"We're not talking about cutting dessert here. We're talking about cutting meals."
Those were the words of Montgomery County Financial Director James Maza, as he briefed the county commissioners on what would need to occur in order to overcome a $44 million budget shortfall going into next year.
Joined by county CFO Randy Schaible and other finance department leaders, Maza presented the commissioners with ten possible options to help balance next year's budget, including the elimination of appropriation funding to the library, community college and mass transit, as well as the elimination of certain county departments including the parks and recreation deparment, the planning commission, the health department and courthouse security.
"We picked these departments to show the kind of damage that needs to be done to get to the numbers that Randy [Schaible] is suggesting," said Maza, as he addressed the commissioners. "The mandates and the loss of the quality suggest that it's unacceptable, but if it can't be paid for, it ends anyway."
Even if the specified departments were to be eliminated, the total savings would only be $12.8 million, and the county would still have to shave off another $31.2 million to balance the budget. Furloughs and salary reductions for county employees remain a possibility, as a 10 percent salary reduction would net $13 million and the county can save $425,000 for each furlough day.
The county currently has $24.5 million in capital reserves, but those reserves are needed to maintain the county's triple-A credit rating. One possibility would be to decrease the reserves to $10 million, but that would surely result in a credit downgrade by Moody's which would increase the cost of future borrowing.
"(Jerry) Sandusky will be on Sesame Street before I go through this crap," said Jim Matthews, chairman of the county commissioners, regarding the shutdown of departments and services. "It's not going to happen. I'm not going to shut it all down. I'm partly responsible for the holiday that the taxpayers have had from 2005 to—and including—this past year."
Matthews stated he was in favor of the option to increase taxes by 28.6 percent, which would average out to a $130 increase per homeowner.
"From my perspective, the one really gutless thing to do would be to pass this off to the next administration," said Matthews. "If I hand this off and pat myself on the back like a fool, it'll be like I didn't fulfill my oath."
"If I do go for the tax increase, then it's 'What are you getting from the next administration?'," Matthews continued. "Either way, if it's in favor of keeping these institutions going and the fine civil work that they do, I'm not going to cut them off at the knees."
Tax increases are never a popular decision, but Matthews points out that Montgomery County has the lowest tax rates—by far—when compared to the five surrounding counties.
According to Matthews, Montgomery County taxes are 33 percent lower than Lehigh County, 46 percent lower than Berks County, 52 percent lower than Delaware County, 54 percent lower than Bucks County and 58 percent lower than Chester County.
Matthews added that even with a 28.6 percent tax increase, they would still be lower than any surrounding counties, and the shortfall could be wiped out in one fell swoop without burdening the incoming commissioners.
"We've done nothing but shrink the size of our government over the past six years, but in retrospect, we shouldn't have provided the holiday over the last few years," said Matthews. "I've made my position clear. It's been a holiday, but the holiday is over."
Commissioners Hoeffel and Castor didn't agree.
"With all due respect, I don't think you have a second vote for a 28 percent increase in taxes," said Hoeffel, adding that the list of options allows for some flexibility outside of a large tax increase.
"I just went through an election where taxes were a critical issue," said Castor. "The results of the election tell me that the public does not want taxes raised, and that the public supported the position taken by the commissioners-elect."
"I think we have to take that into account when we are deciding what we're going to do," added Castor. "We are representatives for the people of Montgomery County, and they have spoken."
Noticeably absent from the meeting were commissioners-elect Josh Shapiro and Leslie Richards, with whom commissioner Castor said he would like to consult regarding the decisions for the upcoming budget.
"I believe that the incoming commissioners need to be consulted about what they think is important from the list of options that we have," said Castor. "I would be very reluctant to support any increases in taxes unless the commissioners-elect are to tell me that's what they want."
According to Hoeffel, both he and commissioner Matthews asked that the commissioners-elect attend the meeting, but they declined.
"The commissioners-elect and their staff were invited to be here today but they chose not to," said Hoeffel. "I think at least their staff should have been here."
The commissioners will post the proposed 2012 budget for public review on November 30th.