Montgomery County Council Approves Balanced Six-Year Fiscal Plan

County’s First Such Plan Shows Spending Limits Needed to Achieve Balanced Annual Budgets

ROCKVILLE, Md., June 29, 2010—The Montgomery County Council today approved a six-year fiscal plan that outlines the spending limits needed to achieve balanced annual budgets. This is the first time the Council has approved such a plan to help reduce annual budget gaps and lessen the impact of severe economic downturns like the one the County has experienced over the past two years.

The Council also approved by 8-0 votes today measures that would gradually increase County reserve funds to 10 percent of adjusted governmental revenue over a nine-year period. The current County reserve target is 6 percent of total resources.

The six-year fiscal plan was approved today by a 7-1 vote. Council President Nancy Floreen and Councilmembers Phil Andrews, Roger Berliner, Marc Elrich, George Leventhal, Nancy Navarro and Duchy Trachtenberg voted in favor of the plan. Councilmember Mike Knapp voted against it. Council Vice President Valerie Ervin was temporarily absent.

The six-year plan is a snapshot in time that reflects current assumptions for County revenues and fiscal policy. Using these assumptions, the plan achieves balance by limiting the future expenditures of the County’s four agencies—Montgomery County Public Schools, Montgomery College, the Maryland-National Capital Park and Planning Commission, and County Government. The plan will be updated annually and as conditions change.

The plan, which applies to Fiscal Years 2011-16, is based on adherence to established County fiscal policies in future years, but it also makes clear that the Council will make actual decisions year by year.

"The Council's action today is an important step—but far from the last step—toward results-based budgeting and performance accountability," said Councilmember Duchy Trachtenberg, chair of the Council's Management and Fiscal Policy Committee. "As governments at every level—national, state, county and municipality—struggle to rein in spending and find a way to maintain essential services, the urgency of sober and serious fiscal planning is inescapable. As stewards of the County's economy, the Council today has shown real leadership and a vision for the future. When the current crisis is finally past, this fiscal plan will be seen as part of the solution."

The plan attempts to alleviate situations like the one the County faced in preparing an operating budget for Fiscal Year 2011, which begins on July 1. The County faced a budget gap of nearly $1 billion, or about one-fourth of the County budget. Working with the County Executive, the Council approved a range of strong measures to balance the budget, including service reductions, elimination of hundreds of positions, and a pay freeze and furloughs for County employees.