AGENDA ITEM #5
May 20, 2010
Action
MEMORANDUM
May 18,2010
TO:
FROM:
SUBJECT:
County Council
Amanda Mihill, Legislative
Analys~
Action: Expedited Bill 33-10, Finance
Amount
Working Families Income Supplement
.
,
Management and Fiscal Policy Committee recommendation
(2-1):
enact Bill 33-10 with an
amendment to allow the Council to approve an amount for the credit as part of the annual
operating budget or another Council resolution.
Expedited Bill 33-10, Finance Working Families Income Supplement Amount, sponsored by
the Council President at the request of the County Executive, was introduced on May 4, 2010. A
public hearing was held on May 11 at which a representative of the Executive testified in support
of Bill 33-10.
Background
As introduced Bill 33-10 would reduce the Working Families Income Supplement to 67% of any
refund an eligible recipient receives from the State-Earned Income Credit Program. In his
transmittal memorandum, the Executive estimates that the average earned income tax credit
payment would be $530 in FYIl. If the Council enacts Bill 33-10, the Executive estimates that
the average payment would be reduced to $353. The Executive estimates that this action would
reduce FY11 expenditures by $5,394,100 (©4). At its May 11 worksession on the Working
Families Income Supplement Non-Departmental Account, the Council placed $5,394,100 on the
reconciliation list to fund the full amount of the supplement.
Committee recommendation
The MFP Committee held a worksession on Bill 33-10 on May 6 and recommended (2-1)
approval of Bill 33-10 with the following amendment:
The amount of the Working Families Income Supplement paid to each recipient
must equal [the amount] [[67%]] the amount of any refund the recipient receives
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from the State earned income credit program or another amount approved in the
annual operating budget or a Council resolution. [[The Executive, by regulations
issued under Method (1), may increase the amount of the Supplement.]]
This language would retain the amount of the supplement at equal to the State earned income
credit, but would also provide the Council flexibility to determine a different amount by
resolution. The Council would also not have to enact legislation if the Council wants to adjust
the amount of the supplement in the future. Councilmember Ervin opposed Bill 33-10.
This packet contains:
Expedited Bill 33-10
Legislative Request Report
Memo from County Executive
Fiscal Impact Statement
Public hearing testimony
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Expedited Bill No.
33-10
Concerning: Working Families Income
Supplement-Amendment
Revised:
5/7/2010
Draft No. __
2_
Introduced:
May 4,2010
Expires:
November 4,2011
Enacted: _ _ _ _ _ _ _ _ __
Executive: _ _ _ _ _ _ _ _ __
Effective: _ _ _ _ _ _ _ _ __
Sunset Date:
_---:-:~-:------
Ch. _ _, Laws of Mont. Co. _ __
COUNTY COUNCIL
FOR MONTGOMERY COUNTY, MARYLAND
By: Council President at the Request of the County Executive
AN
EXPEDITED
ACT to:
(1)
amend the amount paid to recipients under the Working Families Income Supplement
Program; and
(2)
generally amend the Working Families Income Supplement Program.
By amending
Montgomery County Code
Chapter 20, Finance
Article XIV, Working Families Income Supplement
Section 20-79
Boldface
Underlining
[Single boldface brackets]
Double underlining
[[Double boldface brackets]]
* * *
Heading or defined term.
Added to existing law
by
original
bill.
DeletedJrom existing law
by
original
bill.
Added
by
amendment.
DeletedJrom existing law or the
bill by
amendment.
Existing law unaJfocted
by bill.
The County Council for Montgomery County, Maryland approves the following Act.'
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ExPEDITED BILL
No. 33-10
1
Sec.
1.
Section 20-79 is amended as follows:
20-79. Amount of Supplement.
2
3
4
The amount of the Working Families Income Supplement paid to each
recipient must equal [the amount] [[67%]] the amount of any refund the recipient
receives from the State earned income credit program or another amount approved
in the annual operating budget or a Council resolution.
[[The Executive, by
5
6
7
regulations issued under Method (1), may increase the amount of the
Supplement.]]
Sec. 2.
Expedited Effective Date.
8
9
10
11
The Council declares that this legislation is necessary for the immediate
protection of the public interest. This Act takes effect on the date on which it
becomes law.
Approved:
12
Nancy M. Floreen, President, County Council
Date
Approved:
Isiah Leggett, County Executive
Date
This is a correct copy o/Council action.
Linda M. Lauer, Clerk ofthe Council
Date
o
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Working Families Income Supplement\BiIl2.Doc
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LEGISLATIVE REQUEST REPORT
Expedited Bill
33-10, Working Families Income Supplement
-
Amendment
DESCRIPTION:
This legislation reduces the Working Families Income Supplement to 67% of
any refund an eligible recipient receives from the State-Earned Income Credit
Program. This reduction would reduce FY-11 expenditures by an estimated
$5,394,100.
The County has experienced a severe reduction in revenue and must reduce
its FYII expenditures in order to balance the budget.
The estimated savings of $5,394, I 00 for FYI1 would help balance the
budget.
PROBLEM:
GOALS AND
OBJECTIVES:
COORDINATION:
Department of Finance.
FISCAL IMPACT:
To be requested.
