Thursday, May 06, 2010

Panhandlers of MoCo

Montgomery County is the Economic Engine of Maryland. The county accounts for one-sixth of the state’s population, one-fifth of its employment and tax receipts, one-fourth of its personal income and one-third of its business profit. So you would think that our economic might would make us the budget bosses of Annapolis, right?

Wrong. In terms of the state budget, we will have our hands out for years. We are, in fact, the Panhandlers of MoCo.

That status is a direct reflection of our budget problems. It is not merely because we need to close a nearly billion-dollar deficit in FY 2010, a gap that is so huge that not even massive furloughs could close it. It is also because our deficits are forecasted to be $500-700 million every year through at least FY 2016. State aid is of little help since the county’s relative wealth guarantees minimal returns on the tax dollars we pay to the state government. However, the “good news” is that if our economy continues to crater, we may actually get poorer and thus get more state money. Such is the nature of good news in bad times.

MoCo’s endless deficits are putting it on a collision course with the state’s Maintenance of Effort (MOE) law, which requires counties to at least match their prior year’s per-pupil local spending on schools to be eligible for state aid increases. MoCo asked for a waiver from MOE last year and was turned down by the State Board of Education. The state then ruled that MoCo’s attempt to comply with the rule was illegal and levied a $23 million fine against the county. MoCo’s state legislators were able to get the fine revoked, but the county - as well as other counties around the state – also wanted to loosen the process of getting waivers from MOE. An attempt to do that through legislation collapsed on the last night of the session due to “technical errors.” Those errors could wind up costing MoCo, and possibly other counties, tens of millions of dollars.

Here’s why. The county cannot afford its MOE requirement again and is applying for another waiver. But the process and the decision-makers who ruled against the county last year remain the same this year, so another denial should be expected. After all, State Superintendent of Schools Nancy Grasmick is mighty proud of Maryland’s number one public schools ranking and the last thing she wants is to let MoCo cut its school spending only to see the state’s rank fall. And so the county will be fined – again. And then the state legislators will have to get it revoked – again. And then the process will repeat – over and over again. This puts our delegation in a very bad position. What price will they have to pay to get these fines revoked? A teacher pension handoff? Big tax hikes that disproportionately hit the county? It won’t be pretty.

In the meantime, the Prince George’s state legislators did the unthinkable. When increases in relative wealth threatened to reduce their state aid, they got a wealth formula changed to give them the money anyway. As a result, County Executive Jack Johnson crowed about how the extra aid meant that his county might not have to apply for an MOE waiver. The irony here is that MoCo’s state legislators actually helped them change the formula. Now it is we, and not Prince George’s, that will be extending our empty cup to the Lords of Annapolis.

Maybe this time we should just take the fine. Even panhandlers should have some self-respect.