By Adam Pagnucco.
Last spring, the county council passed a gimmick-ridden, Kicking the Can operating budget that spawned a $293 million structural deficit for next year. Later, a county fiscal report projected that the county would have to cut $134 million from its agencies because revenues were not keeping up with spending. All of this fiscal chaos is erupting despite a double-digit homeowner property tax bill increase due to the council’s abolition of the $692 Income Tax Offset Credit.
So what is the county council doing to bring fiscal order to the county’s books?
It is considering a bill that would add another $25-30 million a year to the structural deficit.
That’s right, folks. Bill 48-26, sponsored by Council Member Kate Stewart and co-sponsored by Council Members Andrew Friedson, Sidney Katz, Dawn Luedtke, Kristin Mink, Laurie-Anne Sayles and Shebra Evans, would establish a $2,500 annual property tax credit for many employees of MCPS who own and occupy homes in the county. The bill defines an eligible public school employee as “an individual employed by the Montgomery County Public School System who is a member of the bargaining unit of the Montgomery County Education Association (MCEA) or Service Employees International Union (SEIU) Local 500. A public school employee does not include a superintendent, associate superintendent, chief-level officer, deputy chief, principal, director, coordinator, supervisor, or central service administrator.”
The bill’s fiscal impact statement was released yesterday. MCPS has roughly 25,000 employees, but not all of them are in the MCEA or SEIU bargaining units and not all of them own homes in MoCo. The fiscal impact summary states:
Records received from MCPS indicate that between 11,000 and 12,000 employees could be eligible for the tax credit, nearly all of whom reside in properties with sufficient assessment values to receive the maximum $2,500 credit. Implementation would result in a potential loss of property tax revenue of between $25 million and $30 million annually. Processing up to 12,000 applications annually between April and June for inclusion on property tax bills mailed in July would require an additional accountant/auditor position for the Department of Finance Treasury Division, costing $137,133 annually.
So far, criticism of the bill focuses on the unions’ roles in county elections. Georgetown University professor and MCPS parent Nora Gordon made this point in a guest column on Moderately MoCo titled After a Brutal Budget, County Council Finds Money for its Most Powerful Endorser. Gordon called the credit “not a strategic use of the County’s scarce resources” and wrote, “Most distressingly, it forces the question of how elected officials balance all of their constituents’ interests, not just those of the policy’s powerful beneficiaries.”
My critique is different. I think teachers and other MCPS employees deserve property tax credits. But so do the rest of us. And the rest of us just had our $692 Income Tax Offset Credit abolished with little prospect that it will return.
One huge concern is the timing of this proposal. I worked at the county council in the aftermath of the Great Recession. Revenue dips were common. When they appeared, County Executive Ike Leggett often proposed mid-year savings plans that the council modified and then approved. I don’t recall them passing new $25 million-a-year entitlements while nine-digit structural deficits loomed. If they had done that, the executive and council of that time would never have been able to pass down a triple-A bond rating to their successors now in office.
Upon hearing of this legislation’s cost, one of my readers told me, “This is like getting a huge credit card bill and then going on a long trip to Tahiti to figure out how to pay for it.” How about going to Tahiti after the credit card is paid off?
Last summer, I wrote that this structural deficit was likely to create another tax hike. If the council passes this bill, there will be at least 25 million more reasons to believe that.