The Budget: What's In and What's Out

The $4.4 billion total County operating budget for FY12 reflects a 2.2 percent increase over the approved budget for FY11 and includes changes in regard to employee benefits. The budget agreement includes several actions as part of a fiscal protection package to make the budget sustainable in future years and protect the County's AAA bond rating.

Even with this year's increase of 2.2 percent, the budget is less than the approved budget for FY10. The FY11 adopted budget was 4.5 percent less than the approved budget for FY10--marking the first decrease in a total budget since the adoption of the current County Charter in 1968. The FY12 budget is 2.5 percent less than the FY10 budget.

We appropriated $1.951 billion in current tax-supported funds for Montgomery County Public Schools. That is $31 million, or 1.6 percent, more than was appropriated in tax-supported funds for FY11. The funding level is based on an assumption that MCPS will adjust its benefit package for employees as the Council changed benefits for FY12 for County Government employees. Even with those adjustments, MCPS employees will still receive more generous health and retirement benefits than most Federal, County and private sector employees.

Our funding level for MCPS is $45 million below the level recommended by the County Executive, but the only significant differences are reductions in areas that do not affect the classroom. Specifically, the reductions are for employee benefit adjustments and to shift funding for retiree health benefits to a centralized account.

The budget includes reserves of 6.1 percent, consistent with the new reserves policy approved by the Council last year at my urging.

In a budget year complicated by the national and regional economic downturn, the Council’s budget protects core services and safety net programs but does not exceed the County's Charter Limit on property tax revenue. For the second consecutive year, it freezes pay for employees of County government, Montgomery College, the Maryland-National Capital Park and Planning Commission (M-NCPPC) and MCPS. The budget does not include furloughs.

We believed that the Executive's proposed reductions for several County functions were too large and restored limited funds to core departments, including Police, Fire and Rescue and Health and Human Services. The Executive's recommended budgets for the departments of Public Libraries and Recreation were 33.6 percent and 21.8 percent, respectively, below the FY08 approved levels, and the proposed position reductions were 35.7 percent and 42.3 percent, respectively, below the FY08 approved levels. The Council restored $1 million for library materials and added back numerous library positions that had been recommended for elimination. The Council also restored funding for recreation programs and staff support at recreation facilities. It also restored significant cuts to the Maryland-National Capital Park and Planning Commission and Montgomery College.

The budget includes the Executive’s recommendation to increase the property tax rate by 4.2 cents to 94.6 cents and to provide a $692 property tax credit for owner-occupants of principal residences. I preferred a different approach and voted against this measure. Total property taxes increased 0.8 percent.

We took several actions as part of a fiscal protection package to make the budget sustainable in future years and protect the County's AAA bond rating. Among those actions were:

~Included $49.8 million to pre-fund retiree health benefits for all agencies (compared to 0 in FY11)
~Included $31.0 million in PAYGO (cash to replace bonds) in the capital construction program (compared to 0 in FY11)
~Included $5.9 million in a new reserve for storm and snow removal costs (compared to 0 in FY11)
~Made structural changes to employee group insurance and retirement benefits to save $33 million in FY12 and $273 million in FY12-17
~Lowered the annual bond issuance ceiling from the level set last year, $325 million in FY11-16, to $310 million in FY12 and $320 million in FY13-16
~Agreed to create a consolidated retiree health benefits trust for retiree health benefits across County agencies
~Included reserves of 6.1 percent pursuant to the policies adopted last year to strengthen the County's reserves