The Montgomery County Commissioners have unanimously adopted a $409.6 million budget for 2013 that makes the first contribution to the county’s pension fund, begins to rebuild the county’s reserve fund, and does it without raising taxes.
The budget projects $412.2 million in revenues in 2013 and reserves $2.5 million for replenishing the county’s Fund Balance, which had shrunk from nearly $100 million to $20 million during the four years of the previous administration.
“This is an honest and transparent budget,” said Josh Shapiro, chairman of the board of commissioners. “This budget reflects the need to repair errors of commission and omission by prior administrations as well as absorbing state cuts to human services and continuing to grapple with the effects of the national recession.”
Vice Chair Leslie Richards praised the work of Chief Financial Officer Uri Monson and said the new budget ensures that the county’s reserve fund will not be used to pay county expenses.
“It is a tough budget,” Richards said. “It is a responsible budget. It is a transparent budget. We will continue to help others find other avenues for funding that we are unable to provide because it is not in the core responsibilities of what the county has to do.”
Commissioner Bruce L. Castor, Jr. called the budget “mean and lean.” He continued saying, “this budget gives us a base upon which to build and return Montgomery County back to its previous fiscal position.”
One of the most discussed sections of the budget involved the elimination of earmarks to 20 agencies in the county, several of which provide social services to residents.
“In order to protect the vital services that this county provides, we eliminated all earmarks from this budget,” Shapiro said. “While these earmarks supported many worthwhile organizations, legitimate questions were raised about the legality of these payments. Upon researching this issue, it became clear that the commissioners are not authorized to make these kinds of appropriations under the Second Class County Code, and that such transfers of taxpayer dollars are further prohibited by provisions of the Pennsylvania State Constitution.”
Shapiro said the law authorizes the county to enter into formal contracts with these organizations, to deliver those services and programs that the county would otherwise provide.
“This is in keeping with what I and the other commissioners have said since we began this budget process – that the county must focus its limited resources on providing the core services of government,” Shapiro said. “That is why we have worked closely with several of these organizations over the past few weeks to do just that.”
“Through these contractual arrangements, the county will be positioned to provide these vitally important services in a more targeted, constructive, and transparent manner, all while operating within the framework of the laws of our Commonwealth.”
Shapiro detailed six other highlights of the budget.
He also reiterated that the budget adopted was in many ways dictated by the “mess” that the previous administration created, including:” a $10 million budget shortfall that necessitated immediate cuts; county government buildings that were crumbling and will take at least $50 million to fix; an emergency radio system that will require at least $45 million to upgrade; and the need to borrow money our first month in office just to make the initial payrolls and pay operating expenses.
“If we fail to make these tough choices now, we will simply perpetuate a broken system that costs taxpayers more while giving them less,” Shapiro said. “In other words, these cuts are necessary in order to meet the County’s core responsibilities to our constituents. Notwithstanding the challenges, let me be clear—we are moving in the right direction. We effectively managed the short-term crises and now with this budget we establish a positive, long-term path forward for our county.”
Help for agencies
The following is a list of contracts approved by the commissioners with agencies that lost their earmarks in the new budget:
• A contract, not to exceed $200,000, with Legal Aid of Southeastern Pennsylvania for assistance with housing-related legal matters
• A contract, not exceed $70,000, with Legal Aid for case coverage assigned by the courts to represent lower income parents in Juvenile Court and Parental Terminations in Orphans/Juvenile Court
• A contract with Montgomery County Child Advocacy Project (MCAP), not to exceed $20,000 for case coverage assigned by courts for child advocacy
• A contract with the Women’s Center of Montgomery County, not to exceed $10,000, for assistance with Protection from Abuse Orders.
–Source: Montgomery County
Now that the public knows Montgomery County has issues with bridges and infrastructure, the county decided to take matters into its own hands.
In the latest commissioners’ meeting, the county approved a $146.5 million capital budget that would help in the next five years of fixing major issues.
The problems that the county faced couldn’t be ignored anymore. Even the building that meetings and county employees work in has major infrastructure problems. These problems didn’t come overnight, though.
“I know when we were here just last week on our 100 days [meeting] we all said that we had reviled some surprises that we did not expect and many of us said that we knew that there will be more,” said Vice Chairman Leslie Richards.
Just last week, the commissioners learned that the Main Street garage would need more than $6 million in repair.
County Chief Financial Officer Uri Monson presented a detailed presentation of the problems, which included pictures of what water damage has done to the buildings.
“I think it’s obvious that our problems are big and comprehensive and need immediate attention,” he said. “It is just so obvious with these pictures what our issues are. They really need immediate attention. Putting these costs off will only make it more and more expensive.”
Commissioner Bruce Castor, who has voiced his opinions lately with how prior administration dealt with money, stated that something should’ve been done before the building was purchase.
“Somebody decided to buy this building without making sure it was sound,” he said. “Somebody made decisions on how to spend tens and millions of dollars to repair things that didn’t need to be repaired in order to address the immediate problems such as the water damage.”
The county purchased the building for $26 million in 2006. Monson can’t find record of the county inspecting the building before purchase.
