A relatively small number of wealthy families have had a significant impact on Montgomery County’s finances, outgoing executive Isiah Leggett (D) said on Monday, and he warned that residents better understand the “ripple effect” high-income people have in the day-to-day operations of Maryland’s largest subdivision.
The three-term executive, who leaves office in less than a month, said that a few dozen super-wealthy residents blew a nearly $80 million hole in the county’s budget projections simply by following the recommendations of their financial advisers.
“As the Trump administration started to talk about a change in federal tax policy, the tax advisers for many people around the state told them, ‘Do not take capital gains, do not sell your business [or] your stock, do not do any of those things. Wait until the next year because next year you’re going to get much more favorable treatment as a result.’” Leggett said.
The impact, he said, was a drop in income tax receipts, a phenomenon that also took place in Howard, Talbot and Baltimore counties, which are among Maryland’s other wealthier jurisdictions.
“The number of people who caused that $79 million problem was about 50 people, because they are very wealthy,” Leggett said. “One of the challenges in the county we have now is keeping those very wealthy people [here].
The county executive made his comments at the Tastee Diner in Silver Spring, where he was the featured speaker at the November meeting of the District 18 Democratic Breakfast Club, a gathering that included County Councilman Marc B. Elrich (D), who will be sworn in as Leggett’s successor on Dec. 3.
Leggett framed his comments as part of a broader discussion about growth in Montgomery County, a debate that has raged on and off for decades. “This is why it is so important that we bring people together,” he said.
Leggett urged the county’s leaders to figure out a way to accommodate people with differing views, to avoid having even more wealthy people opt for greener pastures elsewhere.
“The wealthy play a very disproportionate impact. So when people like [Washington Redskins owner] Dan Snyder say, ‘I’m getting ready to move to Florida,’ I’m going to go and try to bring him back.”
“We can’t afford to lose large sums of very wealthy people.”
Leggett’s comments echo, at least in part, those made by regional economist Anirban Basu over the summer. Basu released a report during the Democratic primary showing that the number of wealthy residents in Montgomery County is on the decline, while the number of lower-income people is on the rise.
Leggett spoke and took questions for nearly an hour on a range of topics, including the midterm elections.
Among the highlights:
— While Democratic gubernatorial hopeful Benjamin T. Jealous might have “closed the gap, maybe” with “a better campaign,” Gov. Lawrence J. Hogan Jr. (R) was always going to be tough to unseat. He cited Hogan’s ability “to separate himself from [President] Trump” and his fundraising. “He had more money than God,” Leggett, a former state Democratic chairman, said.
— Despite recent news reports about Amazon’s HQ2, Leggett isn’t convinced Montgomery is out of the running. “I’m not sure they’ve made a decision. The whole article about Crystal City [winning the competition] I keep reading in the Washington Business Journal. The Washington Business Journal, the last time I checked, is located in Crystal City.”
“I am hopeful. It’s a battle. … If it’s located anywhere in the Washington region, we all will benefit.”
— Montgomery County should embrace the governor’s plan to widen the Capital Beltway (I-495) and Interstate 270, even as homeowners near the two roads raise questions about where engineers will find the needed land — and whether eminent domain will be needed.
“The governor of the state is now willing to put more money into it, and you can build off of that. My approach would be ‘fight the details when the details are presented.’ … I would rather say, ‘put the money in, let’s work out the details.’”
— Democratic victories in Howard and Anne Arundel, where two incumbent Republican county executives fell, were impressive given the numbers Hogan put up in those counties.
— Traditional media endorsements don’t have the “impact” they used to, and social media are a growing force in swaying and mobilizing voters. “If you received in the past the Journal newspapers and the Gazette newspapers and then The Washington Post… those endorsements basically sealed the race for you. … Social media now plays an extremely important role.”
Though he didn’t mention by name county executive hopeful Nancy M. Floreen (I), who was backed by the Post, he did note that Elrich’s 64 percent of the vote exceeded his own prediction by about 5 points.