This story has been updated.
The Montgomery County Board of Commissioners on Thursday approved a $389.7 million operating budget linked to a property tax increase of 9.8 percent, the first since 2012 and the first engineered by the Shapiro administration.
The budget reflects a $19 million increase in spending from 2015, including a more than doubling of last year’s payment to the county pension fund from $3.8 to $8 million. Also included is an additional $2.6 million in debt service, primarily for core infrastructure improvements, the financing of interest payments for municipalities for new emergency radio equipment and covering an obligation made in 2010 for a failed economic development project in Norristown’s Logan Square.
Board Chair Josh Shapiro called the budget a “statement of principles” and “clearly honest and clearly fiscally responsible.” He said that while spending is down from four years ago, it is better “targeted” to meet ongoing operations of county government. He might also have said budgets can be political tools.
Shapiro pointed to an example of poor budget practice by the last administration, one often cited over his four years on the county board, related to part-time lawyers and use of outside counsel in the Solicitor’s office along with budget figures not accounting for those costs. The problem was two-fold, he said. There was mismanagement from the standpoint of the imposition of higher costs than necessary in the Solicitor’s office and “they weren’t passing honest budgets” that reflected actual expenditures.
Uri Monson, the county’s chief finance officer, said at the Thursday meeting that the 2016 budget is nearly $30 million less than the budget passed in 2012 (and $20 million less than actual expenditures that year). The tax increase on an average property assessment of $168,901 amounts to slightly less than $52 annually.
In terms of public reaction to this year’s budget, “it’s been pretty quiet out there,” said Comr. Val Arkoosh, referring to the two public hearings in early December, at which there was all but one public comment generated. In contrast, in 2013, when, for example, Montgomery County Community College (MCCC) took a 25 percent budget cut of more than $5 million, residents flooded the public hearing to object on a wide range of issues.
Other budgetary challenges facing the county in 2016 include more than $9 million in “new” costs: a $3.2 million increase in a contract for prison health care; $2.6 million in debt service; $1 million to cover an arbitration award for corrections officers and existing labor contract increases; nearly $2.5 million in increased inflationary costs for various departments, including software licensing fees, increased technology costs in public safety, replacement of outdated equipment across the county and increases in crime lab fees. In Adult Probation and Parole, for example, the county is budgeting $900,000 over 2015 estimated expenditures to reduce caseloads “more in line with standards across the commonwealth,” said Monson.
Additional cost increases include more than $650,000 for security and staffing increases at county facilities, parks and trails; $1.3 million for a salary increase of 1.5 percent for unrepresented employees; and a $300,000 increase for court appointed fees.
The county’s full pension payment of $8 million based on an actuarially defined contribution level is a dramatic reversal of practice after failing to make payments at all from 2008 to 2012 and then making partial payments of $3.2 million in 2013 and $3.5 million in 2014 and 2015. “I’m not aware of any other government that’s doing that,” said Shapiro, who readily conceded that there were probably some others he isn’t aware of.
The issue of cutting longstanding contributions to Montgomery County Community College has been a tough one for an administration committed to greater fiscal controls, especially with respect to functions beyond the core of county government. The college is level-funded for 2016 after recent increases that have not put much of a dent in the $5 million-plus cut in 2013.
When community colleges were formed in PA, the funding framework envisioned was an approximately equal division between the local sponsor, in this case Montgomery County, the commonwealth and attending students, according to MCCC Interim President James Linksz in a recent interview. Linksz was the long time president of Bucks County Community College.
Given the county’s strong and consistent contributions over the years, the 25 percent cut in 2013 was a hard blow. “It was a pretty substantial portion of the budget,” said Linksz. Meanwhile, as enrollment took off after 2000, state funding was leveling off and in the last five years, there have been no increases at all from the state, he said. As a result, student tuition and fees ballooned to make up the difference and now cover almost 55 percent of total costs, a far cry from the original vision of a three-way equal partnership. And just on the heels of the recession when enrollment was surging and community colleges were gaining prominence as the low-cost/high powered under-utilized engines of higher education, their acceleration here and elsewhere has been slowed.
On the expense side, the biggest impact of the county cuts was in personnel, said Linksz. Positions that were vacant were eliminated or left vacant for a protracted period – some to this day. Where possible, duties were transferred and positions realigned hiring was delayed, even for critical positions. An early retirement program started and the college increased its use of part-time faculty and staff, rather than hiring for full-time positions.
In addition, to pick up some of the slack, new efforts were made to develop public/private partnerships for initiatives like the Culinary Arts Institute, Children’s Day Care Center, and other efforts in community arts and cultural programming, clear plusses for the college.
On the revenue side, there were tuition increases of 8.7% in 2012-13 and 11.6% in 2013-14. And these increases have continued at more than double the CPI in the past two years (tuition and fee increases of 3.2 and 3.8 percent),” explained Linksz. Still, as the Shapiro administration is quick to point out, the award winning MCCC remains less expensive than other community colleges in southeastern PA.
While the county’s reduced contribution to the college’s operating budget remains sizable, capital funding has increased. Recent operating fund increases averaging $380,000 per year for the last two years has brought total county contributions up to $18 million, in comparison to $21 million in 2012. In a statement on Friday, Linksz said, “Montgomery County has been a strong supporter of Montgomery County Community College for many years, and we thank the Commissioners for their continued support. The college will continue to work with the county on strategies to keep tuition as affordable as possible while, at the same time, continuing to offer high caliber academic and workforce training programs for the county’s citizens.”
Thanks to a bolstered fund reserve, Montco was able to direct some $32 million until early November to keep human service providers afloat who were going unpaid due to the state budget impasse, which began July 1. Monson announced on Thursday that the county had about $12.5 million in the bank and would make it through the end of the year. But by early January, there would be nothing left for payroll and regular bills, so it would have no choice but to float up to $75 million in a TAN (tax and revenue anticipation note) to stay solvent until state lawmakers come up with a budget.
All three Montco board members, including outgoing Republican Bruce Castor, registered major frustration with the fiscal paralysis in Harrisburg. Shapiro said that to salvage the budget framework that the legislature and the governor initially came up with two months ago, 20-25 Republican House members from southeastern PA will have to be persuaded to get on board. He declared it was time to “stop forcing county government and others to pay for their mistakes.”
The board also passed a $76.2 million capital budget and authorization for bonding, as well as four non-general fund budgets for 2016, all by unanimous votes.