By Adam Pagnucco.
It’s Sunday afternoon. Junior wants something. He wants it soooooo bad. He begs his parents to get it. Dad, who is busy watching the Nats tied with the Phillies in the ninth inning and is halfway through beer number three, says “Sure Junior, whatever you want!” So it’s up to Mom to be the evil parent and say no.
Is that going to happen in the county’s budget?
Yesterday, the county council discussed their staff’s Memo of Doom, which laid out the details of this year’s recommended budget from the county executive. Many of you are now familiar with what this budget includes:
A 10 percent property tax hike.
Large funding increases for most county agencies and departments, especially over two years.
Compensation increases of more than double the rate of revenue growth.
Use of one-time revenues for ongoing spending.
And a structural deficit of $145 million next year.
Council Member Dawn Luedtke wasn’t having any of it. Here is what she told executive branch officials.
When we have the county executive proposing a budget like this and then recognizing that these are coming from one-time funding sources, and as soon as it drops saying, “I’m happy to work with you all though, county council, on figuring this out,” it ends up putting us in the negative position, right? I’m the mom who said no. I become that person because I have to. Because someone has to be the person who takes a hard look at this even if the dad says, “We can do everything!” And you have to say, “Sorry! No we can’t. We’re not going to Disney this year. We can’t afford it.”
Mom says no.
Council Member Marilyn Balcombe, another mom, also brandished the wooden spoon.
So I really appreciate Council Member Luedtke’s analogy of that this budget leaves it to the moms to make the tough decisions. We’re in luck because we have a lot of moms here! So I think we’re good.
This is a really difficult budget. And it not only requires significant multiple tax increases but it sets up this structural deficit for next year. And I’m just not comfortable pushing these decisions off to next year of how we’re going to cover this budget – next year’s budget next year. We need to make these tough decisions now, this year, instead of deciding how we’re going to pay for next year’s budget next year.
Moms of the council unite! You have nothing to lose but your structural deficits!
Good parenting aside, one of the things that drew the most concern from Luedtke, Balcombe and other council members was the budget’s use of one-time revenues to pay for ongoing spending. One of the most controversial one-time revenue sources was brought up by Council Member Andrew Friedson. Friedson will never be a mom, but I can imagine him being a tough taskmaster on Junior’s chores. “No dessert until you fully fund OPEB!”
The issue at hand is the income tax offset credit (ITOC), which is a property tax credit received by owners of owner-occupied homes. The current ITOC is a flat $692 amount. Homeowners receive this credit by applying to the State Department of Assessments and Taxation. State law has changed and the state is now requiring homeowners to reapply for the credit, even if they have previously received it. Failure to apply will result in losing the $692 credit. The county has sent out a press release urging homeowners to reapply and the county’s website has more details. (If you’re a homeowner, take care of this as soon as you’re done reading this post!)
It’s inevitable that some folks will not apply and therefore lose the credit. Some of them might not be legally eligible if the property is not their principal residence. But others might be eligible and lose it due to failure to apply. The executive’s recommended budget contains a projection of the money the county will receive from these lost credits and books it as one-time revenue. The staff memo states:
Income Tax Offset Credit (ITOC). For FY24, Finance includes a one-time increase in property tax revenue of $13.8 million for estimated recapture of ITOC revenue due to a new State requirement that a homeowner must apply for the Homestead Tax Credit to be eligible to keep their ITOC. As of March, there are approximately 80,000 property accounts in the County that do not have an application on file and therefore may no longer be eligible to receive the ITOC (recommended by the Executive to remain at $692 in FY24). Finance does not assume the ITOC recapture funding in FY25-29.
That set off Friedson, who requested more information on how that number was calculated. He told county officials, “That’s a fundamental difference – if we’re just refining our numbers based on new information, that’s one thing. If we’re spending money of residents’ tax credits that they haven’t redeemed, that is a totally different story that I’m deeply uncomfortable with.”
The ITOC issue is only the tip of the iceberg in a budget that relies on spending $159 million in reserves on top of a $223 million property tax hike. Will council moms have to spank the second floor kids, perhaps with an assist from the angry dads pulled away from the Nats game? We shall find out in a matter of weeks.
In the meantime, you can watch Luedtke’s remarks on video below.