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News Article
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Montgomery County Faces Tough Decisions
Written by Larry Roeder, Editor

Options range from a 28 percent tax hike to drastic cuts in services

        One of the dismal figures to come out of the 2010 Federal Census was that the poverty rate in Montgomery County has risen from 5.4 percent to 5.5. It means that 42,773 residents (up from 40,800 in 2009) of the “Key to the Keystone State” are living at or below the federal poverty rate of $22,350 for a family of four.
        The news coming from the senior Montgomery County officials couldn’t have come at a worse time. As they prepare next year’s budget, a $44.1 million shortfall between expenditures and revenue is projected.
        A combination of items has helped to create the shortfall, among them: government expenditures rose more than $26 million; decreased revenue caused by in increased number of successful property tax appeals; a $4.4 million additional debt service; $2 million to staff the new addition to the county prison; $4.2 million for a 3 percent pay hike to county employees (there have been no pay raises in the last two years); position eliminations are down because of little employee turnover; and an increased number of recipients of county services.
        Estimates back in August, based on the first six-months of 2011, reported that the county could end the year with a $25 million cash reserve. Third quarter figures deflated that estimate to about $20 million. According to the county’s chief financial officer Randall Schaible, the county needs to have, at least, $25 million in reserves to keep its prized Aaa bond rating..
        Among the options to close the budget gap are: a tax increase of 28.6 percent which would raise the average county tax bills by about $130 and produce $44 million in revenue; decrease the county’s projected $20 million in cash reserves by $10 million which would seriously jeopardize the county’s Aaa bond rating and the ability to borrow money at a reduced rate; cutting $6.25 million in appropriations which could result in the closure of the county library, cut legal help for the poor, downsize public transit, and raise tuition at the community college; forgo employee pay increases for the third year in a row to save $4.2 million; furlough county employees, eliminate holiday pay or have employees take time off without pay to save $425,000 for each day; reduce all employee salaries by 10 percent to save $13 million; and save $2 million by not opening the newly built $25-million addition to the county prison.
        Other cost cutting options are: keep the budgets for county departments at 2011 levels to save $5.5 million or save $10 million by reducing current funding levels by an additional 10 percent; and shut down county parks and heritage sites for a $5 million savings.
        Other options include eliminating the courthouse security, the health department, the planning commission staff and reducing public property.   Together they would equal less than $8 million in savings.
        Some of the options border on the absurd while making a point that some form of tax increase, in conjunction with pieces of the other options, may represent a viable alternative. 
        Commissioners elect Josh Shapiro and Leslie Richards have been kept abreast of the budget issues. Shapiro and Richards ran on a platform that included no tax increases and financial reform. They will take office on Jan.1. The current commissioners have been soliciting their opinions and supplying them with information for their transition team.
        Under state law, the new administration will have 30 days after taking office in January to tinker with any finalized budget approved by the current administration.
        Discussions will continue with the administration planning on posting a draft budget on Nov. 30.






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