ECONOMIC
IMPACT:
EVALUATION:
To be requested.
Subject to the general oversight of the County Executive and the County
Council.
Montgomery County is one of the few local jurisdictions
in
the nation
that provides a local income tax credit for its residents.
Joseph Beach, Director, Office of Management and Budget.
EXPERIENCE
ELSEWHERE:
SOURCE OF
INFORMATION:
APPLICATION
Applicable in all municipalities.
WITHIN
MUNICIPALITIES:
PENALTIES:
Certain provisions subject to a Class "A" violation.
F:\LAW\BILLS\1033 Working Families Income Supplement\Legislative Request Report.Doc
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OFFICE OF THE COUNTY EXECUTIVE
Isiah Leggett
County becutive
ROCKVILLE, MARYLAND 20850
MEMORANDUM
April 27
~
2010
TO:
Nancy Floreen, President
Montgomery County Council
Isiah Leggett, County Executive
Working Families Income Supplement - Amendment
FROM:
SUBJECT:
Montgomery CountY is one ofthe few local governments in the nation that
provides a local earned income tax credit (EITC) for
its
residents. This prograni, which began in
FYOO at a cost of$2.2 million, was based on matching the State's refundable EITC which, at that
time, was 10% of the federal EITC. Participation in the program included 12,322 total recipients.
Since that time, the State match of the federal EITC has grown to 25% at an estimated cost in
FYII of$16.2 million to
be
paid to 30,505 recipients. The average BITC payment has grown
from $178 from FYOO to an estimated $530 in FYI 1.
In order to respond to the current fiscal crisis, I am reluctantly forwarding with
this memorandum legislation for Council consideration that would reduce this payment by 33%.
This reduction would create an estimated savings of $5,394, 100 and would change the average
EITC payment to $353, which is approximately the level this payment was at
in
FYOS.
As the Council is well aware, the County has experienced a severe reduction in
revenue and must reduce its FYI1 expenditures in order to balance the budget.
If
enacted, this
legislation will assist in balancing the FYIl budget.
IL:tjs
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c....c.
056854
OFFICE OF MANAGErvIENT AND BUDGET
Isiah Leggett
County Executive
NAN
LL
S'6f
AM
Joseph F. Beach
Director
MEMORANDUM
May 11,2010
TO:
FROM:
SUBJECT:
Nancy Floreen, President, County CqpnCif'
Joseph F. Beach, Director
,~"/".'~.
Expedited Bill 33-10, Fini9be - Working Families Income Supplement - Amount
The purpose ofthis memorandum is to
transmit
a fiscal impact statement to the Council on
the subject legislation.
LEGISLATION SUMMARY
This legislation amends Chapter
20,
Finance ofthe Montgomery County Code with respect
to Article XIV, Working Families Income Supplement. The purpose of these amendments is to reduce
the amount paid
to
program recipients by approximately 33 percent. This action is needed as the County
has experienced a severe reduction
in
FYI0-11 revenue and must reduce its tax supported FYI I
expenditures
in
order to balance the budget.
FISCAL SUMMARY
This legislative revision would provide futUre fiscal year, and beyond, operating budget
cost savings. Specifically, this change would produce an
FYl1
estimated operating budget savings of
$5,394,100
by reducing the average
Earned Income Tax Credit
payment
$177
per
program recipient; from
$530
to
$353,
which is approximately the level this payment was at in
FY05.
The
following contributed to and concurred with this analysis: Bryan Hunt, Office of
Management and Budget, and Robert Hagedoom, Department ofFinance.
JFB:bh
c: Kathleen Boucher, Assistant Chief Administrative Officer
Dee Gonzalez,Offices ofthe County Executive
Jennifer Barrett, Director, Department ofFinance
Robert Hagedoom, Department ofFinance
John Cuff, Office ofManagement and Budget
Office of the Director
101 Monroe Street,
Floor' Rockville, Maryland 20850 • 240-777-2800
www.rnontgornerycountymd.gov
@
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Testimony: Expedited
Bill 33-10,
Finance - Working Families Income Supplement­
Amount
Good afternoon, I am Karen Hawkins, Chief Operating Officer of the Department of
Finance, and I am here to testify on behalf of County Executive Isiah Leggett in support of
Expedited Bi113
10 Finance
Working Families Income Supplement - Amount.
This legislation will amend the amount of the Working Families Income Supplement paid
to each recipient, as recommended by the County Executive in his amendments to the
Recommended FYI1 Operating Budget, and specifically in a memo dated April 27, 2010.
In
order to respond to the current fiscal situation, the County Executive reluctantly forwarded this
legislation for Council consideration, which would reduce the payments under this program by
33% and create an estimated savings of$5,394,100 in the FYll budget. In making this
recommendation, the County Executive is cognizant of the impact of this action on County
residents. This action would change the average EITC payment to $353, which is approximately
the level this payment was at in FY05.
The Executive reached this decision only after making extensive expenditure reductions
in the County Government tax-supported budget, and after the revenue outlook for FYI 0 and 11
deteriorated significantly, requiring an additional round of expenditure reductions and revenue
raising measures to balance the budget. If enacted, this legislation will assist in this effort.
We urge the Council to approve this legislation.
May 11,2010