Thursday, July 23, 2009

Why MoCo’s Helicopters Won’t Fly in Annapolis

As we revealed last week, County Executive Ike Leggett is requesting county funding to augment a federal grant for the purchase of two police helicopters. The County Council is considering the merits of that request. But whatever those merits may be, the Executive and Legislative branches must consider the political consequences of going forward. Simply put, Montgomery’s helicopters could very well throw the county’s Annapolis priorities into a tailspin.

The Executive’s request to the council was remarkably short on specifics. While his request did outline acquisition costs of $248,894 in federal grant money and $279,890 in local funding, it did not estimate the maintenance and operating costs. Council staff volunteered a rough estimate of 1-2% of the total police budget, which under the Fiscal Year 2010 budget would amount to $2.5-4.9 million per year. The Police Department estimates the operating cost at $7.9 million over five years. The county faces a $350 million budget deficit next year.

In normal times, this issue would be kicked around between the Executive and the County Council and eventually resolved. But these are anything but normal times. Montgomery County’s budget is extraordinarily dependent on the state government at the moment. Specifically, two issues will make or break us in the near term.

School Budget Maintenance of Effort (MOE)

State law requires that counties at least maintain their level of local school funding in order to be eligible for state aid increases. Montgomery County requested a waiver from this requirement from the State Board of Education this year owing to its poor economy, its fiscal problems and the tax-limiting consequences of the Ficker Amendment. The board denied its request so the county resorted to an accounting maneuver to get around the requirement. The board has requested an Attorney General opinion on the issue and it is far from clear as to whether Montgomery’s MOE compliance will be upheld.

Our sources tell us that the helicopter proposal has been in the works for at least a year. That means that while the county was crying poverty to the State Board of Education, it was already considering purchasing helicopters. The Executive Branch further postponed its funding request until after the county budget was finalized in May. The state board and other decision-makers in Annapolis may very well conclude that the county made its case for a waiver in bad faith. After all, if it was secretly considering purchasing police helicopters, how could it credibly say it was too poor to afford its MOE requirement? Whatever the ultimate mechanism for settling the MOE dispute, this will diminish the county’s leverage and cast doubt on the veracity of its budget claims, both now and in the future.

Teacher Pensions and State Aid

The state’s desperate budget situation ensures that state aid to counties, and specifically teacher pensions, will remain part of the budget discussions in Annapolis. In Maryland, the state pays pension benefits for teachers, school administrators and support staff. This is one of the few state programs that benefits Montgomery County since it pays its teachers more than other counties due to its high cost of living, and thereby generates higher benefit levels. Montgomery enjoys the highest absolute dollar benefit and the third-highest per-capita benefit of the state’s jurisdictions from this program.

In the last general session, Senate President Mike “Big Daddy” Miller introduced a bill to phase in a handoff of teacher pension costs from the state to the counties. Montgomery would have been disproportionately damaged by that bill. Furthermore, the colossal unfunded liability in the state pension plan – which was, after all, caused by state fiscal policies – could very well be imposed on the counties. But Big Daddy’s plan is far from the worst scenario. A Western Maryland Delegate introduced a bill during the 2007 special session that would have wealth-adjusted the handoff of pensions. That proposal would devastate Montgomery’s finances just as it would protect other counties around the state.

All of the reasons above explain why our state delegation’s highest priority, as supported by County Executive Leggett, is to prevent teacher pensions from being unloaded on the counties. Our delegation must make the case that we are not as rich as the rest of the state thinks we are to have a shot at preventing a Montgomery fiscal catastrophe. But if we appear to be wealthy enough to splurge on helicopters, that case will be laughed out of the statehouse.

We asked our state legislators on an off-the-record basis what a helicopter purchase would do to their efforts to defend our state aid. Here’s what six of them said:

“My first response to that is that it may be a needed purchase, but with the fiscal climate we are all in and are going to be in for awhile, I think purchasing helicopters needs to go on a wish list for better times after we take care of the necessities. A purchase of helicopters would be a hard sell to folks in Annapolis.”

“There’s no question the helicopters are needed. The only questions concern timing and priority. At a time when we are all buckling our belts two notches tighter and the delegation is gearing up for a major battle to maintain Montgomery County’s fair share of state aid and protect teacher pensions, it is appropriate to ask whether this is the right priority at the right time.”

“In this case, like most, the merits may end up getting swallowed by the politics.”

“As we continue to struggle to make the case to our colleagues from around the state that Montgomery County streets are not paved with gold as they mistakenly believe and to argue that our needs and corresponding budget challenges are great, dubious spending initiatives at the local level such as this tend to undercut and undermine those efforts.”

“I think it flies in the face of all of our efforts to demonstrate our need for state aid. I’m sure the state is happy it didn’t fulfill our waiver of Maintenance of Effort funding for educaiton. As a county, we spent a great deal of political capital explaining why we were so poor. The state disagreed and then we proved them right. Hope we don’t have the gall to make a second such request next year, absent some new economic catastrophe.”

“It will be Exhibit A for why we ought to be cut.”

Regardless of its merit or county budget impact, this proposal will kneecap Montgomery in Annapolis. Big Daddy will gleefully embrace MoCo’s helicopters if they make it easier for him to send teacher pensions to the counties. Ike Leggett will no longer be able to draw lines in the sand over teacher pensions if the helicopter rotors are blowing them away. And if the State Board of Education gets a chance to punish Montgomery for its Maintenance of Effort compliance tactics, they will do it without regret.

The Executive Branch has already demonstrated its strategic insensitivity to our state budget leverage, but it is not too late for the County Council to do better. They should send the helicopters back to the launch pad, at least until the county and state budgets improve. If they don’t, the helicopters will crash land at the statehouse - and Montgomery’s agenda will go down with it.