Rockville’s Budget: Something Has to Give

By Mark Pierzchala, last updated 4/24/14 07:50am

Photo credit Mark Pierzchala  
2 comments · 

This is the 4th of a series of articles by former Rockville Councilmember Mark Pierzchala on how the budget process in Rockville works and how you can be involved in that process. Mark Pierzchala was a Rockville Councilmember from 2009 to 2013 and was known for his budgetary knowledge. During that time he was also on Rockville's Retirement Board and the board of Rockville Economic Development, Inc. He owns a small business and is a member of the Rockville Chamber of Commerce.

Two of the City’s scheduled 4 budget hearings were held on March 31 and April 7. Only a few people testified. At Community Forums I have seen, 2 citizens and 2 police officers advocated pay increases for the City’s Police Department. Mayor and Council held a work session on the operating budget (March 31) and on the Capital Improvements Program (CIP) budget (April 7).

The issues raised so far are not surprising. The need to replace the City’s water pipes and the resulting Water rate and fee increases was raised during the April 7 hearing and by Mayor Newton. The City will consider options for the Water Fund in the fall after a consultant’s report is finished.

Two other issues brought up concern the FY15 proposed pay increase by the City Manager (considered insufficient by the Fraternal Order of Police and the Administrative Employees) and a possible restoration of a $100 property tax credit for owner occupied dwellings (proposed by Councilmember Feinberg).

Both the proposed tax credit and the request for higher pay, considered separately, would force major changes in the City Manager’s proposed budget. Considered together, the two proposals conflict because both reflect large unplanned-for expenditures.

If Mayor and Council wish to fund either or both proposals they have to pay for them. Any tax-rate increase is off the table. Other ways to pay for these proposals ultimately include

  1. program cuts, which imply staff cuts,
  2. increase bonding for capital maintenance instead of using operating money,
  3. put off expenditures,
  4. reduce cash contributions to capital projects which implies more bonding or delay on capital projects,
  5. reduce General Fund transfers to the Parking Fund,
  6. increase revenue projections (which are conservative),
  7. reduce benefits or require larger staff contributions to benefits, or
  8. reduce the City’s cash reserves.

Each has drawbacks and each has impacts on future budgets.

These decisions will be made in late April or early May. In the meantime, there are 2 more hearings and work sessions on April 21 and 28. If history is a guide, we will see care giver agencies giving several presentations at one of these hearings, likely asking for more money.


In this series:

Posted April 24, 2014: Rockville's Budget: Something Has To Give

Posted April 10, 2014: Rockville's Looming Budget Challenges

Posted April 3, 2014: Understanding Rockville's Budget Books

Posted March 27, 2014: Rockville's Fiscal Year 2015 Budget

Filed under Around Town

2 comments

Jim Coyle, May 14 2014 8:26am:

Mark,
Thanks for doing this series on the Rockville budget. The major factor facing Rockville is the increasing costs of urbanization on the City Budget. Without sales tax revenues which are collected for the State in Rockville, the City is not likely going to be able to support its budget and expanding services needs from property taxes and user fees. The recent research reports on the cost/benefit of the Pike Plan support this challenge; the authors discount the costs associated with other than direct services which will fall on the backs of city residents after the Pike redevelops. Can you address this issue?

Mark Pierzchala, May 15 2014 6:26am:

The present Mayor and Council removed the idea of gaining a portion of the sales tax from its legislative agenda. This was done because this would be such a large shift in state practice that a lot of work and coalition building has to be done ahead of time. I personally think that if this idea comes to fruition at all, it will be far into the future. (Note: I had a large hand in putting this in the state priority list.)

I don't necessarily agree with the premise of the question. Costs of urbanization is such an ambiguous term. We will need more police, perhaps, but that would be a direct cost in my opinion, more than covered by any property tax increase. Would we need more infrastructure directly around Rockville Pike (roads, water, and sewer); yes, but that should be a developer cost and would benefit Rockville. What other urban costs are in mind? Which are borne by the City, which by the County, and which by the State? Which costs are better handled in a more dense construction by the Metro stations, and what are the adverse effects of requiring more, not less parking, than the recent zoning ordinance?

Then there is the cost of doing nothing or zoning sub-optimally. Rockville just is not an island, but is surrounded by an urban mass. That's our context and it makes all the difference. We could just let Rockville Pike deteriorate and fix a bigger mess in the future.

I look forward to thoroughly reviewing the Rockville Pike Plan when it finally comes out after 5 years of process.

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