, although the Democratic percentage of the electorate in 2020 (64%) is about the same as in 2018 (65%). (The state has not released official turnout numbers yet for 2020, making these numbers approximate.)

Second, 2020 precinct level data includes all voting modes whereas 2018 included election day votes only. Election day votes accounted for 61% of all MoCo votes cast in the 2018 general election, and the Democratic percentage of the electorate (61%) was lower than the Democratic percentage of other voting modes (71%). That skews the 2018 precinct results in Hogan’s favor a bit. Hogan won 47% of MoCo’s election day votes whereas he won 44% of MoCo’s general election votes overall.

All of the above said, the chart below shows Trump’s vote percentage by MoCo town in the 2020 general election.

These results are predictable. Trump only won one precinct out of MoCo’s 258 precincts: 12-1 in Damascus, where he tallied 962 votes vs Joe Biden’s 926. Trump did particularly badly in the Democratic Crescent, pulling in the teens and single digits there.

The chart below shows Hogan’s election day vote percentage by MoCo town in the 2018 general election.

In terms of election day votes only, Hogan won many areas in MoCo. Even if other voting modes were included, Hogan probably won in Brookeville, Damascus, Derwood, Dickerson, Laytonsville, Leisure World, North Potomac, Olney, Poolesville, Potomac and Sandy Spring. Hogan’s overall loss in MoCo was due to lopsided defeats in Silver Spring and Takoma Park, not to geographically broad unpopularity.

This goes to show that a fiscally conservative, socially agnostic and politically strategic Republican can get a lot of votes here, especially in upcounty. But Trumpism is a huge loser in MoCo.

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COVID-19, MCEA, MCPS

MCEA to School Board: Reopening Should be Safe

By Adam Pagnucco.

In a letter written to the school board today, Montgomery County Education Association (MCEA) President Chris Lloyd called for a number of measures to ensure that any reopening of schools would be as safe as possible.  Among those measures are the installation of effective air handling systems in every classroom, a health and safety committee at every school, strict social distancing, personal protective equipment and a choice of work location for educators.

Lloyd’s letter is reprinted below.

*****

December 11, 2020

Sent Via Email

Office of the Board of Education
Montgomery County Public Schools
Carver Educational Services Center
850 Hungerford Drive, Room 123
Rockville, Maryland 20850

Dear President Wolff and Members of the Board of Education,

I write to you today on behalf of the Montgomery County Education Association in relation to the Tuesday, December 15, 2020 Board of Education meeting, and the discussion/action around the return to physical workspaces.

We affirm the value of in-person learning, in support of the needs of our young scholars and their academic and social-emotional well-being. We call upon you to demand that our state and county leaders make the required investments in physical workspaces and institute policies to curb the significant community spread of this virus.

All of us need to be advocating for policies and funding needed for the safe schools our communities deserve. There is a fierce urgency in this work, so that we can return to schools as soon as possible. It is incumbent on policy makers to prioritize public education and the safety of adults and children in our care, not through proclamation, but through investment and policies.

We want to return to school safely and soon, and we can do this by stopping the rampant community spread, and by simultaneously providing proper health and safety protocols at the worksite. Acting immediately on these two items will allow our schools to thrive.

We have the knowledge and understanding of how to stop community spread. We’ve seen countries such as Australia institute polices that not only bent the curve of transmission but caused a precipitous and effective drop in cases and deaths, which allowed for safety in a community and its schools. Stopping the rampant community spread in our community is a matter of public policy and will, and it can be done if we decide to do so.

We have the knowledge, understanding and the resources to make workplaces safe. The Silver Diner in Rockville safely uses UV light in its air handling to eradicate the virus, and transmission there is significantly lower than average. Other worksites such as grocery stores have installed plexiglass barriers, used face masks and face shields, while simultaneously and significantly increasing the air exchange rate and air filtration in their buildings, aggressively moving air up and out of the building. These are examples of ways critical and essential businesses are seeking to eradicate the virus in their buildings. For one of the wealthiest counties in the nation, with $184 million in CARES Act funding, there is an obligation to act in this way in our public buildings.

We believe schools are essential, and therefore deserve essential funding to make the buildings and the inhabitants safe. Instituting a paycheck protection program for county businesses will allow us to stop the spread, and to open up the most important buildings for our children – our schools. By prioritizing schools and protecting our most vulnerable workers, we can both control the virus, keep our economy strong, and invite students back into buildings.

