DV Journal

Montgomery County commissioners’ vote to raise taxes and give themselves a pay hike was a “gut punch” for taxpayers, a fiscal watchdog group said. But local Democrats dismiss the complaints as political theater.

During a special meeting last week, commissioners approved hefty pay raises for themselves and most row officers, even as taxpayers face an eight percent property tax hike. It is expected to result in $32 million more in property taxes paid by residents. It was the third consecutive year of property tax rate increases.

The board’s two Democrats, Dr. Valerie A. Arkoosh and vice chairman Kenneth Lawrence Jr., voted for the pay increase while the lone Republican, Joe Gale, opposed it.

Gale chastised colleagues for recklessly spending public money, saying they should be trying to provide relief for property owners.

Likening it to the “infamous midnight pay raise” state legislators gave themselves in 2005, Gale claimed the county was jamming the salary increases through “under the cloak of darkness.” But the county solicitor pushed back, saying the measure was required by law to be considered at a separate evening meeting between 6 and 9 p.m. when more residents would have a chance to share their opinions on it.

“I think it’s a bunch of bulls**t, and I think it’s absolutely wrong. And it is insulting to the general public,” Gale said. “The optics of this are terrible.”

Boards of Commissioners are empowered to set salaries for all elected officials except the district attorney.

Montgomery County’s chief financial officer Dean Dortone defended the salary increases, saying they were the first pay hikes for commissioners in 14 years and bring the county in line with what elected officials are paid in nearby counties.

On January 1, 2024, when the pay raises take effect, commissioners’ salaries will jump up from $87,600 to $98,200. The board chair’s salary will go from $90,900 to $101,800.

In each subsequent year, those salaries will increase by a percent less than the raises provided to “non-represented” employees, Dortone said.

Bucks and Chester Counties anticipate paying commissioners $103,900 and $97,500 in 2024 while their chairs also make slightly more.

Montgomery County row officers will make nearly $10,000 more in 2024, up to $88,700, while the register of wills gets $91,400, officials said at the meeting.

The Commonwealth Foundation, a free market think tank, condemned the commissioners’ actions.

“Montgomery County families need a break,” Nathan Benefield, senior vice president of the group told DVJournal. “Saddling families and small businesses already struggling with higher gas prices, higher electric bills, higher grocery costs, higher interest rates, and higher costs for services with higher property taxes is just another punch in the gut. Commissioners should instead focus on ways to reduce out-of-control government spending to protect working families from the burden of a massive tax hike.”

Gale, who ran an unsuccessful bid for governor earlier this year, vowed he would not accept any raise if he is still in office when it goes into effect, promising to donate any excess salary to a pro-life group. He also proposed tabling the measure, but his motion failed.

Gale’s fellow commissioner Lawrence mocked those complaints, claiming the Republican commissioner knew well in advance the board was voting on the salary increases and told him to “stop with the dramatics.”

“The Oscar goes to Commissioner Gale for self-righteous indignation,” Lawrence said.

Gale thundered back he was “shocked” by his colleagues’ actions and told them they should be ashamed of themselves.

“Use your indoor voice,” Lawrence taunted Gale.

The county will vote at the Dec. 15 meeting on the proposed 8 percent property tax increase for the fiscal year 2023 budget.

Projected general-fund revenues for the year are $512.1 million – with more than half of that amount being raised through property taxes – compared with more than $530 in anticipated expenditures, according to budget documents.

Those living in single-family homes with a market value of $430,000 can expect to pay $722 in property taxes when factoring in a $53 increase to account for the tax bump.

Dortone said at a previous meeting the COVID-19 pandemic and Hurricane Ida teamed up to produce the “perfect storm” of financial woes for the county, which faces its most challenging fiscal situation over the last half-decade.

Ida resulted in $24 million in “unanticipated” costs for cleanup and recovery, according to budget documents.

However, the county received more than $161 million in American Recovery Plan Act funds alone, in addition to millions in additional federal and state COVID-19 aid.

Some residents who spoke during public comment rallied to Gale’s defense, saying he seemed to be the lone public official “fighting for us” amid proposed tax increases.

“How are we supposed to put food on the table? How are we supposed to pay our bills?” one woman said. “You’re supposed to be working for us, not the other way around. I’m at a loss for words.”

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Internet connectivity is essential in an increasingly digital world. That was no more evident than when the world shut down at the height of the coronavirus pandemic. The ability to be online and remain connected was not optional but vital to living during that time. Thus, it makes sense why policymakers and experts are trying to find ways to ensure internet connectivity is spread as far and as widely as possible today.

Unfortunately, many of those thought leaders have proposed tax hikes on big tech companies as a way of reaching this goal. The idea centers around a proposal outlined by Federal Communications Commission (FCC) Commissioner Brendan Carr in a May 2021 op-ed piece. Carr called for major tech companies to be forced to pay fees to fund the Universal Service Fund (USF) to fund internet infrastructure projects and to promote affordable access across the country. The proposal received some traction then and is still circulating, especially as opinions surrounding tech companies have become more polarized.

The argument goes that since a select few tech companies account for a disproportionately large amount of web traffic, they should have to “pay their fair share” to keep the internet up and running. Presently, traditional telephone services pay for that through fees that are imposed on consumers’ monthly telephone bills.

As with most arguments that rely on the “fair share” fallacy, that doesn’t tell the whole story. First, big tech companies are already investing in building out more internet to unserved parts of the country – and the world – precisely because of how much they rely on it. That sort of investment cannot just be hand-waved away because it’s not part of USF.

There is also no hard-and-fast way to ensure the tax on big tech companies will not get similarly passed on to consumers. Any time a tax is increased on a business, the company will have to compensate somewhere. That would likely involve price hikes in some, way, shape, or form. Not only would such a “big tech tax” damage existing investment and innovation from these companies, but companies would also undoubtedly respond by raising ad prices as well as the price of their various devices and services. All those costs inevitably reach the average consumer, contributing to the inflationary pain everyday Americans are already experiencing.

It is also important to note that funneling money into the USF may be for naught. The USF is on the verge of collapse. Contribution rates are falling and there is a reason policymakers in Congress and the administration are grasping for solutions. The USF – like other government programs – is in dire need of reform and simply throwing more money at will not immediately solve. Taking money away from innovators in the space is one of the more counter-productive solutions available.

Considering the volatility of the tech space, making the USF reliant on skimming big tech revenue could make the program even more unstable. For example, Meta’s market cap has taken a severe hit over recent months, losing billions in value in such a short period as the company’s revenue continues to take major financial hits. It would make very little sense to tie a vehicle like the USF to companies whose prospects can shift so drastically so quickly. It is a recipe for even more uncertainty in an already unstable program. Imagine tying the fate of the USF to companies like MySpace and Yahoo just a few years ago. The consequences would have been disastrous.

To make the plan viable, the government would have to actively prop up tech companies, creating another new “too big to fail” dynamic. Given the push to fund USF through big tech taxes likely stems out of a desire to rein in these tech companies, the proposal becomes even more counterintuitive. And, given how typical government bailouts work, the American taxpayer would be on the hook for even more cost because of government carelessness.

While delivering high-speed internet across the nation is an admirable goal, reactionary politics going after convenient political targets will never achieve that result. Policymakers need to take a sober-minded look at the USF and come up with reasonable ways to move forward, bearing in mind the interests of taxpayers as well, and potentially working with the companies who also have a clear stake in ensuring the longevity and proliferation of the internet to every corner of America.

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