Newsletter subscribe

Chairman's Message

Paying the “Montgomery County (Higher) Price”

Posted: September 7, 2013 at 8:33 pm   /   by   /   comments (0)

markUncaphernewFor anyone doing business or living in Montgomery, the added expense of the county’s costs must be taken into account. This is in effect the “Montgomery County Price.” Our cost structure is the exact reverse of the so-called “China Price,” which has so dramatically driven economic growth in that country.

A recent Washington Post story highlights the “Montgomery County Price” for new construction permits. A real estate developer considering plans for a 365 unit, $40 million apartment complex was faced with the cost of the Montgomery County building permit: roughly $1.1 million. The same permit for an identical project in Gaithersburg would cost only about $400,000. Across the river in Alexandria, the “permitting fee” would be only $300,000.

The increased cost of paying for Montgomery County inspectors to check on construction quality adds an extra $2,000 for each housing unit being built. This effectively adds at least an extra $15 a month rent for each apartment, forever.

The response of Diane Schwartz Jones, director of the Montgomery Department of Permitting Services to complaints about the higher costs illuminates the attitude of many County officials. She was quoted by reporter Bill Turque in the Washington Post as complaining about developer community “bullying” because they questioned Montgomery’s costs as not being in line with other jurisdictions. Jones’ response speaks volumes about the arrogant “we know best” mindset that residents and businesses face when dealing with the County. After all, how dare the public question why the County charges three times as much for the exact same government ‘service’?

Our county’s restaurant owners face another example of the “Montgomery County Price,” our archaic county liquor distribution monopoly. By law, Montgomery County is our only legal distributor of all beer, wine and alcohol. As a result commercial distributors first must deliver their product to the County’s central warehouse and then County employees take beer, wine and liquor to any bar, restaurant or retailer selling alcohol. In most other jurisdiction, such as Washington DC, bars, restaurants and retailers can deal directly with distributors. Our county expects its cut as an extra middleman.

According to many accounts, Montgomery’s Department of Liquor Control or DLC is about as customer friendly and efficient as one would expect of a government mandated monopoly. Restaurant owners complain, for example, that “special orders” of items that the DLC does not kept in stock comes with a non-negotiable mark-up. Bethesda restaurateurs find that the price they are charged can be higher than the same product retails for across the District line.

In response, Montgomery’s DLC claims to be competitive with private alternatives. However, tellingly, they are unwilling to give up their unique monopoly status by allowing customers to buy from competing distributors, such as from nearby jurisdictions. This would involve the DLC actually having to earn their customers’ business.

Many small business owners and others with higher incomes face marginal income tax rates which are more than 50% higher than across the river in Virginia. In fact, Montgomery County’s “piggyback” income rate, the tax in addition to the state’s income tax, is higher than a number of other Maryland counties.

County Councilman Marc Elrich is currently proposing another addition to the “Montgomery Price,” an increase of the county’s minimum wage to $12 per hour. Not only is this a 66% increase over the current Federal minimum wage, it is also 30% higher than the highest state level minimum wage, which is Washington State’s $9.19.

If this to goes into effect, many service businesses will find themselves at a competitive disadvantage with their nearby competitors. Their likely response may include reduced hours, increased use of part-time workers and increased use of innovations such as “touch screens” to reduce the workforce size.

Over the past few decades, surrounding jurisdiction, both outside and inside Maryland have consistently generated more new jobs than Montgomery County. In large measure this is the result of the self-imposed additional costs that Montgomery County places on doing business – the “Montgomery County Price.”

Mark Uncapher
Montgomery County Republican Chairman