A memo from President Marvin Weinman

In the three years that I have been President of the Taxpayers League, I have heard a lot of county citizens complain about the actions of their elected officials. However, many of the same people never make their complaints known to those officials. At the same time, there have been determined individuals and groups of citizens using the petition process to bring attention to issues about which they believe elected officials have been derelict. The November 2 election will give all Montgomery County citizens the opportunity to express their voices on three amendments to the County Charter:

• Question A. This petition would eliminate the authority of the County Council to allow property taxes to exceed the inflation allowable Charter limit.
• Question B. This petition initiative would limit County Councilmembers and the County Executive to no more than three consecutive terms.
• Question C. The Montgomery County Civic Federation is responsible for this proposal to require Councilmembers to run from nine single-member districts, replacing the current system of five single-member districts combined with four members elected at large.

The Taxpayers League is promoting the holding of a public forum, sponsored by a neutral group such as the League of Women Voters, where the current Executive and Council could present their positions on the ballot questions and, most importantly, where citizens could ask the kinds of questions which the current machinations of government in Montgomery County these days does not allow..

You have the power to send a message to your elected officials on November 2nd by your vote on these questions. The Taxpayers League is particularly interested in Ballot Question A limiting property tax increases and will take an official position at our Annual Meeting. This newsletter provides information on Montgomery County revenue and spending practices that we hope will help cast an educated vote. Become an activist, call the Council requesting they support a forum where you can participate and become properly informed on both sides of the ballot questions issues before you vote.

I encourage you to attend the Annual Meeting of the Montgomery County Taxpayers League on September 21. The annual election for the Board of Directors of the League will be held. The following persons are nominated to fill designated terms: 2003-2006 -- Philip Schneider and 2004-2007 -- Robert Monsheimer and Marvin Weinman.

County Council Budget Actions Precipitate Property Tax Limit Ballot Question

The decision of the County Council, for the third year in a row, to override the Charter provision limiting revenue from property tax above an inflation-based limit, has caused a petition to be placed on the November ballot to eliminate the authority. The petition was initiated by perennial gadfly Robin Ficker but apparently resonates with many citizens. The Taxpayers League has not yet taken an official position on Ballot Question "A" but did urge the County Council to place the question on the November ballot. The League will determine a position on this and the other two ballot questions at its Annual Meeting on September 21.

The Taxpayers League testified at the public hearing on the property tax and continued to monitor the whole convoluted process. Councilmember Philip Andrews tried to reduce the property tax burden with a proposal to provide a revenue neutral bill that increased utility taxes to substitute for the property tax reduction.. Property tax is recognized as a regressive tax while utility taxes provide greater distribution of the tax burden. The League supported Mr. Andrews, making a statement of support for a 2-cent reduction per 100 dollars of assessment.

The bill progressed through a public hearing, with almost unanimous public support, and won approval in committee following discussion about a possible reduction to 1 cent.

However, the committee recommended bill was never voted on but was parsed for a vote when a procedural maneuver and a "spontaneous" amendment produced approval of the tax increase by the Council. Voting in opposition was Councilmember Marilyn Praisner. The bill resulted in a $39.6 million tax increase, $10.7 million of which was applied to the property tax credit resulting in the $28.9 million net tax increase.

MCTL Marvin Weinman's protestation to let the public be heard on a proposal which had never been given a hearing were ruled out of order.

Future Tax Burden Could Be Over a Billion $. The override of the Charter Limit amounts to $37 million in the FY '05 budget. If overriding continues for the next five years, the County Fiscal Plan Tax Supported Revenue Summary estimates the one-year cost for FY 2010 will be over $400 million. The Charter Limit override for the five-year period FY '06 to FY '10 would cost the taxpayers over $1.5 billion.

The State of Maryland Homestead Property Tax Credit Act caps the maximum yearly property tax increase at 10%. Montgomery County has always approved the maximum 10%. With compounding increases of 10% over six years, the property tax assessment will increase 77.16%. In contrast, Howard County caps their assessment at 5% resulting in a six-year assessment compounding of 34.01%. For Baltimore County, the figures are 4% assessment per year and a 26.53% increase over six years six years.