We call on the immediate funding and installation of effective air handling systems in each classroom, that provide for necessary air transfer, filtration and virus eradication.

We call for a laser focus on instruction, that educators can teach either online or in buildings, so that we can meet the needs of young scholars in our care and focus our efforts either in-person or online.

We call for Health and Safety Committees at each school, to look after the physical and emotional security of our students.

We call for every inhabited space in our schools to have the safety we’ve come to know and expect, and just like other emergencies, for educators to have the ability to remove themselves and their students from life-threatening situations.

We call for strict social distancing measures and needed PPE so that we can protect our children, families and staff.

We call for the choice of work location for educators, either remote or in-person, so that we can meet the needs of our teachers, and all of the children in their care.

All of this is possible with action now, so that we can bend the pandemic curve and have our buildings safe for occupancy. It will require funding and policies that make clear the top priority of this community is its schools and other people’s children. Fierce urgency and moral courage demands nothing less.

We alone cannot make our schools safe. We alone cannot stop the rampant spread of the virus. But we can lead the efforts to make this happen. It took weeks, and not months, for other countries with strict policies to bring the spread of the virus under control. It took investment by a community to make workplaces safe. We should do the same, demand the same, and then return to school safely and soon after executing such policies and infrastructure investments.

Sincerely,

Christopher Lloyd, NBCT

President, MCEA

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Adam Pagnucco, Montgomery County Council, redistricting

Come On Now

By Adam Pagnucco.

MoCo is about to embark on one of its most important tasks of the decade: redrawing county council districts. The county’s charter mandates redistricting every ten years in line with the release of new U.S. Census data. The charter also states that the council must pick a redistricting commission to recommend new boundary lines (although the council retains the final say). The current redistricting will be particularly intense given the recent passage of Question C, which expanded the number of districts from five to seven.

MoCo’s current county council districts.

More than 100 people applied to be on the 11-member redistricting commission and 32 were scheduled for interviews. The interviewed applicants include:

1. Two former elected officials, including one who used to be a council member and has run for two different offices in the last five years.

2. Five other former candidates for office, including one who has run for office seven times since 2009. Three of these former candidates have run at least once since 2018.

3. Two political consultants, one of whom has worked for MoCo politicians, including sitting council members.

4. Two spouses of sitting municipal elected officials. Both of these officials unsuccessfully ran for higher office before being elected to their current positions. One of the spouses also ran for office, including for council in 2017-18.

5. A sibling of a 2018 council candidate who has managed multiple local political campaigns.

These are not bad people. To the contrary, most – if not all – of them have done good things and can serve the county well in other roles. But the redistricting commission is a critical body that will play a key role in designing council districts for the next decade. The importance of this exercise to county residents cannot be overstated. The public interest should be the sole determinant of redistricting. Given the fact that the public is watching how this plays out:

It would be wise to avoid the appearance of a candidate designing his or her own district for a future run.

It would be wise to avoid the appearance of a political operative designing a district for a client.

It would be wise to avoid the appearance of a commission member designing a district for a family member.

Redistricting is an official and supremely important act of county government but it’s also a very sensitive one. Many people are jaded about “gerrymandering” and the county just had an all-out ballot war over the appropriate number of council districts. I can’t count how many times I have seen the word “machine” used to describe the county’s politics this year. In this climate, it won’t take much to get people to believe the worst about redistricting, and given the recent popularity of charter amendments, who knows how far such sentiment could go.

There are plenty of qualified applicants who could do a good job and don’t have any of the above issues. Come on now, council members! Please consider them when choosing who serves on the redistricting commission.

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Development, Montgomery County Council, schools

Council Overrides Veto, Attacks Elrich, Cuts Revenue for School Buildings

The Montgomery County Council unanimously overrode County Executive Marc Elrich’s veto of their bill to lower impact taxes on development in wide areas around public transit.

The press releases title sets the tone with the strange claim that the override reaffirms the Council’s “commitment to investing in Montgomery County’s future.” Except that by reducing the impact taxes collected, the county will now have less money to invest in school buildings and other capital projects.

It’s a commitment to disinvesting in public infrastructure. The language is especially telling because Democrats normally tout public spending as investment, but they’ve adopted Republican-style talking points on cutting taxes. Knowing this is the case, the press release is at pains to hide just how much they’ve reduced taxes on developers. It just says that the new tax rate will “more accurately” reflect the actual cost of school facilities.

