By Adam Pagnucco.
Last Thursday, the great tax hike battle of 2023 came to its dramatic conclusion as the county council raised property taxes by 4.7 percent. That followed the announcement of a large increase in impact taxes and the council’s vote to raise recordation taxes. The county has not substantially raised this many taxes at the same time since 2003. And there could be more next year.
Any battle this large will have many winners and losers. My sources have lots of conflicting opinions about this. After listening to them, here’s my take.
Winners
County Executive Marc Elrich (short term)
Sure, Elrich did not get his full 10% tax hike, but he got a chunk of it. He also got a recordation tax increase for the capital budget that was authored by the council. And on top of that, he rewarded his union supporters with big contracts. Whether you agree or disagree with Elrich’s priorities, he got a solid win over a clearly reluctant county council.
Bonus: Elrich’s arch-enemy, Hans Riemer, failed in his bid to become planning board chair. That has nothing to do with the tax battle but boy is that great for Marc Elrich.
County employee unions
They got generous new contracts fully funded by the county council even though the county executive’s tax hike was reduced. Once again, labor showed the sway they exert over county government. Watching them in action – especially the teachers – should bring home this lesson. If you have an opportunity to join a union in your workplace – DO IT.
Republicans
Shut out of county and state elected offices in MoCo for the fifth straight time last year, the county GOP has found purpose in organizing another term limits push. Yes, it’s hard to see them winning office, but as I wrote last year, they can still be relevant on ballot questions. And the latest series of tax increases could give them momentum for a win.
Essie McGuire
Council staffers never get headlines but Essie deserves one. As the council’s once and current MCPS analyst and a former senior MCPS executive, Essie demonstrated that the school system did not need every penny in its request to meet its basic needs. The council believed her and that opened the path to a reduced tax increase along with enough money to fund labor contracts.
Northern Virginia
See my column from yesterday. Never has the gap between MoCo and Northern Virginia loomed so large. In fact, I am starting to wonder whether the Northern Virginia jurisdictions’ true competitors are each other rather than anyone in Maryland.
Losers
County council
There were individual council members who had positive moments. Council President Evan Glass demonstrated grace under pressure as he put together the votes to pass a rough budget. Dawn Luedtke and Marilyn Balcombe formed an informal moms caucus dispensing common sense and tough love. Natali Fani-González stood up to hold MCPS accountable on literacy progress. Will Jawando and Kristin Mink cemented their status as progressive standard bearers by arguing for a bigger property tax hike. Andrew Friedson cemented his status as the undisputed leader of the center left by opposing the tax hike as too large. And Gabe Albornoz issued a prophecy about unsustainability that is certain to be proven true eventually.
But for the body as a whole, this was not a great moment for the council. They seemed surprised by the sheer size of the executive’s tax hike. Given the fact that it was proposed by a decades-long socialist, they should not have been. They were then put in a pressure cooker by the teachers, SEIU Local 500 and angry taxpayers, none of whom were happy with the final result. They presided over three different tax hikes on new construction, home sales and property which will surely be noticed by employers and investors across the region. And they could be facing more budget headaches next year.
There are no surprises now. The county executive is emboldened to continue negotiating new labor contracts with annual increases of $100 million or more and requesting tax hikes to fund them. As long as the council stays on defense, this scenario is going to repeat itself. They must prepare a proactive plan NOW to ensure that they, and not the executive, are the architects of future budgets.
Business community
Set aside the realtors and Empower Montgomery, who stood up and fought the property tax hike. The rest of the business community was largely inert, demonstrating once again why county leaders mostly ignore them. Last year, I told the business community that they needed to get up or get out. Guess which option they picked by default?
Homeowners
If you want to build a home, you will pay higher impact taxes. If you want to buy a home, you will pay higher recordation taxes. If you own a home, you will pay higher property taxes. And if you decide to throw in the towel and sell your home, you will pay higher recordation taxes on the way out. This is not a good advertisement for coming to live in Montgomery County.
Low Income Workers
These folks lost roughly half of their county earned income tax credit and got slammed with a property tax hike at the same time. That is a serious black mark on county leaders who call themselves progressives.
Push
MCPS Management
Yes, they got a big budget increase, and that’s the good part. Now they must deliver results. Can they do it?
Question Mark
Marc Elrich (long term)
While Elrich got a lot of what he wanted this time, the council will not forget the hell they endured during this budget. Many – perhaps most – have written him off as a genuine partner in guiding the county. There is also the threat of a GOP effort to tighten term limits for the county executive next year. If that passes, Elrich will go down as the victim of a tax revolt. That won’t be a great legacy for a guy who has been in politics for decades.
The Biggest Winner of All
David Blair
Yes, I’m biased. I spent a year and a half of my life trying to get him elected as county executive. But everybody knows that if Blair had won, we would not be talking about big tax hikes. We WOULD be talking about how to spend government money more effectively. If he ever runs again (I honestly don’t know if he will), Blair can point to this year’s tax increases as Exhibit A for the need for change.