While continuing to increase tax rates, the county continues to underestimate revenue. The FY '05 budget estimates appear to once again underestimate revenue. The FY '04 property tax showed a 8.6% revenue increase compared to FY '03. With the second third of the property owners 10% assessment increase for FY '05, there should be a substantial revenue increase. However, the FY '05 projection is 6.8%, which is less than last years increase.

The estimated tax projection for the FY '05 budget is significantly higher in many areas. Property tax revenue is plus $110.8 million, income tax is plus $34.7 million and energy taxes are plus $40 million thanks to the one-cent, $10.7 million property tax reduction paid for by a taxpayers $39.6 million utility tax increase. The year ending total local tax estimate for FY03 was $1,917.3 million. These are your property, income and all other personal taxes. The year ending total local tax estimate for FY '04 was $2,170 million. The tax increase for FY '04 was a mind boggling $252.7 million, a 13.18% increase.

Time for Fiscal Responsibility in Montgomery County

The final revenue figures are in for FY '04 and it illustrates the Council's inability to address the difficult financial situation Montgomery County finds itself in today. The year ending total local tax estimate for FY '03 was $1,917.3 million. These are your property, income and all other personal taxes. The year ending total local tax estimate for FY '04 was $2,170 million. Your tax increase for FY '04 was a mind boggling $252.7 million, a 13.18% increase. What was the money spent on?

After spending all the money in FY '04 what was necessary to fund the FY '05 budget? As part of their late May FY '05 budget action, the Council increased your taxes another $76.9 million. They voted to once again override the Charter Limit, an increase of $37 million and approved a net utility tax increase of $39.6 million to provide the 1-cent property tax reduction.

Over the last three years in our testimony, the Taxpayers League tried to convince the Council that their budget actions were unsustainable. Councilmember Praisner cited the issue of sustainability as the reason for her vote against the budget. It is obvious by looking at the FY '04 Council spending actions that the majority of the members never got the message.

Our testimony tried to initially get them to focus on the difference between needs versus wants and to have the political courage to say no to their friends when spending was not justified. This year, after observing the difficult financial state of the county, the League addressed another set of issues, cause and effect. We noted that if the Council spent time working on the cause they could save a greater amount of time and money spent trying to eliminate the effect.

For three years, we identified salary and compensation as the number one cause of the budget sustainability issue. Over 80% of the entire county budget is spent on salary and compensation. For MCPS it is over 89%. In FY '04, 44.6% of the teachers received a yearly salary increase of over 9%. If the 9% salary increase continues for eight years salaries will double.

There are 2,686 ten-month teachers (25.3% of the total) who are in the maximum salary category. Their basic salary, not including stipends, is between $80,823 and $86,376. A twelve-month teacher gets a 20% increase for the two months of additional service. As many as 193 twelve=month teachers are eligible to receive salaries in excess of $100,000.

The salary and compensation issues will take years and a high level of political courage before any meaningful action can be accommodated. It may seem unfair to single out hard working teachers, but the numbers speak for themselves.

For the most part, Montgomery County employees are talented and dedicated. They should be compensated fairly for their efforts. However, we need to recognize that our financial situation is different from the major area employer, the Federal government. The Federal government can incur deficit spending. There is also a difference in that they don't initiate a salary step increase each year.

We have done detailed analysis over the last three years and believe we have some positive recommendations that are worthy of consideration. Other spending issues that deserve critical attention from the Council are:

• A flawed grant process
• The supplemental appropriation process
• Failure to adequately evaluate cost/benefits prior to approval
• County cost and benefits from public/private partnership agreements
• Resolution of affordable housing availability
• Consequences of impacts from AGP and economic development decisions

The Taxpayers League is prepared to be an active participant in any Council efforts to allow for the highest possible quality of life for the citizens of Montgomery County.