The individual comments are little better. Sponsor Hans Riemer attacks Elrich because that is what he does. He also lauds the policy as “balanc[ing] the competing needs to address school enrollment” and “make our transportation system safer.” Except lowering impact taxes that help build new school buildings hurts rather than helps schools. I imagine this also reflects Hans’s magical thinking that everyone wants to live near transit but that they won’t have many kids—somehow families with kids don’t need housing too.

Councilmember Nancy Navarro refers to this legislation as “bold” which is the same word she used previously for lauding her support for the last tax cut on devleopers.

Overclaiming that this will lead to more “affordable housing” and “environmental sustainability,” Councilmember Andrew Friedson says the bill makes the county “more attractive to new businesses.” Once again, he conflates development with business as the Council continues to do nothing to attract the non-development related business it needs.

There is no requirement for more affordable housing as a share of new development. Impact taxes have little impact on the overall cost relative to demand and land prices, so the major impact will not be a blossoming of housing or a reduction in its price, but further losses to the county treasury to build schools.

All of Hans Riemer’s many other like-minded bills have similarly failed to do much to bring affordable housing to the county. This one won’t either. It might, however, result in more campaign contributions from developers to the incumbent councilmembers and their allies.

Evan Glass touts how hard the Council worked on the new policy—they did spend a lot of time on it—and that it reflects the Council’s commitment to “inclusivity and diversity.” No doubt the Council believes that to be true. But progressive verbiage doesn’t alter the hard fact that, directly at odds with this claim, the county will deepen the already acute shortfall in funds for public school buildings to serve its diverse student population.

“Council Assures More Portables in MCPS’s Future” would have been a good alternative title for the press release.

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taxes, Will Jawando

Jawando Calls for a Tax Hike

By Adam Pagnucco.

This morning, the county council and representatives of the executive branch discussed the county’s abysmal new fiscal plan, which raises the prospect of cuts to county government (excluding MCPS and Montgomery College) of up to 12% next year. That attracted many comments from the council as one might imagine. Council Member Will Jawando was the only one to call for a tax hike to prevent draconian cuts. His comments (which can be seen on county video) are transcribed below.

*****

Thank you, Mr. President and thank you to Mr. Madaleno [the county’s chief administrative officer] and Mr. Coveyou [the county’s finance director] and acting director [Jennifer] Bryant [the county’s acting budget director]. Excited to confirm that shortly. And to all the staff.

A couple things I just wanted to note. I think Council Member [Evan] Glass said something that’s really important I want to underscore and I agree with, that our focus needs to be on maintaining services for those who need it the most, and Director Bryant, you said this as well, and I think everyone agrees with that. But I also want to make sure that we are also looking at how we’re going to come out of this crisis. And we are in the unenviable position of having to both manage our fiscal situation, deal with the multiple pandemics – health, social, economic – and try to make sure that we don’t exacerbate inequality and we plan for the recovery at the same time.

And that’s not easy, right? We’re dealing with that, as is the nation, as is the world. But I think we are in a better position than most to try to make those plans. And I want to urge us to do a couple of things as we’re thinking about that, so as Mr. Madaleno, as you’re coming back in January with your team. We have reserves for a reason. So we should use them. If we’re not going to use them now, I don’t know when you would use them. I’ve said this since the beginning. And we have been using them on special appropriations and we have been seeking reimbursement.

Jawando speaks in open session today.

But I think to – as we’re looking at, there’s been a lot of talk of savings plans. We cannot cut critical services to those in need that are going to exacerbate income inequality. And if those decisions are being made or are on the chopping block, we have to use reserves.

The other thing is we have to consider how we’re going to raise additional revenues. This has been one of the most unequal pandemics and recessions that we’ve ever seen. There was a report out in October that billionaires increased their net worth by $637 billion through October during the pandemic. And obviously those numbers are smaller for millionaires. But equal growth. While at the same time, you see more than 40 million Americans applying for unemployment insurance. My office has helped hundreds, I know other colleagues have. So this recovery, this pandemic has not been equal. And Montgomery County is a perfect example of that. We have – we are in the wealthiest county in the wealthiest state with the most millionaires per capita in the country. And so as a state and as a county, some who have done well, and I’m happy that that’s the case – we’re going to do have to do more for our residents. So before we discuss any cuts to services that are in need that are going to exacerbate inequality, we’re going to need to look at these types of options.

