Fiscal Problems in Montgomery County, PA
Posted: Thursday, October 20, 2011
by Jack H. Schick
Montgomery County, a suburban county adjacent to Philadelphia in southeastern Pennsylvania, has a fiscal problem for next year. The proposed $428.88 million in spending (a $24.9 million increase), exceeds revenues by $42.15 million. The county commissioners have until the end of the year to come up with a plan to balance the budget.
Proposed county spending 2012 represents a 6.17% increase over the balanced 2011 budget, and yields the nearly 10% disparity between spending and income. However, the figures do not include about $25 million in payments the county owes to the employees pension plan that has not been contributed to sufficiently for the past three years. Though not 100% funded, as state law requires, the county claims the plan is not in danger. The commissioners have opted to delay payments, counting on the stock market, where a majority of the money is invested, to rebound to previous levels soon.
One option the commissions will have to act on promptly is the county health benefits program. The period for changes to the program expires in early November. A decision whether or not to increase employees’ copayments must be made. Chairman James R. Matthews is opposed to the proposal. “Clearly we have balanced our budgets for the last several years on the backs of our employees,” he said, citing pay freezes and requiring the county employees to make health care copayments for the first time. Matthews said, “We can’t do that again without having major morale problems.”
The 2012 budget calls for a 3% pay hike for employees. It will cost the county only $4.2 million, less than 10% of the deficit. “It doesn’t make sense,” Matthews said, “to give out pay increases and then take those increases away with an increase in copays.” Commissioner Joseph M. Hoeffel III said that with the large revenue gap “nothing should be off the table.” Commissioner Bruce L. Castor, the only one of the three commissioners up for re-election, did not offer an opinion on the issue.
Another option to address the fiscal problem is property tax increases. To balance the budget, however, the increase would have to be 26.7%. Current property taxes generate about $152 million a year. The proposal must be seriously considered, though Castor would like to delay the decision until after the election.
Montgomery County has joined the County Commissioner Association of Pennsylvania’s campaign to get the Republican lead state government to back off of its crippling austerity binge. A statement issued by the Association pleads with Harrisburg to “prioritize and adequately fund core government services.” It points out that tax and spending cuts by the state simply pass the obligations down to the counties and local communities. There may be a reduction in paycheck deductions, but it will be, more than off set by necessitated increases in county property taxes or government services and wages and benefits to county employees will have to be reduced.
The Association’s statement points out that, for example, “Counties must investigate potential cases of abuse or neglect, and take action to protect children who are in danger. Counties also have the responsibility to care for the mentally ill…” It is apparent that the current state leaders don’t care about the safety and health of children or the mentally ill. Federal and state aid must continue to increase, not be cut back. It is not moral, or in some cases legal, to cut back on “core government services,” and it is not reasonable to expect local counties and municipalities to pay for it all.
Until the opposition party is able to wrestle back control of the state government and more reasonably redistribute state wealth from “richer” counties to the less fiscally sound ones, Montgomery County has few options other than continuing to increase property taxes. This action will affect only the more wealthy people in the county who are well off enough to own a home or other real estate. It will not affect the poor, renters or require county employees to pay a larger health services copay. And, most importantly, it will not require any reduction in the increases in county government spending.
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Top-level comments on this article: (2 total)Since Harrisburg is bankrupt, it isn't likely they will be antying up extra money, and the USA is headed toward a Greece problem of it's own. So my guess is there will be lots more foreclosures next year, in areas where taxes are already too high. The rich won't be rich much longer, as their businesses are failing, and without more jobs, it will soon only be the two classes :the elite, and the lower class. Then what? Great analysis of the problem in Montgomery County, and it will be the same for thousands of counties throughout the country by next year....without new jobs in the private sector.I have trouble not writing my personal point of view in these essays. I try to make it subtle, and non-emotional.
I read an international pundit and writer and investor. He said that the way we are going to "crumble". Not sure if that's the right word -- is that local services will get holes, lapses, breaks in service, limitations of all kinds, slow ups and outright shortages of local services FIRST. He said that local entities will show the weaknesses all along the national array of counties, states, cities and municipalities. I have been wanting to study this on a holistic basis. This is a good reflection. Excellent article.thanks for reading and commenting
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