New Report on Montgomery County Economic Stats Shakes Up Election Season

By Mark Uncapher MCGOP Chairman

Montgomery County’s election season has been roiled by the release of a report on Montgomery County’s economic performance called “The Coming Storm: How Years of Economic Underperformance are Catching up with Montgomery County.”[1]  

Commissioned by a non-partisan group, Empower Montgomery, the study concludes that: “Montgomery County has already entered a downward fiscal spiral in which debt service gobbles up an ever-growing share of the local budget…Raising taxes to balance public needs with public resources would serve to further accelerate outmigration, slow business formation and impede tax base growth.”

Council President Han Reimer challenged the study’s authors, the Sage Policy Group, as an unreliable source.  And yet, as recently as January, the county found Sage reliable enough to hire for an economic study supporting the county’s application to become Amazon’s second headquarters site.[2]

Drawing on publicly generated data from a variety of sources, the report paints a bleak picture of Montgomery County’s economic trends.  For example, IRS data collected from 2014-15 tax returns show that in that tax year, the adjusted gross income of those leaving Montgomery County exceeded $1.8 billion. Meanwhile, the adjusted gross income of newcomers was $1.4 billion. The result was a net loss of nearly $440 million in adjusted gross income in just one year.

New business creation in Montgomery County has ground to a halt:  

• Between 2011 and 2016, the county added just 6 net new establishments. During that same period, the number of business establishments in Maryland increased by nearly 6,300;
• The county was home to fewer jobs in 2016 than in 2006 despite the addition of 11,603 government positions;
• These trends contrast with 2001 to 2004 when Montgomery added 1,841 net new business establishments

Montgomery County’s job creation lags the rest of Maryland:

• From 2001 to September 2017, Montgomery County added 26,459 jobs, a 6.0% growth in the number of jobs.
• Over that same period, Maryland’s total employment expanded by 12.2% and the nation added 10.7% to its job totals.
• So, despite representing approximately one-sixth of Maryland’s population and a quarter of its household income, Montgomery County created fewer than 1 in 10 net new Maryland jobs between early 2001 and the fall of 2017.

Comparisons with the balance of the Washington metropolitan area are also revealing:

• Between 2001 and 2016, total employment in the Washington metropolitan area expanded by 393,048 jobs or 14.6%.
• In percentage terms, Montgomery County ranked 20th among 24 Washington metropolitan area jurisdictions in terms of job growth with employment expanding just 3.1% over 15 years.

Not so affordable housing:

• Despite a significant amount of apartment construction in recent years, the number of residential building permits issued in Montgomery County has been soft by historic standards in recent years. The county’s share of permits issued in Maryland’s D.C. suburbs has generally declined since 2012.
• In part, the lack of construction of single-family housing is due to restrictive zoning, but it is also attributable to sky-high development impact fees that amount to as much as $45,000 for a single-family detached unit.

Growing Debt:

• The county has been using debt to help balance financial wherewithal with need. From FY2016 to FY2017 it grew by $31.6 million, the largest annual net increase in any of the last 7 years.
• Montgomery County had tallied $5.9 billion in outstanding debt by FY2016. The level of debt was up 6.1% on an average annual basis from FY2012-FY2016.
• On a per capita basis Montgomery County’s debt amounts to $5,647 per person, 58% higher than the statewide average of $3,575.

If the definition of insanity is doing the same thing over and over and expecting different results, then electing a candidate this year from the architects of these trends makes no sense.  Montgomery County needs a new direction.

[1] See  Sage Report on the Coming Storm   For more about Sage, see Sage Policy

[2] The State of Maryland and Montgomery County commissioned Sage Policy Group, Inc. (Sage) to analyze the economic and fiscal benefits associated with the potential development of Amazon’s second headquarters (HQ2) within the county.  See Sage Policy Report Re: Amazon