Promised pay raises would cost county $105.3m over two years

Montgomery County is facing a potential budget gap of about $300 million in fiscal 2015, thanks partly to large employee pay raises and hard-to-predict tax revenues, county officials warned Tuesday.

Preliminary data show funding for county agencies would need to drop by 4.9 percent in fiscal 2015, or more than $300 million. County Council Staff Director Stephen Farber told council members that part of the shortfall is connected to the county's projected loss of revenue from the federal sequestration and a slowly growing county tax base that has not reached its prerecession level.

But the problem also points to three county union contracts approved by County Executive Ike Leggett, which would cost the county $31.6 million in fiscal 2014 and $73.7 million in fiscal 2015, which starts July 1, 2014.

Those contracts include raises for the police, fire and county workers unions, with the largest pay raises going to firefighters, who would receive a 19.5 percent pay raise over two years. County government workers would receive 13.5 percent raises over two years, and police would get 14.7 percent over two years.

The council is expected to examine the contracts next week.

"At least at this stage, the fiscal plan shows for fiscal 2015 those funds available for [county] agency use will be down 4.9 percent," Farber said. "That simply is unworkable. That won't work."

Farber added that the data is preliminary and takes into account the sequester, when county officials don't fully know its impact. He said the council shouldn't be too worried yet.

"It's only a snapshot in time," he said.

Jennifer Hughes, director of the county's Office of Management and Budget, said that based on county spending projections for fiscal 2014 and 2015, the council should consider keeping the much-contested county energy tax intact.

Two proposals to reduce the tax have been introduced -- one by 10 percent and the other by 5 percent. The council voted last year to reduce the tax by 10 percent.

Councilman Phil Andrews, D-Gaithersburg/Rockville, proposed reducing the energy tax by 10 percent. He said Leggett's fiscal 2014 budget has shown the executive focusing on higher spending and raises at the cost of county taxpayers.

"That's the formula we've seen in this budget," he said, adding that the proposed compensation packages for county workers are too high. "We can accomplish two good things -- provide a reasonable pay increase and provide a reduction in the energy tax for our residents."

Numerous residents agree the increased spending in Leggett's budget is problematic. The council has received many letters from residents opposing any tax increases to increase county spending.

"In a time when federal employees are facing cutbacks it demonstrates how out of touch our executive is," wrote Michael Barainca, of Gaithersburg.