“There is no record of one being done by an outside consultant, I don’t know if there was one done by internal public property whether to advice the commissioners at the time,” said Monson.
As for the bridges, the budget is expected to address the huge problem the county faces. The county has 26 bridges, which are considered posted, which means there is a weight limit placed on the bridge because the bridge isn’t functioning in the capacity it was meant to function in.
Seven county bridges are closed, while 75 bridges are over 60 years old, which equals out to 73 percent.
“I also think It is prudent that we invest in our own assets and that is a huge priority of our administration here and it is really what this capital budget sets out to do,” Richards said.
As of Jan 1, the county is $418 million in debt. Munson wants to shed the debt to about $390 million at the end of the year.
“This is meant to be a living working document,” Munson said. “It is a plan of what we know today. Things will change.”
“As a taxpayer, I am angry, angry that [the prior administration] ignored the problems, that they had misplaced priorities that will end up costing us more money down the road,” said Commissioner Chairman Josh Shapiro.
As usual, Castor let the board know that there are still tough times ahead, even though they are heading into the right direction.
“Unless we know how to create money from no where, we are going to be making some very difficult decisions,” he said. “Even though we are only in April, the public has to know that.”
Now that school has ended for the summer, the last thing students are concerned about is the tuition that will be due in the next coming months.
For Montgomery County Community College students, they may want to start saving now because the county may not be able to fund what they promised to the college. After looking at the financial issues of the county, county Chief Financial Officer Uri Z. Monson recommended that the county slash annual allocation to the county by roughly 25 percent.
“Based on analysis, I indicated that if I were forced to make a recommendation now, it would be that the 2013 county budget would fund the college at an amount of $15,766,25 — a 25 percent reduction from the 2012 funding level,” Monson said.
The county commissioners will most likely follow Monson’s recommendations.
“We have said many times that based on the situation we inherited that choices were coming,” said chairman Josh Shapiro. “The three of us are preparing to make those choices. This is the reality of the times. We are not singling out the college but it just so happens we have to give the college some information at this time for their budget.”
Monson stated he would look for additional revenue to help fund the college. Some students may face more than a $4-per credit increase.
“While I am hopefully that the efforts the county is undertaking to reduce costs, increase efficiencies, and develop new revenue streams will change the county’s fiscal outlook, this is the reality facing the county at this time,” Monson said.
Though the budget is not set in stone, students should prepare.
“When you told us what we realistically could do to fund the college, it was heartbreaking for me hear that that and in no way reflects our opinion of the college,” said vice chairman Leslie Richards. “Every time I walk on the campus, I am proud of it. We fully believe in everything that the staff does. I just want to state this is just a realistic accounting of where we stand today, in the middle of 2012 putting our budget together and this is the numbers we can realistically fund.”
The county is also in the beginning stages of significantly ratifying its budget. County officials stated numerous times cuts to important services will be made and this may just be the first of many.
“These are the realities of the times, but the commissioners here are ready to make the decisions in a very thoughtful and careful way,” Shapiro said. “I want to make it clear that we are not singling out the college. As we go forward with the zero-based budgeting process, you can expect tough choices to come.”
It is official. It will cost more to attend Montgomery County Community College this upcoming semester.
The college adopted its budget for the school year, which includes an 8 percent increase in tuition for students.
Just a month ago, county commissioners announced they would cut more than $5 million to the college. The commissioners received a recommendation from Chief Financial Officer Uri Z. Monson.
Monson and his office have looked at every expense from the county, trying to figure out what will save money for the financially-troubled county.
“We work on a calendar budget as you know,” said chairman Josh Shapiro. “The college works on a fiscal year budget. In the past, commissioners, at times through a letter from the chair to the community college president, indicated what the commissioners would be providing in the budget and at other times, would pass a resolution and say what they would be doing.”
The prior administration did stress how important it was to not cut money in the middle of the school year. Now with school out for the summer, the new administration stepped in and told the college early that they would be funding the school with much less than usual.
“Our CFO provided a letter to [college president] Dr. Stout based on his recommendation for he would recommend to the commissioners when we do our budget in December,” Shapiro said.
While working on the new budget, the county could give more money next year. Right now the county contributes less than 20 percent of the college’s overall budget.
“We were serious when we said cuts were going to be made,” said Shapiro. “We are not singling out the community college. It just so happen that they needed some direction from the commissioners at this time relative to the timeline that they passed the budget.”
The new operating budget, slightly more than $72 million, calls for an increase of $9 per credit plus a $1 increase in fees. A three-credit course is now $405.
The county recently decided to give its county workers a raise that was promised to them.
“We have begun our zero based budgeting process which in no doubt yield savings and further cuts and it is just a reality of times that we are in,” said Shapiro. “We believe collectively that investing in the community college is an important thing to do, but we are also constrained by the fiscal realty of today and the situation that we inherited and that leaves to tough decisions that needs to be made.”
The higher cost of education still puts the college below most of higher educational institutions in the area.