I’m glad that we included in the statement we sent to Annapolis asking for the authority to levy a progressive tax bracket on the income tax. We need to do that. I’ve said it before. If we were to increase the top bracket from 3.2 to 3.5 percent on just millionaires in the county, you’d bring in over $90 million in revenue a year. I’m not saying that’s the specific proposal we need to do, but we certainly need to be talking about those things in the context of this larger picture. And I just want to say that because it hasn’t been said. So I look forward to reviewing the details. I appreciate the sobering picture and look forward to working through this with you and our colleagues.

Thank you, Mr. President.

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Adam Pagnucco, budget

The Day of Reckoning is Near

By Adam Pagnucco.

I worked at the county council during part of the Great Recession. Those were terrible years. Under County Executive Ike Leggett’s leadership, the county slaughtered every sacred cow to stave off fiscal disaster. It busted collective bargaining agreements, cut employee benefits, instituted furloughs, doubled the energy tax and cut positions by roughly 1,000 people. The county did those things for the sake of fiscal survival.

Never did we dream of cutting county government by 12% in one year. But that is the all-out disaster projected by the executive branch in its new fiscal plan, which was sent to the county council last night.

At first, the new fiscal plan doesn’t seem that bad. It projects lower shortfalls during the current fiscal year than the previous plan from July does. But it confirms what sage budget observers have been predicting for a while: Fiscal Year 21 is tough but Fiscal Year 22 will be much worse. The difference between them is reminiscent of the gap between a paper cut and decapitation.

To understand just how bad the projection for next year is, let’s go over the moving parts of the operating budget. Each fiscal year starts with a beginning reserve, targeted by the county as 10% of adjusted governmental revenues. (The 10% level was initiated by Leggett to stave off a bond rating cut ten years ago.) Next, the county projects its revenues, of which the biggest are property taxes, income taxes, other taxes and state aid (which mostly goes to MCPS and Montgomery College). After adjusting for net transfers, debt service, cash for the capital budget and a few other items, what’s left is allocated to the county’s agencies. Of those, there are four big ones: MCPS, Montgomery College, Park and Planning and Montgomery County Government (MCG), the latter of which is governed directly by the county executive. State-mandated minimums apply to local dollars going to MCPS and the college but not to MCG or Park and Planning. At the end, the fiscal year’s ending reserve is supposed to be set at 10% of adjusted revenues and carries over to the next fiscal year.

It sounds smooth and some years it is, but sometimes things go wrong. The current fiscal plan shows a LOT going wrong, including:

1. A drop in the projected reserve percentage in FY21 from 10.2% to 7.6%, a decline of nearly $140 million. That matters because it means less money will be available for FY22 than previously believed.

2. Declines in estimated FY21 receipts of income taxes ($58 million), transfer and recordation taxes ($19 million) and other taxes ($25 million) that are offset by assumed receipts of federal money, particularly FEMA reimbursements. The federal money is not assumed in FY22 but much of the tax revenue declines remain.

3. An increase in FY21 agency spending of $108 million, some of which is due to the executive’s COVID emergency pay program.

And so lower reserves, less tax revenues and higher spending in FY21 bleeds over to FY22, when the red ink really begins to gush. According to projections, getting reserves back to a 10% level in FY22 will require an extra $127 million. That has to come from somewhere, and since revenues won’t be growing, it will have to come out of allocations to the agencies. But remember – as we said above, MCPS and Montgomery College are subject to state-mandated spending minimums. The fiscal plan projects just 0.5% cuts to both of those agencies. That leaves Park and Planning and Montgomery County Government (MCG) to bear the brunt of the cuts.

Do the math and the fiscal plan projects cuts to Park and Planning and MCG of 12% in FY22. If you include one-time COVID-related spending in FY21, the cut to MCG appears even higher at 17%.

That’s right, folks: a 12% cut to the agencies that pay for police, fire service, parks, libraries, health and human services, transportation, environmental protection, courts, corrections, housing, recreation and most functions of government other than education.

Montgomery County has never seen anything like that before.

