Montgomery County
Taxpayers League
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County Employee Salary and Compensation -- the Looming Crisis
Overall salary and compensation represents 80% of the tax-supported
budget for Montgomery County. For the Montgomery County Public
School System, employee support comprises just under 90% of the MCPS
budget. As the current level of increase continues to compound over the
long term we will be reaching a point were employee salary and
compensation will become unsustainable.
The County's Proposed FY 2008 Operating Budget
Costly to the Taxpayer
By Chuck Lapinski, CO-Chair, MCTL Public Finance and Utilities Chairman
We already know enough about the proposed FY 2008 Operating Budget to see a disturbing picture forming. Many
of our concerns have been identified and discussed before. Others are new. And some are old but taken to a
whole new level. The result will be the creation of structural deficits that can only be overcome by either (1) drastic
reductions in other areas, (not likely since they represent new contractual commitments) or (2) overriding the
County Charter's limits on property tax increases.
On a practical basis, the County, through the past actions of our previous elected officials, has pushed the
county's income tax to its statutory limit of 58% of the owed State tax. Our county income taxes cannot go any
higher. And they're not likely to be lowered either. Remember, the Council promised us 16 years ago that they
would return our income taxes to the 50% level of 1990, but they never made good on that promise! Out of a 20%
increase in income tax rate (an increase to 60%) we only got back 2% resulting in the current 58%
Our elected officials have also raised just about every tax and fee to its practical limits. Further increases in phone
and utility taxes and fees, for example, may result in decreased revenues as folks cut back in use in response to
ever higher costs. But even if some of these discretionary taxes and fees are somewhat increased, they cannot be
made large enough to compensate for the high cost of the contracts which have been negotiated with labor unions
representing all the county's and school 's employees. For over 20 years, we have stated that the agreements with
all of our employees must be fair and equitable to them AND fair and equitable to the taxpayer.
One topic will have overall priority, and that is the recently negotiated labor contracts with our police, teachers and
school system employees. It is my opinion and that of many others that these agreements are economically
unaffordable over both the near and long term. Even the Washington Post and the Examiner question the
advisability of these agreements. For example, all the agreements include not only the increase in wage and
salary adjustments, but also step increases of 3.5% that apply to some 90% of county and school system
employees. (Some employees are at the top of their steps, so they don't receive the step increase, but qualify for
the wage and salary adjustment.) The teachers and other school system employees are projected to receive wage
and salary adjustments of 4.8% the 1st year, 5.0% the 2nd year and 5.3% in the 3rd year plus the 3.5% annual
step increases! Thus the total increases by contract year are: 8.3%, 8.5%, and 8.8%. This compounds to a total of
a 27.9% increase over the 3 years. For the school budget (and by extension to the County budget) this agreement
adds over $70 million in direct labor costs to the operating budget. Over the last six years, the increase averaged
about 7% per year and had a similar impact on the costs. Similarly, the county government employees and police
agreements will be almost 25% increase over the same 3-year period. The dollar impact of these hasn't been
published as yet. It should be noted that since the inception of the Consumer Price Index for the Baltimore
Washington region, it has averaged approximately 2.7%. Over the same period, private sector employers have
averaged less than 3.5% Total for salary and wage adjustment and step increases, equal to about an 11%
increase over the same 3 year period historically. And, all of these increases add significantly to the retirement
benefit liabilities of the County.
Other equally important issues include:
- progress in Council oversight and accountability
- prudent budget and financial processes and affordability guidelines
- property assessments and Charter limits
- progress on delayed government infrastructure maintenance and improvements backlog
- budget optimism and realism
- project cost estimating standards
- comprehensive review and assessment of employee total compensation
- productivity improvement
- financial management system software and hardware upgrades
- and countywide equipment recapitalization
The Annapolis legislature is considering some 20 bills that will allow the state and the counties to implement new
taxes and/or increase existing taxes and fees. But the worst of the lot, HB 399, would legislate the rollback of the
supermajority vote required to override the charter limits on increases to property and state taxes. Nearly 17 years
ago, the taxpayers and voters of this county approved the requirement that a "super majority" of Council members
had to vote to override the 10% charter limit. Now is the time to be proactive and let your state representatives
know that you don't want the will of the people overridden.
County Council consideration of a property tax increase 23 Apr 07
Due to the greatly increased costs in the new labor contract and the recently changed federal funding requirements
for retirement facing the county, the Council is reviewing the option of increasing your property taxes for the FY
2009 through FY 2013 budgets.
The Council is currently looking to keep the upcoming FY 2008 property taxes within the Charter Limit as previously
identified in the Executives recommended budget This incorperates a one time credit of $613 for resident
homeowners. If the new plan is approved they will make up the budget shortfall in the following years by increasing
your property taxes by 10% a year. Without the tax credit in 2009 homeowners will experience a 27% increase that
year.
Below you will find an example of the taxes for FY 2008 and 2009 if the Council approves the revised plan. The
Council will be taking up approval of the labor contracts on Tuesday. The final critical action on budget approval will
take place on May 17th with final vote on May 24th.
UNDERSTANDING YOUR FY 2008 AND FY 2009 PROPERTY TAXES
Taxable Assessment for FY 2007 assumed at $400,000
Taxable Assessment FY 2008 $440,000 ( $400,000 x 110%)
Taxable Assessment FY 2009 $484,000 ( $440,000 x 110%)
FY 2007 FY 2008 FY 2009
Rate Tax Rate Tax Rate Tax
State Property Tax 0.112 $448.00 0.112 $492.80 0.112 $542.08
County Property Tax 0.624 $2,745.60 0.627 $2,758.90 0.627 $3,034.68
Nominal Special Tax 0.292 $1,284.80 0.293 $1,289.20 0.293 $1,418.12
Note 1 Note 1 Note 1
Solid Waste Charge $337.30 0? 0?
Water Quality (RSFD) $25.23 0? 0?
Total $4,478.40 $4,540.90 $4,994.88
Credit ($221.00) Credit ($613.00) Credit $0.00
Tax $4,257.40 $3,927.90 $4,994.88
Reduction $329.50 Increase $1,066.98
Change -7.74% Change 27.16%
Note 1 Nominal Special Tax
Mass Transit
Fire Note : Potential Fire Tax Increase in FY 2009
Recreation
Storm Drain
M-NCPPC
Montgomery County Taxpayers League
April 17, 2007
