The Montgomery County Council will enhance services and reduce energy taxes through its fiscal year 2014 operating budget unanimously agreed to Thursday morning.
The council reached a tentative agreement on the $4.8 billion spending plan a little later than planned Thursday as it battled over options to reconcile higher spending with lower revenue. The council will take a final vote on the budget on May 23.
About $18.3 million in extra spending for council priorities needed to be reconciled with as much as $11.6 million in energy tax revenue reductions.
“Budgets are a reflection of our values,” Council President Nancy Navarro (D-Dist. 4) of Silver Spring said. “There are always more needs and more wants than there are resources available.”
Using County Executive Isiah Leggett’s proposed budget as a framework, the council crafted what Navarro called a “balanced, sustainable budget.”
“It funds the school system’s request, begins to reverse the most painful of the cuts made at the height of the recession, prioritizes services for the most vulnerable in our county, enhances after-school opportunities for at-risk youth, reduces the energy tax and provides compensation increases for our dedicated county employees for the first time in four years,” she said.
Leggett (D) noted the council’s final spending plan keeps 99 percent of his recommendations. Montgomery County Public Schools will get its full request without the county exceeding state-mandated funding minimums, known as maintenance of effort.
Employees will receive pay raises that include a mix of cost-of-living and step increases. The county will continue to restore cuts to programs like public safety and libraries.
The budget also maintains property tax revenue at the charter limit with a $692 tax credit for most owners, increasing the average tax bill about $80 a year and the weighted tax rate by 1.8 cents from 99.1 cents to just more than $1 per $100 of assessed property value.
However, to balance its ledger of wants, the council diverted from Leggett’s plan and supplemented about $6.6 million available for its priorities by dipping into its employee benefit funds and its capital program.
To add about $12.3 million in extra spending — including $2.2 million in grants to nonprofits — Council Staff Director Stephen Farber said the council will transfer $8.7 million to the general fund from the county’s group insurance fund, available by assuming lower insurance costs.
The council will also stash only $137.9 million, or about $6.7 million less than Leggett’s recommended $144.6 million, in its retiree health insurance fund, known as OPEB, and it will give $1.9 million less to capital projects.
Leggett said the decision to put less toward OPEB is essentially borrowing against the future, as the county will need to pay more toward the fund in subsequent years.
While the council found more money to spend, it also continued reducing the energy tax increase implemented in fiscal 2011 to get it through the recession, taking it down another 10 percent. Leggett recommended keeping the energy tax rate as-is for fiscal 2014.
The energy tax hike was originally scheduled to sunset July 1, 2012, the start of the current fiscal year, but the council chose to instead reduce it by 10 percent, a pattern it will continue in fiscal 2014.
Impending federal budget cuts and litigation that could cost the county revenue should have given the council pause, Leggett said.
“That is why borrowing against OPEB and reducing a stable source of revenue was, to me, a mistake,” he said.
Reducing the energy tax increase by another 10 percent drops energy bills for the average resident by about $1.29 per month.
But had the council opted for only a 5 percent reduction, Councilman Marc B. Elrich said almost all of the council’s priorities could have been funded.
Residents will only save 65 cents more a month with a 10 percent reduction, as opposed to a 5 percent cut, Elrich (D-At large) of Takoma Park said. A 5 percent cut would have reduced energy tax revenue by $5.8 million.
The council’s compromise left $6.6 million of priorities unfunded, according to a list from Elrich’s office.
Priorities such as a pre-trial correctional officer, supervised visitation in circuit court, and extra rounds of funding for programs including the Working Families Income Supplement, stump removal and tree planting, and e-books for libraries, were not included in fiscal 2014 spending.
“There’s so much on that list,” Councilwoman Valerie Ervin said. “And all of it was worth it.”
Ervin (D-Dist. 5) of Silver Spring said as budget discussions neared an end, the council was fighting over about $5 million.
Compared to the overall budget, $5 million appears small, but for a struggling family or a kid that doesn’t have a recreation program, Ervin said, “that’s a lot of money.”
Despite their frustrations, Elrich and Ervin both voted for the budget. Elrich said the council funded too many good priorities for him to vote against it.
Council staff will take the week to draft the budget resolutions that the council will formally approve on May 23 when it officially adopts the fiscal 2014 budget.