Citizen Input to the Process of Government is a Challenge

Henry Clay said it best. "Government is a trust and the officers of the government are trustees and both are created for the benefit of the people". He meant for all of the people. There is much left to be desired when it comes to interaction between Montgomery County citizens and their elected officials. The opportunities for most citizens to interact directly with their elected officials are very limited versus those of special interest groups such as lawyers, lobbyists, developers, business groups, associations, union representatives and representatives of large special interest groups pushing for benefits, financial and otherwise, from county government. It is not a level playing field.

The major opportunity for significant public input is at public hearings on matters such as the Operating Budget and the Capital Improvement Plan (CIP). Over each of the multiple sessions, hundreds of citizens appear for their 3 or 5 minutes of testimony to implore the Council to provide favorable support for their requests. As it is usually 2 1/2 to 3 hours per session the Council, out of necessity, limits their questions making opportunities for a meaningful discussion or dialogue virtually non-existent.

After the public hearing, where is the opportunity for public input? There are phone and e-mail opportunities, which are typically answered by staff unless you are from one of the previously identified special interest groups.

The Council committees are tasked to review and make recommendations to the full Council for action on items that fall under their jurisdiction. In some cases a commission or a working group is tasked to meet and provide a formal recommendation to the committee or generate a plan for committee review. This sounds reasonable until you look at the composition of these groups.

One group was formed to generate the Strategic Economic Development Plan. The document listed almost 100 persons as participants. We really don't know how many were involved in producing, reviewing and approving the delivered document. The core group was from the business community, the same group that stood to benefit most via corporate welfare from any implementation. The initial document contained a funding recommendation of $300 million annually for a Global Center for Technology Leadership. The funding is to be provided from public and private sources. How large a bill will the citizens of the county be asked to pay for this corporate welfare? I was not surprised when I found the initial Council committee review deleted any reference to funding from subsequent versions of the document. The final version of the plan retained recommendations for a job growth rate double that of the Annual Growth Policy (AGP) recommended by the Planning Board and approved by the Council.

When the Executive, with approval of the Council, set aside 1.5 million in tax dollars to fund the FY '05 Partnership Grants/Humanities and Recreation matching grants initiative, it happened late in the budget process. As there were no guidelines for control and distribution of the funds a committee had to be formed to produce the guidelines. The committee was composed of members of the arts and humanities community along with county staff. Once again the document delivered allowed established organizations the maximum opportunity to receive the grants. To the credit of the combined Council review committee, a more reasonable guideline approach was approved.

While certain groups are allowed to appear before committees and the full Council in the review development and approval process, civic groups with significant knowledge in various subject areas are not offered the same privilege. Over the last three years, the Taxpayers League has given budget testimony with over 25 creditable recommendations for reducing the rate of budget increases. To our dismay, we were never asked to come before any Council committee to provide specifics.

Responsible civic organization should be given greater opportunity for participation. It can only have a positive affect in providing a government most representative of the desires of all its citizens.

County "Gifts" to Voluntary Associations Muddies Public/Private Roles

In describing the way in which Montgomery County doles out monies to voluntary, non-profit organizations, County Councilmember George Leventhal used the term "mysterious". He is chairman of the Council's Health and Human Services Committee and was referring to the several million dollars which the County provides in the annual budget on a non-competitive basis to private groups providing health, human services or community development programs.

Along with Councilmember Marilyn Praisner, who chairs the Management and Fiscal Policy Committee, he is concerned about the lack of accountability and oversight for a whole range of grants funded by County tax dollars outside the programming of the major county departments. These private groups put in a request for funds according to their determination of need, not to a government request to purchase a specific service. There is evidently no uniform application process, no evaluation, no assurance that the service has been delivered.
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History of Public/Private Cooperation. Like most other general purpose government bodies in America, Montgomery County collects taxes from its residents and businesses and receives shares of federal and State revenues. With these and other authorized sources of funds, MoCo is charged with providing basic levels of services and programs to ALL of its residents and commercial enterprises. The government responsibility is to fund the public need before providing grants for special interest wants.