“Even with the tuition increase the board has passed, they are still below the regional average and below the other regional colleges,” said Shapiro. “It is still a good bargain and still an incredible value for students to attend Montgomery County Community College.”
Montgomery County taxpayers are witnessing something new.
At the last commissioners meeting, officials revealed a quarterly finance report. The current administration has made it a new policy to have quarterly reports concerning the county’s budget.
Last year, a snap shot look at the budget wasn’t released until a few weeks before it was due to pass.
Many residents were upset upon hearing about the numerous services scheduled for elimination. Taxpayers sent e-mails, called county officials, and attended meetings just a few days before any action on the budge was taken.
“The public needs to know that know (about) the borrowing, the fund balance, and the bond rating,” said Commissioner Bruce Castor. “All of those things are all connected so that the residents are not left with the ‘trust us because we are the commissioners;’ that (they) are able to figure out why is the commissioners are making the decisions that they are (making).”
The previous administration was responsible for cutting services they thought the public didn’t need in order to not raise taxes. When residents spoke up, a vote was passed to raise taxes 17 percent.
Today, the county may face a $3.1 million deficit.
“Very tough choices have to be made, and you will see those come out in the coming weeks and months,” said chairman Josh Shapiro. “You are never happy when you face a challenge like that. We are prepared to meet the challenges and we’ll meet them in a thoughtful way.”
According to Chief Financial Officer Uri Monson, the county will see about $30 million in additional revenue from the tax increase that was approved in December. The commissioners said they want to be open about the financial troubles.
“I think it gives residents time to understand it and digest it,” said vice chairman Leslie Richards. “I think in the past, a lot of numbers were thrown at people at the end of crunch time when all these decisions had to be made. The budget is very complex, and you just need time to really understand it and see where we are and see what information we have to base our decisions.”
Also, according to Monson, the county had to borrow $25 million in January to ensure it made payroll. There is the possibility of another tax hike.
Shapiro refused to comment if a tax hike would happen and said, “It’s premature,” to assume there would be one.
“It is more of a snapshot,” said Richards on the release of the budget. “I think we are making great strides and moving in a wise way, given with the issues and the challenges we have ahead of us. Our report today, which we will have several of as we put the budget together, is just helping us get to that zero deficit.”
The county’s money has shrunk significantly since 2007. That year, the county had roughly $95.5 million in reserve, but by the end of 2011, the figure shrunk to about $20 million.
“They [they prior administration] would throw stuff at people and no one understood it, so the easy way to deal with it was to trust their explanation,” Castor said. “Now we are giving the public the building blocks on which we are making the decisions so that they know not only we are making them, but why we are.”
Budget talks are always a hot issue in Montgomery County. Knowing this, the new commissioners in charge wants residents to know they are staying on top of it.
With that said, the county is working hard to adapt to the 2012 budget that has been passed. The problem is that there seems to be a gap.
“When the prior budget was past, we were compiled to make cuts across the board that equaled roughly 10 million,” said chairman Joshua Shapiro. “As we went through that process, the finance officer found numerous areas of concern. I think what he was trying to do was highlight in that memo today.”
The memo that was released in the latest commissioners’ meeting stated that the county has made $7.72 million in adjustments to comply with the budget, but still had close to a $2.24 million gap to fix.
“We were correcting for additional gaps because the prison,” said Chief financial Officer Uri Monson. “You have to staff a new prison, and you have to staff a new judge.”
The budget included money for a new prison, but not money to have the employees in it. Now the new administration is held accountable to find the money.
“We are going to go line by line in the budget and figure out whether or not there are things that the county should be funding and if they are going to be funded what is the proper number,” said Shapiro. “I think you are going to see a lot more of this as we approach the next budget.”
There is also question to how money was spent in the past. Usually $100,000 was spent to pay outside legal fees. The past administration was spending up to $500,000 a year. Monson believes the past administration lied about spending.
“I knew we were hammering money,” said Commissioner Bruce Castor. “I always wanted to know where it was. The other commissioners would say our budget is the same or it is going down. I think those budgets were lies.”
Castor was part of the past administration and stated publicly many times that he was often left out of the loop with budget discussions.
“The other budgets that were presented to the public and to me were not true reflections of the county’s budgetary position,” said Castor. “They were dumb to fool me and the public to think that the county was being managed in a responsible way. I think that this board is going to be faced with some very serious challenges. I think the budgets that you see going forward are going to look a lot different because they are going to be accurate and honest.”
Up to seven employees have already been laid off by the county to compromise with the new budget. The county has also changed many full-time positions to part-time.
“I’ve said this many times. We were dealt a bad hand,” said Shapiro. “We are playing the hand we’ve been dealt. We are making serious choices to make sure taxpayer dollars are accounted for and that taxpayer dollars are spent wisely.”
With a county trying to regain its image after its last chairman was arrested on perjury charges, Shapiro wants to change the culture. Last year, many residents didn’t hear of a budget until it was last minute.
“The next time you hear a fiscal report will not be in November of December when we are trying to pass the budget,” said Shapiro. “We will be doing these updates periodically so that the commissioners have an understanding of what’s going on and so that the public has an understanding of what’s going on."