The Leggett administration used to send us ominous fiscal plans in December to warn the council against exuberant spending increases only to reveal rosier projections in March. It’s tempting to believe there may be a bit of that here except that the pandemic’s economic effects are truly unprecedented. If this projection is anywhere close to the truth, it would be a planet-shattering cataclysm for all stakeholders in county government – employees, residents and businesses alike. Layoffs would be inevitable. Benefit cuts for employees and vulnerable residents might be unavoidable. Terminated Ride On routes, less street maintenance, cuts to fire service, deferred police recruiting, cuts to child care and social assistance, extractions of cash from capital projects – you name it, it’s all on the table. It makes the Great Recession look like a rain drop on a sunny day.

Assuming the revenue projections hold, there are only three ways to avoid an evisceration of county government. The county can get a federal bailout (as it has been futilely praying for since last summer). The county can raid its reserves and retiree health funds, going significantly below its reserve target of 10% and risking its bond rating. Or it can raise taxes. It could also use some combination of the above in concert with cuts to spread the pain.

Given the ferocity of the pandemic, some degree of budget unrest was certain. The county could have prepared for this better by instituting a real FY21 savings plan rather than the nothing burger it passed in July, sticking to its hiring freeze rather than ending it, not spending freely from its reserves and behaving responsibly on emergency pay rather than creating a new $100 million a year liability. But it’s too late.

The day of reckoning is near.

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Corporate Welfare, Montgomery County Council

Corporate MoCo Council Adopts Supply-Side Economics

The Montgomery County Council talks a good game when it comes to progressive politics, but their policy choices are straight out of the corporate conservative Republican playbook.

Consider their most recent action to lower impact fees that pay for public services, like schools, on development.

Heeding calls by Empower Montgomery (which advertised being founded by David Blair until he ran for county executive), the Council is eliminating moratoria on development required by law due to the county’s failure to provide public services needed for existing residents in these areas. The Council didn’t solve the problem providing the public services needed to meet legal requirements but by simply eliminating the moratoria.

In the past, councilmembers have argued against moratoria on the grounds that the impact fees from new development are vital to providing these services. No one has trumpeted this line more strongly than the Council’s Planning, Housing and Economic Development (PHED) Committee Chair Hans Riemer.

In an October email blast, Riemer justified the Council’s last corporate welfare giveaway (eliminating real estate developments on WMATA property from property taxes for 15 years) by pointing to the impact fees they will generate:

These projects generate more construction jobs and more one-time revenue for the County, such as impact tax revenue that can be used to add school and transportation capacity.

Now, the Council has voted substantial cuts to the impact fees that they touted as the reason to eliminate the moratoria and pass the property tax giveaway for developers. Consistency may be the hobgoblin of little minds, but this nevertheless remains an impressive feat of quick dumping down the memory hole.

The Council’s decision sounds like straight supply-side economics. It contends that reducing impact fees will result in more development. If they believe that this will result in an impact tax gusher, it’s the exact same fantasy that fueled massive deficits under Reagan, Bush and Trump, when tax cuts for the wealthy did not swell the nation’s coffers. Otherwise, they are bringing in more people who will require services but leaving the county even less equipped to pay for needed infrastructure.

The Council has conveniently left the decision as to what cuts should be made due to revenue reduction to County Executive Marc Elrich. They’ll lay the blame for the fall in revenue and cuts at his door even though their policies will cause the problem.

Elrich vetoed the bill despite unanimous Council support. As they vote to override it and further starve public infrastructure, the Council will cast Elrich’s fiscally responsible decision simultaneously as far-left crazy and anti-affordable housing.

During his ten years on the Council, Hans Riemer has cast himself as the leader of efforts to provide affordable housing. He vilifies Marc Elrich’s policies as the source of the problem. Yet it’s Riemer and his allies, like two-three-term Planning Board Chair Casey Anderson, who pushed this supply-side legislation, who have long been running the policy show in this area.

That hasn’t stopped them from regularly declaring current policy a failure to justify their latest idea. Obliviously, the Council regularly passes new legislation that Anderson, Riemer and friends claim will address the lack of affordable housing while simultaneously lamenting the continuing decline of affordable housing.

But don’t let the rest of the Council off the hook either. It voted to raise your property taxes while cutting those on favored developers (Councilmembers Hucker and Jawando opposed the latter). And all voted to reduce impact fees even though they all ran on improving public services.

Supported by monied interests, this show has been running for a long time. The Council gift wraps another tranche of money to wealthy interests that lobby for it in the gauzy rhetoric of affordable housing and social justice. The policy failure is then used to justify the next giveaway. Recycle and repeat.

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