State
On January 12, the first day of the 2011 legislative session, 40 freshmen legislators will be sworn in: 30 in the House of Delegates and 10 in the Senate. All but two of the new Senators, Ronald Young and Bill Ferguson, have previously served in the House. At only 27 years old, Ferguson becomes the youngest member of the Senate, and is the only incoming Senator who has never previously served in public office.
As Session begins, the Department of Legislative Services (DLS) projects a shortfall between spending and revenues of $1.6 billion; however, the real structural shortfall is put at closer $2.1 billion, and is projected to rise indefinitely. Despite the State’s dire financial straits, the O’Malley Administration and General Assembly leadership appear to have little appetite for tax increases this year. That has not, however, completely deterred Senate President T.V. “Mike” Miller, who is urging the freshman class to look at an increase in the gasoline tax. Governor O’Malley insists that he’s preparing a budget for the next fiscal year that includes no tax or fee increases-- but it may be that the freshman class (with a little nudge from leadership) may have its own ideas about how to resolve the State’s growing structural deficit. Thus, no one should assume that increased taxes and fees are off the table.
Miller Announces Committee Assignments
Senate President Miller has announced the standing committee assignments for the 2011 legislative session. While there was fear that, with the loss of Senator Rona Kramer, Montgomery County would also be losing one of its three seats on the powerful Budget and Taxation Committee (B&T), this did not happen. Miller appointed Roger Manno (D), from District 19, to succeed Kramer, thus maintaining three members from Montgomery on the Committee. Long-time Chair Senator Ulysses Currie (D), from District 25, will also remain on the Committee, but has relinquished the Chairmanship to Senator Edward J. Kasemeyer (D), from District 12 in Baltimore County.
Elsewhere, it is the Education, Health and Environmental Affairs (EHEA) that will see the most changes, with six of the ten newly elected Senators assigned to it.
Tax Reform Commission Votes Against Combined Reporting
An 18-member State commission has voted 13 to 4 to recommend that the General Assembly not adopt a “combined reporting” law for corporate income taxes during the 2011 Session. Combined reporting, which would require businesses to take into account out-of-state income and that of subsidiaries when calculating their Maryland tax obligations, was one of the top issues debated by the Business Tax Reform Commission.
Commission member and General Assembly Delegate Kumar Barve (D), Montgomery County, made the motion against consideration of legislation “this year,” which presumably leaves the door open for recommending introduction in a future Session. A recent report from the state Comptroller’s office said that implementation of combined reporting could cause greater swings in the State’s tax receipts.
Prince George's County
Three's a Charm for Rushern – "On the Path to Greatness"
Rushern Baker’s third run at the office of Prince George’s County Executive was a resounding success. Sworn in on Monday, December 6 as the County’s 7th Executive, Baker wasted no time fulfilling his campaign promise to bring change to County government. Within the first hour, the newly sworn Baker made his first official decision, announcing eight interim appointments and two permanent appointments as senior staff and selected county agency heads. The action included replacements for Chief of Police Roberto Hylton and Fire Chief Eugene Jones. Those named as interim appointees will hold their positions while Baker conducts an extensive search for individuals to permanently fill the positions. Click here to see the list of appointees and biographies: interim-leadership press release.
Lesa Hoover, AOBA’s Maryland Government Affairs VP, is serving on the Baker Transition Team. And, thanks to the generous donations from our members active in Prince George’s County, AOBA was pleased to be a Platinum sponsor of the Baker inaugural events (click here to see the official list of sponsors).
AOBA members should be proud that their hard work and long-time commitment to Baker’s vision for the County is finally a reality. While Baker has a very tough job ahead of him and many hurdles to overcome, AOBA now has the opportunity to assist him by providing greater input in shaping Prince George’s County policies on issues of importance to our members and their tenants. The good guys do not always finish last.
 
 
 
On a less enlightening note, Baker’s swearing-in ceremony also saw the swearing in of five new County Council members, one of whom was Leslie Johnson (D), the newly elected representative for Councilmanic District 6. The wife of outgoing Executive Jack Johnson, Councilmember Leslie Johnson is being seated on the Council, but has been denied positions on any standing Council committees. Both Johnsons are under Federal indictment for corruption and destruction of evidence.
The newly sworn Council, as is tradition, elected a new Chair and exchanged the gavel during its first official meeting. The Council unanimously voted Ingrid Turner (D-District 4), a lawyer serving her second term, to be its new Chairperson. Councilmember Eric Olson (D-District 3) was elected Vice Chairman by an 8-0 vote. Pointedly, Leslie Johnson (D) abstained: Olson was one of five members who had publicly stated that Mrs. Johnson should not take her seat on the Council because of the pending federal corruption charges against her and her husband.
Montgomery County
Newly re-elected Montgomery County Executive Ike Leggett, facing a budget shortfall of nearly $200 million, is considering radical cuts in County services. Seeking solutions for the growing structural deficit, Leggett and the County Council are scrutinizing a two-part report from the Council’s Office of Legislative Oversight (OLO). Part I, Achieving a Structurally Balanced Budget in Montgomery County, focuses on revenue and expenditure trends, while the focus of Part II is evident from its title: Options for Long-Term Fiscal Balance. Key points are described below, and their full texts may be seen here: Part 1, Part II.
Part I: Revenue and Expenditure Trends
The OLO inspected the spending trends and tax-supported revenue over the last ten years and provided predictions for the next six. The agencies examined consisted of the County Government, County Public Schools, Montgomery College, and the Maryland-National Capital Park and Planning Commission (M-NCPPC).
