City Council to Vote on $107M Operating Budget

The Rockville City Council will vote tonight on a fiscal 2012 budget that holds constant the tax rate but does not include a $100 tax credit for homeowners, resulting in a spending plan that amounts to what one council member says is a tax hike. 

Meanwhile, Councilwoman Bridget Donnell Newton and Mayor Phyllis Marcuccio are concerned with the amount of compensation packages and vehicle allowances for the city's senior staff.

The is a $2.3 million or 2.2 percent increase over the current operating budget.

It holds the residential and commercial property tax at 29.2 cents per $100 of assessed value for fiscal 2012, which begins July 1.

Marcuccio, during a May 9 meeting, proposed reducing the tax rate to 28.9 cents per $100 of assessed value but the proposal had no support from the council.

Councilman Piotr Gajewski has also fought in vain for support that has been included in each of the last four budgets. Gajewski suggested cutting $630,000 set aside to subsidize RedGate Golf Course and putting it toward the $1.5 million that the city would need to maintain the $100 tax credit.

"I will not vote for a budget that doesn't include a tax cut," Gajewski said on May 9, the same day he cast the lone vote in opposition to cutting the $100 credit during a preliminary vote on the budget.

"It is important to note that that [tax credit] was given four years ago in the middle of financial crisis in America," Newton said in an interview last week. "The city has to be very careful that we give that rebate to citizens who need it most.”

Newton said that she prefers that the city rely on the state’s Homeowners' Tax Credit Program. The program offers aid to low-to-moderate-income homeowners for residential property taxes.

Under that program, households with gross incomes up to $85,000 per year and a household net worth of less than $200,000 could qualify for tax relief on the first $400,000 of their home's assessed value in fiscal 2012. The credit would also apply to the first $400,000 of assessed value for city residential property taxes.

Newton asked that the council consider a deferred compensation package that is part of the retirement benefit for senior city staff.

The “retirement addition” to the city’s senior staff is “pretty hefty—it’s 10 percent,” Mayor Phyllis Marcuccio said during a May 9 budget discussion.

In all, 13 members of the city’s senior staff receive an add-on equal to 10 percent of their annual salary. Those staff members include the city clerk and city attorney, the city manager and three members of his office, the police chief and the directors of the departments of Community Planning and Development Services, Finance, Human Resources, Information Technology, Public Works and Recreation and Parks.

“We called this deferred compensation, yet the employee is entitled to take it as a lump sum cash payment each year,” Newton said in an interview. “And that to me is not deferred compensation.”

Newton said that by offering the 10 percent add-on the city is being “less than transparent” with taxpayers.

Marcuccio agreed, calling the add-on “an illusion.”

“Why aren’t we not just paying the people the salary we should be paying them, rather than putting this 10 percent package on top?” Marcuccio said on May 9.

The compensation is part of a longstanding contract structure that has “worked well for us,” city manager Scott Ullery said.

“I would not recommend, I would not support, a reduction in the compensation for the executives,” Ullery said. “I think that it is well in line with the marketplace and [cutting it is] not advisable.”

The 10 percent add-on is projected to cost the city $191,000 in fiscal 2012.

Councilman John Britton also opposed cutting the deferred compensation, which is separate from a pension plan or 401K, and is “very common in executive pay," he said.

“That’s how you attract good talent,” Britton said. “It’s done across the board. There is nothing unusual about what we’re doing here. And I’ll stick with what we have.”

Councilman Mark Pierzchala agreed, saying he “fully supported” the compensation packages.

“I think part of the problem is just the language describing it,” Pierzchala said. “It’s not on top of, it’s a part of. It’s a package of compensation that is very common, as John has said, throughout the nonprofit world, throughout the private sector."

Newton and Marcuccio also questioned a $5,400-per-year car allowance that 10 senior staff members receive.

The annual allowance goes to the city attorney, the city manager and three other members of his office and the directors of the departments of Community Planning and Development Services, Finance, Human Resources, Information Technology and Recreation and Parks.

There was no opposition to giving take-home vehicles to the two senior staff members who receive them: the chief of police and director the Department of Public Works.

But Newton said that if Rockville calls itself a “green city” it should talk about the value of the vehicle allowance for other senior staff.

“In my opinion it’s something that we should be discussing,” she said in an interview. “Just how much driving are these city employees doing?”

Newton said that she would bring up the compensation and vehicle allowance issues “in the context of several other concerns I have about the budget. But I will be voting for the budget because I believe budgets are compromises.”

The council also is expected to reject a recommendation by the city’s Compensation Commission that the mayor and council receive pay increases under a resolution approved in 2009 that pegs pay hikes to the annual increases in the consumer price index.

The index has increased by 1.6 percent in each of the past two fiscal years. The increase would cost the city about $3,500. The mayor’s pay would increase from $25,750 today to $26,580. Council member’s pay would increase from $20,600 today to $21,264.

The mayor and council rejected the recommendation early in the budget process without ever giving it serious consideration.

Correction: The original version of this article incorrectly stated the final amount of the operating budget considered by the City Council. Rockville Patch regrets the error.