For the budget beast, it’s always feeding time

Spending corners county into a wealth of tough decisions

Other council committees have reinstated fire personnel at three stations slated for reductions and added funding for a fire services commission. Council President Michael J. Knapp (D-Dist. 2) of Germantown has maintained the ambulance fee proposal is dead on arrival.

At a time when the national housing crisis has affected every level of government, county leaders face a dilemma.

They could accept something like Leggett’s budget plan, whose 3.9 percent growth is austere by Montgomery standards.

Or they could press on with the smorgasbord of services residents have come to expect. Over the past decade, that has meant the county budget has grown 89 percent. By contrast, median household income has increased about 28 percent.

The heft of Montgomery County’s budget is both an advantage and a hindrance, said David Bliden, executive director of the Maryland Association of Counties.

‘‘The larger your budget, the more flexibility you have in shifting,” he said.

On the other hand, Bliden said, Montgomery County competes for teachers and first responders — ‘‘the backbone of the county government work force.”

Montgomery’s Annapolis delegation frequently laments that colleagues from around the state think the county is a land of plenty. The reality, Bliden said, is that Montgomery has challenges along with its wealth.

Montgomery can rely on a strong school system and a thriving biotech industry. At the same time, it has the largest non-English-speaking population of any jurisdiction in the state and a need to deliver health and social services.

‘‘The Montgomery County budget and the stress reflected in that budget is reflective of the challenges of counties around the state,” Bliden said. County leaders are seeing less revenue, along with reduced state aid, he said.

Maryland’s decision to cut aid to the counties inflated Montgomery’s problem to $401 million. Over several months before he released his budget in March, Leggett winnowed that number down to $297 million.

Delivering goods and services to a diverse population, in any kind of economy, requires personnel — the largest designation in the county’s budget, accounting for 80 percent of spending.

Fueling the budget growth has been work force growth. In the past five years, county government has added 1,300 jobs, and it has added 2,200 in the past 10 years. Similarly, the school system has added 5,000 jobs in a decade.

‘‘We added things primarily for education as a county with a growing student population, and because we wanted to do more for public schools and Montgomery College,” said Douglas M. Duncan, who was county executive from 1994 to 2006. ‘‘Then you have the basic necessities of public safety. Education and public safety, those are the two big chunks.”

Already the county has increased the income tax rate to the highest level allowed by the state and increased other resident fees, but with such a large budget gap to overcome, discussion has evolved into a personnel debate.

Leggett’s budget plan includes reducing the county’s work force by about 225 positions, including 50 through an early buyout program. But with the county’s personnel costs continually rising, a push for reductions in the county’s contracts with its six employee unions is also on the table.

Of Leggett’s $161.8 million budget increase, about $129 million would go toward salaries and benefits, an increase the county cannot afford, Councilman Philip M. Andrews said.

The contracts with the six county and schools unions provide compounded salary increases ranging from 26 percent to 29 percent over three years, according to council staff. For fiscal 2009, which begins July 1, cost-of-living increases range from 4 percent to 5 percent for union members. Each percentage point increase in COLAs equates to $23 million.

From 2004 through 2007, Montgomery County government employees’ pay increased at roughly twice the rate of the private sector — 30.1 percent versus 15.3 percent, according to a county human resources report.

More than one in 10 merit system employees had salaries of $90,000 or more in 2007.

The average salary at the Maryland-National Capital Park and Planning Commission, which serves Montgomery and Prince George’s counties, was $58,048 in 2007. Since 2002 at least, M-NCPPC salaries have grown at a rate more than 1 to 4 percentage points greater than the consumer price index.

In 2007 the average annual base pay for Washington Suburban Sanitary Commission employees was $65,623, with 189 workers making $90,000 or more.

COLAs and raises for WSSC workers have roughly matched those paid county employees, also outpacing the private sector.

‘‘We still need to look at the long-term costs of salaries and benefits,” said Andrews (D-Dist. 3) of Gaithersburg. ‘‘The council has to reduce the [COLAs] that are driving the increases in the budgets.”

To help reduce the costs, Andrews has proposed reducing the cost of living adjustments by 2 percent.

‘‘We shouldn’t just rely on taxpayers,” he said. ‘‘People feel tapped out. All of our employees should be asked to help and be part of the solution.”

Relying on taxpayers, usually in the form of taxes, is part of Leggett’s proposal this year. His proposal to exceed the charter limit has been done only three times before, in fiscal 2003 through fiscal 2005. The proposal for a $138 million increase over the charter limit would be almost twice the amount of the other three years’ increases combined.

Already some council members have balked at the increase, and this week Councilwoman Nancy M. Floreen (D-At large) of Garrett Park proposed a budget package that would exceed the charter limit by $62 million.

Part of Floreen’s proposal includes reducing the county’s reserve by 0.5 percent. On Tuesday, Leggett said reducing the reserve was not a solution.

‘‘This is not a single-year problem, it’s a multiyear problem,” Leggett said, adding that not addressing it as such would allow ‘‘problems to accumulate.”

Five years ago, the council, facing a $321 million gap, raised the energy tax, decreased the county’s reserve, and increased the property tax, as parts of its plan to plug the budget gap.

‘‘We used every trick in the book,” said Steven A. Silverman, a county councilman from 1998 to 2006. ‘‘We had a huge gap to fill and everybody pitched in, and as the economy upticked, things changed.”

The council also negotiated a six-month delay in COLAs with the unions.

‘‘There are not a lot of discretionary dollars,” said Silverman, who lost to Leggett in the 2006 Democratic primary. ‘‘The federal government can rely on large programs like welfare to cut to save money, but the county doesn’t have large-scale programs like that. There are not many options.”

The council is expected to hear contract recommendations on Friday. In the meantime, Knapp and others have been meeting with union officials and are weighing the benefits of COLA delays, wholesale benefit reductions, a mixture of both, or no changes at all.

Changing the contracts will not solve the problem, union leader Gino Renne has maintained.

As president of UFCW Local 1994, which represents 8,500 county government workers, Renne said the salaries and benefits offered in the contracts are necessary to retain employees, a point on which he and Andrews disagree.

Better compensation was cited as a reason for leaving by only 18 of the 584 employees who moved on from their county jobs in the most recent personnel management report, published in April 2008.

More than twice as many, 37, were fired.

‘‘At the end of the day, it translates to critical public services and having been around governments for 30 years and witnessing some unjustifiable expenses that have nothing to do with sustaining the core services of taxpayers,” Renne said.

Last month the union sent a list of budget-cutting recommendations to the council, including suggestions to contract less county jobs, and to decrease the number managers in some county departments.

‘‘If we don’t come out of this budget process with all of the various tax-funded agencies that will allow for honest, open collaboration, we will have accomplished nothing. We won’t have done anything to confront the budget problems that we are concerned with every five years or so.”

But budget watchdog Marvin Weinman said the council’s process and its reluctance to make significant budget cuts is the problem.

‘‘We come down to the end and there is no time to do the right thing,” said Weinman, president of the Montgomery County Taxpayers’ League. ‘‘As much money as they take in they will spend, or find ways to spend it. They save nothing for the following year.”

The council approves the union agreements without a full analysis of the impact of the agreements on future years, he said, ‘‘and then we’re shocked when we come three years later and find out that we have compounding. How can you expect to sustain that?”

Staff Writers Marcus Moore, Margie Hyslop and Sean R. Sedam contributed to this report.