GERMANTOWN — The budget process for County Executive Isiah Leggett’s last year in office takes place during a time of uncertainty.
Leggett has bragged to residents about the County’s low unemployment rate, its “triple A” bond rating and its growing reserves, as he has toured the County to talked to residents as part of his series of annual budget forums. Yet, as the term-limited Democrat prepares to submit his final budget to the County Council by March 4, the County that Leggett has served for many years is in the grips of an unexpected budget shortfall.
“My first objective is to try to do no harm,” Leggett said, “to provide the services and the programs for the things that we are already funding where it makes sense for us to continue that. Once we achieved that objective, then I would look to try to expand beyond that depending on the level of resources available.”
Leggett met with residents at the Blackrock Center for the Arts in Germantown, assuring them of the County’s fiscal stability, promising not to propose to raise taxes and to keep the County’s budget in order. As Leggett prepares his budget for the next fiscal year, the County Council passed $63 million in cuts to help make up for a $120 million budget shortfall for the current fiscal year.
Leggett told forum attendees that given the shortfall for the current fiscal year and uncertain tax projections for the next, he would promise to try to maintain County programs without steep cuts or tax increases.
“Keep in mind the various challenges we are facing,” Leggett said. “I do not intend to go back to continue to hit our employees as we have done in the past – our libraries. And all we are trying to do is to balance all of this in a very difficult and uncertain economic climate as it relates to taxes and revenue.”
County officials blame the uncertain tax climate on the federal government.
In December, Congress passed a tax cut on the federal income tax on the highest earners. While most Americans will see a tax cut, the wealthiest Americans may see the greatest direct benefit. According to County Finance officials, the highest income taxpayers in the County, waited to file their taxes in anticipation of a large cut, causing in part the $120 million budget shortfall.
“There is still a great deal of income tax uncertainty out there, among these is the impact of the federal tax changes by Congress,” said Joshua Water, an official with the County Department of Finance.
In early January in reaction to the shortfall, Leggett proposed $60 million in cuts for the current budget, $25 million of which to Montgomery County Public Schools, which the Council mostly approved of Tuesday with some slight changes.
Montgomery County has been here before, Leggett said.
During what people called the “Great Recession,” the economic downturn that started in the fall of 2008, the County made steep cuts most notably to salaries and benefits for County employees. In 2016, the County made another round of cuts to employee benefits, with the Council deciding not to fund a step increase and cost of living adjustment for County employees to help make up for budget residual budget issues from the Great Recession.
While Leggett will have to wait until February to get the uncertain tax projections he is waiting for, he said his next budget would not be a return to the unpopular austerity of previous years.
At the forum, Leggett stood for more than 45 minutes listening to what residents asked for either maintained or increased spending for various programs – schools, legal services for immigrants, parks and libraries. Leggett cautioned people to not expect much additional spending but said he would try to maintain current levels.
“We will not, and I will not, recommend any tax increases – that’s not going to happen, that’s not going to happen. I am not going to deeper into the reserves,” Leggett said. “I am going to submit a budget that maintains the target levels that we’ve suggested.”