The dangerous road ahead
It’s county budget time. The county executive has forwarded his recommended budget to the County Council for action. He has identified critical needs and indicated they can be provided within the $215.2 million, 6.3 percent budget increase.
The Office of Legislative Oversight, at the council’s request, has produced some outstanding reports with recommendations that, if implemented, could provide enhanced service to the people with potential cost savings as an added benefit.
That’s the good news. The bad news is with the costly labor contracts pending for 29,000 county employees. It’s not clear that the council will be able to live within the executive’s fiscal 2008 budget, provide for all the identified improved services and still provide homeowners with the executive’s proposed $613 property tax credit.
The county government is asking for 500 additional positions. The schools want 107 more positions, in spite of the fact that enrollment has declined by 2,330 students over the two previous years and a loss of 749 students is projected for fiscal 2008.
Salaries for these new employees and those already on staff will spiral upward.
Salary increases come in two parts: service step increases at about 3.5 percent and a cost of living adjustment. The federal government uses the Consumer Price Index as a guide to setting COLA for a region. This year’s COLA in the Washington region was 3 percent. On the other hand, COLA for county government varies for bargaining groups, this year ranging from 4 percent to 5.3 percent, with no apparent rationale for the higher amounts. For eligible school employees, the compounding step and COLA will result in an average salary increase of more than 9 percent a year.
Benefits costs are increasing at an uncontrollable rate. The schools’ Office of Legislative Oversight report identified that for the schools alone the estimated six-year cost contributions for the Retiree Health Benefits and Trust Fund would be $454 million. That’s 40.6 percent of the total six-year projected total $1,119 million revenue increase.
The numbers get worse. For firefighters hired as 20-year-olds, retired at 40, life expectancy of 75, 35 years of potential retirement benefits. Now the police expect the same deal.
How did we get into this vulnerable position? Others have paid the price for continuing down this dangerous road. Consider the experience of General Motors, Ford, Delta Airlines and Bethlehem Steel, who along with their employees have suffered the resulting consequences of excessive labor contracts.
In Montgomery County, the long-term financial consequences will be borne by the remaining county residents.
We have good employees and few problems recruiting qualified new employees. The union officials have every right to make an effort to maximize benefits for their members. That is their job. What then is the responsibility of our elected officials to the citizens they represent when it comes to labor contract appropriations? It’s a difficult question.
One thing they need to do is change the one-year budget mentality. By approving the labor contracts as is, the council would effectively fund salary and compensation for three years without considering the remaining multi-year financial impact for fiscal 2009 and fiscal 2010 budgets.
The issue is now in the hands of the council. It will hold hearings during which hundreds of residents will testify for three minutes in an effort to get the council to appropriate funding for their programs. Clearly we can’t fund them all. In fact, if we fully fund the recommended labor contract for the 29,000 employees involved in the contact negotiations, many requests will not be funded.
The Montgomery County Taxpayers League believes it is important to reach out to the public to help them understand the far-reaching consequences of this year’s budget process and the dramatic effect the labor contracts could have on each of us. As part of this effort, we will appear on the ‘‘Political Pulse” program, which will air on Channel 16 at 9 p.m. April 12 and repeated at 9:30 p.m. April 17.
The real issue is sustainability and council action on appropriations for the labor contracts. The review starts on April 16. The public needs to be aware of council action on this critical budget matter. If, in fact, we have an open government, we will be given the opportunity to take part in a full, open discussion and have the ability to enter into a dialogue with our elected officials on the labor contracts. Pertinent data available to the council, such as regional salary studies, cost impacts statements and pertinent actuarial data should be made available to the public.
This could be the most critical budget impact issue we have had in the last five years. People should get involved.
Marvin Weinman of Kensington is president of the Montgomery County Taxpayers League.