Montgomery County’s executive should look toward reforms, not tax increases

Facing a $237 million shortfall for the 2016 budget, Montgomery County Chief Executive Isiah Leggett announced in January that he is considering raising property taxes to close the gap.

Separately, Leggett outlined during his inaugural address in December that he intends to establish an independent transit authority for Montgomery as part of an ambitious effort to tackle countywide traffic congestion while arguing that the proposed agency would help boost the local economy.

Unfortunately, between the existing budget shortfall and the fact that the agency would be funded by a new transit tax that would not be counted against the charter cap, which limits the amount of revenue the county can collect, Montgomery’s hardworking families and businesses would be left picking up the tab.

Although Leggett formally withdrew his transit authority proposal in late January, his staff continues to actively solicit feedback from residents and community stakeholders about his proposed initiative, suggesting that the transit authority remains a top priority for the three-term chief executive.

Meanwhile, between Gov. Larry Hogan’s pro-business agenda and the Augustine Report commissioned by Maryland Senate President Mike Miller and House Speaker Michael Busch, a bipartisan consensus is emerging in Annapolis that serious efforts must be made to improve Maryland’s private-sector economy and that it cannot principally rely on federal spending.
Leggett, for his part, has also outlined his own six-point economic plan for Montgomery, which include “to better nurture our entrepreneurial culture” while ushering in an environment that says “yes to business,” among other things.

Unfortunately, despite Leggett’s positive assurances on his intentions to improve the county’s business climate as outlined in his inaugural remarks, the County Council’s top-down approach to business suggests otherwise. Between having passed legislation requiring businesses to pay some of the highest energy taxes in the country to supporting increased minimum wage legislation to the so-called “ban the box” law, it has the business community fearing that once the pending mandatory paid sick-leave legislation is passed, rent control could be the next item on the County Council’s progressive agenda.

While Leggett deserves praise for having successfully closed nearly $3 billion dollars in budget gaps and maintained the county’s AAA bond rating, he has not vetoed anti-business legislation, exasperating fears in the business community that a compromise on rent control could be next.

There are a number of progressive lawmakers on the County Council who actively champion rent control; should it pass, it would place the economic burden on the business community, with small businesses expected to take a particular hard hit.

Despite Montgomery’s highly educated and talented population, the council’s top-down approach to business have often led corporations to establishing themselves in neighboring counties with a particular preference for Fairfax County. It is also worrisome that a number of businesses located here have left, with Marriott being the latest to threaten to do so.

These conditions help explain why it is going to be a formidable challenge for Leggett to close the $237 million gap for the 2016 budget as the county’s tax base is not expanding, despite its historic wealth and impressive workforce.

For Montgomery County to afford the high-quality services its residents have and deserve, concrete steps must be taken to expand the tax base. Instead of levying an additional tax increase for an independent transit authority, even if one is merited, Leggett must support a responsible budget that address shortfalls by tackling the structural deficit, systemic pension reform and general spending restraints. A first step must be to begin negotiations with the county’s powerful public sector unions; it is unacceptable for the taxpayer alone to be expected to yet again pick up the tab for the shortfall in question, let alone have to shoulder additional expenditures.

While Leggett deserves praise for his smart-growth initiatives, he must also pay attention to the lesser economically developed areas of the county, including the Takoma Park/Langley area, Montgomery Hills and Silver Spring’s Four Corners neighborhoods. By offering tax incentives for large scale regional and national corporations to establish themselves in such areas, Leggett could help establish a corporate anchor, which in turn could rejuvenate local economies, similar to the positive impact Discovery Communications has had on downtown Silver Spring.

While Leggett’s has successfully shepherded the county out of the last recession, he has a unique opportunity to preserve Montgomery’s wealth by beginning to address shortfalls by tackling the structural deficit, undertaking systemic pension reform and showing spending restraint. Between taking on these necessary reforms coupled with offering tax incentives to businesses, he would be able to expand the county’s tax base and protect its wealth while maintaining programs to help protect our most vulnerable residents. Failure to implement public sector reform coupled with additional tax increases would not only deter businesses from coming to our region, but would overtime deplete Montgomery’s historic wealth.

Between proposed tax increases and a shrinking tax base, failure to carry out public sector reform will become an inevitable burden for the Jewish community as it will become harder for families with children at Jewish day schools to meet their daily expenses.

Sigurd Neubauer lives in Silver Spring, is married to a small-business owner and has children in a Jewish private school.