Five-cent cut in property tax still in the cards

Council gets ready to approve record spending and construction budgets

Wednesday, May 17, 2006

The County Council is poised to pass record spending and building budgets, including a 5-cent cut in the property tax rate. A vote is scheduled for Thursday, with a formal final vote set for May 25.

Even with record levels of education appropriations and allocations for roads, health care and housing initiatives, fiscal 2007’s budget still meets the charter limit, without major spending and program cuts that have been necessary in previous years.

But budget projections compiled by council staff, which include increased demands on county resources for pensions, health care and building costs, are predicting that the county will have to borrow larger sums to meet its steadily increasing budgets.

The operating budget — initially proposed by County Executive Douglas M. Duncan (D) at almost $4 billion — and the first year of a six-year, $2.7 billion construction budget will be carried out with help of at least $300 million in surplus revenue when the fiscal year ends June 30.

More than half of the county’s spending budget — about $2.1 billion — would go toward education, including $1.8 billion for the school system and $218 million for Montgomery College. The school system’s budget is almost $137 million higher than last year’s budget, with the bulk of the increase going to salaries and benefits. The council added $13.9 million to the initial school appropriation for the system’s pension plan and other programs.

In addition to the education budget, the council will finalize the budget for the Washington Suburban Sanitary Commission, which provides water and sewer services to 1.6 million ratepayers in Montgomery and Prince George’s counties.

That budget includes a 3 percent rate increase. The council’s failure to approve late changes requested by the WSSC could delay building a temporary holding facility for sewerage in Washington, D.C., to avoid overflows. It could also delay a study of how to improve the disposal of septage —septic tank contents and other wastes, such as grease, not discharged into sewers.

‘‘It’s been an easy [budget] year because we have the resources,” said Council President George L. Leventhal (D-At large) of Takoma Park.

The council has spent the past week negotiating cuts to county agencies and programs to fill gaps in school funding and pay for about $55 million in pension enhancements for school system employees, the Seven Locks Elementary replacement school and additional agency requests. To pay for those items, the council has proposed cutting the budget by $7.8 million, and reducing Duncan’s proposed 9.5-cent property tax cut to a nickel.

In addition to the 5-cent property tax rate cut, introduced by Councilwoman Marilyn J. Praisner, the plan would give homeowners a one-time $221 tax credit. Under the plan, county revenues would increase $5.2 million over Duncan’s recommendation.

‘‘[The 5-cent proposal] is consistent with what we did last year with across-the-board relief where everybody benefits,” said Praisner (D-Dist. 4) of Calverton.

On Tuesday, at least five council members were backing the 5-cent plan; the plan would pass with a simple of the nine-member council.

The council is also expected to expand a program that offering tax credits to homeowners whose assessments are outpacing their income.

Last year the council cut the property tax rate by 4 cents and provided $116 rebates to homeowners.

If passed, Praisner’s plan would beat out a proposal by Councilman Steven A. Silverman (D-At large) of Silver Spring, who proposed not cutting the property tax rate, but giving homeowners a $468 credit.

All three property tax proposals would meet the charter limit on county-collected tax revenues. So far, the budget is consistent with the council’s spending affordability guidelines passed this fall, does not call for increases in property or income taxes and adheres to debt levels to keep the county’s vaunted triple A bond rating.

Even with the economy going strong into the upcoming fiscal year, tax advocates and more fiscally conservative council members like Praisner have questioned the council’s and executive’s spending habits.

‘‘This year because of strong revenues the council has not had to make that many hard cuts. But the council has to be cautious not to take on too many continuing obligations,” said Councilman Philip M. Andrews (D-Dist. 3) of Gaithersburg.

Last week Marvin Weinman, president of the Montgomery County Taxpayers League, submitted a letter to The Gazette outlining the county’s spending problems. ‘‘Montgomery County is addicted to spending,” he wrote.

‘‘It’s a spending issue and the issue is [if the budget is] sustainable,” Weinman said in an interview this week. ‘‘We need to be looking at every dollar for every new position and program. With the council, they get the money and they spend it. Unfortunately people only care about the budget when it affects their tax bills.”

But other council members said the public should not worry about the future.

‘‘Every year the word sustainability is out there, and every year the budget has been sustainable,” said Councilman Michael L. Subin (D-At large) of Gaithersburg.

‘‘If the economy has a downturn, we’ll address that and make cuts where necessary,” said Silverman, who is running for county executive. ‘‘Some of my colleagues have been talking about sustainability since I got on the council in 1999. The real test is whether they want to propose cuts to address the sustainability issues that they are concerned about.”

Without many major funding issues to debate, the budget conversation has largely centered on the public schools system.

During Tuesday’s session, the council tentatively approved a $142,00 appropriation to its Office of Legislative Oversight for two additional analyst positions, including one analyst specifically for school system issues.

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