Like most other American communities, Montgomery County has a broad array of voluntary, non-profit organizations with admirable goals and records of providing a wide array of broad and narrowly-defined services and programs. However, unlike County government, these organizations have no public mandate to carry out these programs. They can be highly idiosyncratic because it is expected that their funding will come from their supporters NOT the public treasury. The prudent
contributor is expected to investigate to determine if administrative costs are excessive, what the mission of the organization is, whether the service is better provided by another organization and how the previous funds were spent.

Like most other local American government bodies, Montgomery County frequently turns to voluntary associations to purchase specific services whose need has been determined through a broad-based planning process and needs assessment. Frequently, the process is competitive but always it is the government which decides goals and sets the terms of contractual arrangements.

County Council to Study Grant Award Process. With the leadership of Councilmembers Praisner and Leventhal, the County Council has asked its Office of Legislative Oversight to undertake an examination of the non-competitive grant awards in the Executive Branch, with a focus on the Executive's processes for receiving and reviewing grant applications and making awards. The study is limited to non-competitive funds appropriated to:

• Community Grants (Non Departmental Accounts);
• The Department of Health and Human Services budget; or
• Department of Housing and Community Affairs budget.

The project will be kicked off on September 14 at a joint meeting of the Management and Fiscal Policy Committee and the Health and Human Services Committee. Community foundation representatives have been invited to attend.

The Montgomery County Taxpayers League will also be in attendance to represent taxpayers who thought they had already given to these charities "at the office". The League intends to make this issue a major priority in the year ahead. The League hopes this Council effort will ultimately address the respective roles of the government and private philanthropy to assure the most efficient and fair use of tax dollars for the benefit of the community.

Taxpayers League Participates in MCPS Cooperative Budget Efforts

Robert Monsheimer, Vice President of the MCTL has completed his second year of service on the "Budget Blue Ribbon Panel" of the Montgomery County Public Schools. The panel membership is drawn from staff, unions, the Montgomery County Parent Teachers Association and the public. The goal of the advisory body is to find savings without significant program impact.

One of the more significant efforts was to affirm residency requirements for all 9th grade students. The first year's results were greater than expected uncovering over 120 students who did not live in the county which will save the taxpayers a minimum of $120,000. If this examination was applied over all twelve grades, the savings could be as high as $15 million with no loss of currently available programs to eligible students.

The League will continue to be represented on the panel this year with expected focus on review of overhead costs and establishing criteria for continuing specialized programs.

Forums Planned for Earlier Public Input.An additional result of this past year's panel efforts was the implementation of the recommendation to hold three forums starting in September allowing for earlier opportunities for discussions on the MCPS FY '06 budget.

The League was pleased to receive an invitation from the Board of Education to participate in the first forum on September 9th. This as an opportunity to provide the Board with the findings from over a three-year Taxpayers League study effort including budget recommendations. It is hoped this will lead to an opportunity for further discussion with any involved organizations to attain the goal of ensuring the success of every student within a sustainable cost-effective budget.

KEY TAXPAYER WEB SITES

Montgomery County Government
WWW.MONTGOMERYCOUNTYMD.GOV

Montgomery County Public Schools
WWW.MCPS.K12.MD.US

Montgomery County Civic Federation
WWW.MONTGOMERYCIVIC.ORG

Neighbors For a Better Montgomery
WWW.NEIGHBORSPAC.ORG

Master Web Site Reference List
WWW.WOWWORKS.COM

Maryland State Government
WWW.MEC.STATE.MD.US

Maryland State Legislature
WWW.MLIS.STATE.MD.US

Maryland Taxpayers Association
WWW.MDTAXES.ORG

UPCOMING CIVIC EVENTS

September 8 First Council session of FY05

September 21 Taxpayers League Board Meeting

September 23 Council hearings on affordable housing. (Moderate Priced Dwelling Units)

November 2 Election Day

November Start of labor negotiations on labor contracts for firefighters, etc..

November 15 Deadline to set the Homestead Tax Property Assessment rate for FY06.

December 7 Installation of New Council President