Joint statement by Nancy Floreen and Ike Leggett
The Great Recession has wreaked havoc on state and local governments nationwide, and Montgomery County is no exception. Plummeting revenues have forced many painful choices including pay freezes, furloughs, service reductions, and increased taxes.
This may be a "wake-up call" for some local jurisdictions -- but not to Montgomery. The work of putting Montgomery’s fiscal house in order – cutting unsustainable spending trends and responding to the economic downturn -- began several years ago.
But times remain tough, and in just the past two months we have taken five more decisive steps to meet our fiscal challenges.
Step 1. We passed a County budget unlike any other in County history. For the fiscal year that started July 1, the Executive Branch and the County Council closed a budget gap of nearly $1 billion, or about one-fourth of our total budget. We reduced overall spending by 4.5 percent, the first year-over-year decline in four decades. While this required a pay freeze and furloughs for our employees, as well as service reductions for our residents, we preserved our highest priority services in education, public safety, and the needs of our most vulnerable. We kept property taxes at the Charter limit, providing a $692 credit to all owner-occupied homes. The higher taxes we did approve, on energy and wireless phones, were just 17 percent of our total gap-closing plan. They were a last resort in order to avoid even more crippling cuts in critical services.
Step 2. We strengthened County reserve funds, which fell sharply as the recession deepened. Our new policy will gradually raise reserves to 10 percent of adjusted governmental revenue, greatly improving our ability to handle future downturns and confirming the historical excellence of our financial management.
Step 3. We pulled together all our agencies -- Montgomery County Public Schools, Montgomery College, the Park and Planning Commission, County Government, Housing Opportunities Commission, and WSSC -- to aggressively seek savings from joint interagency efforts in technology, utilities, benefits, procurement, facilities management, and other areas. We've also asked an expert group of County residents to propose more efficient and innovative ways to deliver County services.
Step 4. We are reexamining the County's structural budget challenges by analyzing the "cost drivers" that create spending pressures and the policy options to address them.
Step 5. We approved a six-year fiscal plan that outlines the spending limits needed to achieve balanced annual budgets. This will help us prevent future budget gaps and lessen the impact of severe downturns. It marks a new era in the County’s fiscal stewardship.
All these steps will help make us leaner, more productive, and better able to meet the needs of our one million residents. We have also taken important steps to expand the County’s tax base by approving the White Flint Sector Plan, the Great Seneca Science Corridor Master Plan, the nation’s first local biotech tax credit, and a new Montgomery Business Development Corporation.
Already these moves are bearing fruit. Just two weeks ago, all three bond rating agencies affirmed Montgomery County’s "Triple-A" bond rating with a "stable" outlook, which allows the County to borrow for future schools, road, and other construction needs at the most favorable interest rates -- saving County taxpayers millions of dollars a year.
One of the three agencies had put the County on a "watch" list due to the economic downturn and falling County tax revenues. Due to the actions we've taken, the County is now off that list -- and that's great news.
Our fiscal challenges are far from over, but these steps -- added to the work we’ve already done over the past several years -- will make our great County even stronger.