Against the wishes of the school unions, the County Council has indicated its intent to freeze pay for all employees and spread furloughs across all agencies. Following is the council’s press release.
Council Indicates Intent to Freeze Pay, End Imputed Pension Adjustments and Support Equitable Furloughs
Release ID: 10-084
Release Date: 5/4/2010
Contact: Neil H. Greenberger 240-777-7939 or Delphine Harriston 240-777-7931
From: Council Office
ROCKVILLE, Md., May 4, 2010— In actions reflecting the County’s severe fiscal situation, the Montgomery County Council today unanimously indicated its intent to freeze all employee pay in the coming fiscal year, FY11. The Council also unanimously adopted resolutions indicating its intent to reject all provisions in the collective bargaining agreements with County unions that have a fiscal impact on the County. These actions signal the Council’s determination to maintain the County’s AAA bond rating while preserving essential services during the worst fiscal crisis in the County’s history.
The Council also unanimously indicated its intent to enact Expedited Bill 16-10, which would eliminate the continuation of the imputed pension adjustment beyond the current fiscal year, saving taxpayers an estimated $7 million a year.
With respect to employee furloughs, the Council unanimously supported the principle of equitable treatment of all employees of all agencies serving County residents and directed its staff to provide a range of furlough options for review.
“This Council is facing very difficult decisions affecting thousands of lives,” said Council President Nancy Floreen. “The unforeseen 20 percent drop in income tax revenue and other revenue shortfalls are causing us to face curtailing or eliminating key services, laying off more than 400 employees, furloughing thousands more, and doubling the County energy tax. This is very painful for us all.”
“These unprecedented fiscal facts mirror the pain that the County residents have felt in this recession. We would like to support bargained pay increases, but we agree with the Executive that under these severe conditions, that is simply not possible. We will come through this as a team, with everyone sharing the burden.”
In indicating its intent to freeze employee pay, the Council concluded that in view of pending employee layoffs and furloughs, pay increases cannot be justified. In addition, the Council indicated its intent to support the Executive’s removal of funding for tuition assistance in FY11.
The Council also indicated its intent to enact Expedited Bill 16-10, which eliminates the continuation of an imputed pension adjustment beyond the current fiscal year, FY10. The imputed pension adjustment refers to basing the calculation of an employee’s future pension benefit, for the rest of the employee’s career, on a bargained FY10 general wage adjustment that was not funded. Enactment of the bill would save $7 million per year starting in FY11.
The Council staff has begun work on a hard look at the structural deficit that the County faces, and the harder decisions the County must face to balance the budget in the future. (See http://www.montgomerycountymd.gov/content/council/pdf/SCANNED_DOCS/042910.pdf.)
“Furloughs and tax increases cannot be an annual event,” Council President Floreen said. “We are prepared to face the future – now.”
“I have spent my entire adult life advocating for working families and for access to quality public education,” said Council Vice President Valerie Ervin. “However, during this extremely challenging fiscal climate the Council has had to make some tough choices on behalf of the county taxpayers for the long term fiscal health of the county. The Council has come together in our commitment to serve our most vulnerable residents, to preserve our long-standing credit rating, and to seek long-term fiscal viability.”
“The Council’s support for Bill 16-10, which would eliminate the use of canceled cost-of-living-adjustments in calculating pensions, will save taxpayers $7 million next year, more than $200 million overall, and signal to the rating agencies that the Council is committed to addressing unsustainable pension costs,” said Councilmember Phil Andrews, said Councilmember Phil Andrews, the measure’s lead sponsor.
“My colleagues and I are staunch supporters of our Montgomery County Public Schools. We have demonstrated that support year after year by approving 99 percent or more of the Board of Education’s budget and exceeding State Maintenance of Effort (MOE) requirements,” said Councilmember Roger Berliner.
“We are now faced with unprecedented fiscal challenges. We cannot meet these challenges equitably and without imposing a devastating tax burden on homeowners, renters, and businesses unless the school system accepts further cuts to its FY11 operating budget. By willingly instituting furlough days for its employees, like all other County agencies have agreed to do, the school system can avoid further impacts to the classroom which would directly affect our students. The weeks ahead will be filled with many difficult decisions and I hope that we will be able to work collaboratively with our colleagues at MCPS to reach a mutually agreeable solution to the current fiscal crisis,” continued Berliner.
“Any solution has to fall on employees equitably. Every worker is valued and every worker does a valuable job. Every employee deserves to be treated fairly. I hope the Council will adapt a progressive solution that will impact those who make the least the least and those who make the most the most. I recognize the impact of lost days of work to a $40,000 per year employee is significantly different than a $100,000 employee,” said Councilmember Marc Elrich.
“I regret that the New York bonding agencies seem to indicate that we need to replenish our reserves to a full 6 percent all in one year at a time when we have had an unprecedented decline in revenue. We are laying off almost 240 employees and abolishing another 500 positions. We are cutting programs far beyond what we believe we should, not because we have found waste but because we do not have the money. We must balance the budget,” continued Elrich
“Years of spending without regard for sustainability coupled with a global economic meltdown got us into this situation. Since 2006, a new County Executive working with this Council has steadily decreased the growth in the spending. This year we will actually spend less than we did last year. Going forward, we must insure that spending is sustainable over the short and long term,” continued Elrich.
“None of us is happy about the choices we are forced to make as a result of the precipitous drop in county revenues. We all look forward to the day our economy recovers. Making wise decisions now will enable Montgomery County to emerge from these budgetary challenges stronger and more prosperous in the future. The County Council appreciates the excellent service provided to our residents by the county’s superb employees and we regret the necessity of sharing these sacrifices. Elected officials will reduce our own pay by whatever amount is finally arrived at for all county employees,” said Councilmember George Leventhal.
“My colleagues and I value our employees’ dedication and hard work, especially while they are being asked to do more with less during these difficult times. Unfortunately, this unprecedented fiscal crisis forces us to look for new revenue sources and make extremely painful cuts. While these are not easy or popular decisions, it is our responsibility to preserve the current and future stability of Montgomery County,” said Councilmember Nancy Navarro.
“I believe that we must be fair and measured in the difficult budget decisions that we will make. We would do well to remember that our County budget is a moral document – one that reflects our inter-connections as a community. It is important to note that the budget provides all of our neighbors benefit in some way, from the full range of public sources and resources we strive to maintain,” said Councilmember Duchy Trachtenberg.