GIVE YOURSELF
CREDIT
Montgomery County's Council and Executive announced yesterday that after solving the county's structural deficit forever [no giggling, please!], it has managed to retain its decades-long AAA bond rating.
Now, putting aside the obvious - that the structural deficit still exists, and we face a shortfall of at least $900,000,000 next May, no matter what the wishful councilmembers say out loud or to their friends in the local media - the truth is that the "Six-Year Fiscal Plan and New Reserves Policy" had little to do with the rating agencies' decision. And absolutely does not mean that the county is permanently off the hook in the ratings department.
Why did the agencies renew the AAA rating?
They saw that this council is willing to raise taxes to historic levels, in the midst of a near-economic depression, in an election year. The gamble, of course, is that their friends in the media will spin this massive, regressive tax increase for them, so that they can win reelection in September and November, without hardly having to even campaign.
The agencies also must have been very pleased - for now - that this council was also willing to place that massive tax increase squarely on the poor, seniors and working families. Flat, regressive taxes are the wave of the future, as smart tax-and-spend politicians have begrudgingly admitted that you can only get so much money out of "the rich." The solution that's coming - and your county council is actually ahead of the curve on something here! - is these sort of sledgehammer taxes on the poor, seniors and working families. Top liberal minds have been opining on this for years in papers and lectures, while you were struggling to put food on the table and get the kids to soccer practice after school.
Why do I write that the agencies are pleased "for now?"
Because this out-of-control tax policy can't possibly last forever. The council taxed their way out of their budget deadline. If they will pay a price for those tax hikes in September and November is entirely up to the voters, if they can cut through the fog and storm of hyperspin that the local media are stirring up to get these folks reelected.
So let's say they all get reelected on this policy [I said, no giggling!]. And then when we get to next May, and there is a budget deficit of $900M, the council raises all kinds of taxes.
What happens then, is that we will have even less jobs than we have now, and more home foreclosures. More wealthy people will move out of the county. And so will lower-income residents. The result? Lower income and property tax revenues.
You can keep raising those flat taxes on energy, cell phones, etc., but there will be less and less people, and less and less revenue. Corporations won't move here now; why would they move here in a higher-tax future?
So the high-tax, high-spending council method of operation is simply unsustainable. They squeaked by again now, at high price to you, the taxpayer. But we cannot go on in this fashion forever.
The ratings agencies will be back. Bankruptcy will loom.
And that new fiscal policy won't do anything to stop it.
As I mentioned the other day, not only is the new "policy" pure fantasy ("We don't have a shortfall next year. There, I said it! That makes it true!"), but there is the problem that it is not mandatory for the council to follow it.
Paige Hill of the Sentinel wrote that the policy was not mandatory; yet, in yesterday's press release, Councilmember Duchy Trachtenburg said she and the council voted "to require annual contributions to the County's reserves and mandate balanced budgets."
It can't be mandatory and not mandatory!
Also, the county charter already requires balanced budgets; that was not a new development by the council this June.
Can I correct some other things misstated in this press release?
"As stewards of the County's economy [I told you, no giggling!], the Executive and the County Council have shown real leadership [OK, I guess you're justified in giggling by this point] and a vision for the future by building our reserves and clearing a path towards balanced budgets."
- Duchy Trachtenburg
Not only has there been no leadership, and no vision, but the council has not built its reserves; the non-mandatory plan does not increase reserves until later in the decade! And even if it was mandatory, how could we afford 10% reserves when we couldn't afford 6% now as it is?
"The plan seeks to match expenditures to available revenues without any drawdown of reserves ...and result in a larger reserve for the County, and less spending on government agencies."
Guess what? All of the existing "bills" that were due this year, are all due again next year for the county budget. They will have to be paid. They total about $900,000,000 right now, before storm cleanups, disasters and the teacher pensions that will be returned to the county by the state.
You can't just "will away" a $900M deficit!
Welcome to the real world.
Watch a video message from a candidate for the County Council At-Large who is prepared to implement a fiscal plan that actually cuts spending, and fundamentally restructures government:
http://www.youtube.com/watch?v=Nnvmm1YNWfM
Then, please consider emailing the video to 10 of your friends who live in Montgomery County. 10 people who have to manage their own financial affairs in real world circumstances, and know that the county must begin to do the same.
We can't go on like this!
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