A major problem in Montgomery County, as well as other jurisdictions across the country, is that there has been an increase in the number of “tax supported budgets that must be allocated to fixed spending commitments.” Some of these commitments include pensions, health insurance, debt service, and contributions to the capital budget and County fund reserve. Projected cost increases are exceeding projected revenue growth, which is exactly how a structural budget issue occurs.
Traditionally, expected revenues for the next fiscal year are supposed to fund the current year’s budget, absorb growth in cost commitments, and pay for new initiatives. However, at the moment, revenue growth for the future is very unlikely to keep up with the current rising costs of the public’s spending. Montgomery County either needs to raise more revenue or make changes to steer the future cost curves downward.
Over the past ten years, personnel pay and benefits have accounted for 82% of tax supported spending. These costs have increased 64% while total work years increased by 10%. The main drive behind these higher personnel costs was not an “increase in the size of the workforce but rather the increase in average costs per employee.”
-Employee salaries grew by 50%
-Health and retirement/pension benefits increased 120%
-Combined agency cost of employee benefits reached $740 million in FY11 (22% of all spending)
Part II: Looking Ahead
OLO has concluded that Montgomery County is facing a structural budget problem and the rising costs of the County’s commitments are projected to surpass the growth of revenues in the future. One-time solutions will not solve the problem, so the County must consider changes that either raise more revenue or lower future cost curves.
Part II of the OLO report states that “marginal, short-term, and one-time fixes will not produce a sustainable solution for the County.” Right now Montgomery County is facing rising costs of salaries and benefits for public employees that, in turn, are tightening services for residents. Some of the options in this report could alter the way in which the County pays its workers and services its residents. The options that may be considered to address the structural budget obstacle include reducing future salary increases, raising employee share of health benefits, reducing the size of the workforce, reducing debt service, restructuring retirement benefits, and increasing revenue.
The report states that these options offer many “potential budget savings and revenue choices. Some would yield substantial savings in the short term, and others would yield an even greater savings, but only in the longer term. Many of the options are not mutually exclusive and could be combined to achieve some savings in the short term and more over time.”
Energy Efficiency Incentives - Workshops
The Montgomery County Department of Environmental Protection and the City of Rockville are hosting a two-part workshop focused on energy efficiency incentives for businesses, multi-family properties and other organizations. Consultants supporting the Pepco Commercial/Industrial Program will provide an overview of the incentives implemented under the Governor’s EmPower Maryland initiative to assist organizations in overcoming the first costs of energy efficiency improvements.
The workshops will be held on December 13th at the Glenview Mansion, 603 Edmonston Drive, Rockville, MD 20851-1012. The program description appears below.
8:00 to 9:00 am - Participating in the Pepco C&I Energy Savings Program Trade Ally Network - Contractors, auditors, architects and others should attend this event to learn how to become part of the Trade Ally Network. Once approved by the Program, registered trade allies are listed in the Pepco directory and get an important business leg-up in delivering services under the program.
9:30 to 11:00 am – Receiving Cash Incentives for Energy Efficiency Improvements – Learn how to access incentives that provide cash for businesses, multi-family and other organizations to make energy efficiency improvements. Property owners, business owners, property managers, boards of trustee members, maintenance staff and others should attend this event to learn more about how the program works and hear success stories of organizations that have upgraded their properties with the help of Pepco programs. Government staff may be available to discuss other incentives and programs.
More information on the Pepco C&I program: https://cienergyefficiency.pepco.com/
Directions to the mansion: http://www.rockvillemd.gov/tours/glenview/glenviewtour/index.html
Space is limited, please RSVP to eric.coffman@montgomerycountymd.gov
Partnerships in Progress
In February, AOBA will host a meeting, for all AOBA members with an interest in Montgomery County, with the County’s five Regional Directors and six police commanders. County Executive Leggett has been invited to kick off this event.
The event evolved through discussions with and issues raised by the Executive, Council members, and various civic and tenant groups. Its purpose is to bring property owners and managers together with the various regional directors, police commanders and other County agencies to form an alliance that will result in a positive and active working relationship to address public safety concerns in apartment communities.
This first meeting will set the stage for the formation of individual regional groups that will be led by the County regional directors. Each of them will, in turn, continue to grow and expand their regional group to best fit each region’s concerns and needs, utilizing public/private partnerships.
The event is February 7, 2011 from 9:30 am to noon at the Silver Spring Civic Center.
Watch your email for the invitation to this new an exciting opportunity to be a part of your community.
Calendar Items
Energy Efficiency Incentives Workshops
Montgomery County Department of Environmental Protection and the City of Rockville
December 13th
Glenview Mansion, 603 Edmonston Drive,
Rockville, MD 20851-1012.
Partnerships in Progress
Workshop - AOBA members and County Regional Directors
February 7, 2011
9:30 am to noon
Silver Spring Civic Center
Quarterly Meeting Dates with County Executive Leggett For 2011
January 18 at 3:00
April 19 at 3:00
September 20 at 3:00
December 20 at 3:00
All meetings will be held in the Executive Office Building,
Office of the County Executive
101 Monroe Street
Second Floor Conference Room
Rockville, Maryland
AOBA’s Maryland Legislative and Regulatory Issues Committee
2011 MEETING SCHEDULE
| January 24, 2011
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February 14, 2011
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March 7, 2011
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| January 31, 2011
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February 28, 2011
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March 14, 2011
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All meetings will be at 2:00 P.M. in the community room located in the lower level of
GEORGIA WEST APARTMENTS (Located behind Georgian Towers)
8708 FIRST AVENUE
SILVER SPRING, MARYLAND 20910
(301) 588 1774 (for directions)
Thanks to AOBA Intern Jake Bender for assistance with this edition of At Issue.
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