Nagender’s Interview with Chief Administrative Officer, Richard Madaleno Part-II

Nagender Madavaram discussed with Chief Administrative Officer, Richard Madaleno about his experiences in meeting the challenges during Covid. Madaleno has been serving the County in various capacities for more than two decades. He worked for Montgomery County’s Office of Intergovernmental Relations from 1995-2002. He represented District 18 in the State Senate for 12 years. Prior to being CAO, he was the Director, Office of Management and Budget, Montgomery County. His vast experience in the administration is helping the County in a difficult time. This is the second of a 2-part transcript of the interview which covered the topics of traffic, budget, and efficient governance.


Nagender Madavaram: We have traffic problem and getting worse. There are different opinions to solve the problem including mass transit system. Do you think problem can be solved without expanding I-270 and Route 355?

Richard Madaleno: I would start by saying that you always want to live in a community that has a congestion problem as opposed to one that does not have a traffic problem, because having traffic means there’s economic vitality. There are a lot of communities around this country that don’t have traffic but don’t have the same economic vitality that we have, so you know, it is a problem. You may ask a question that why is Northern Virginia is moving forward with the range of transit projects but not Maryland. The reason is Maryland approaches funding infrastructure differently than Virginia. The business community, coalition of elected officials from Northern Virginia Community, Democrats and Republicans and then Republican governor fought for a new funding approach for infrastructure that allowed Northern Virginia to charge different levels of property tax depending upon the use of the property. They’ve been very aggressive and using special taxing districts in order to generate the resources necessary to make those infrastructure improvements. The business community has supported these policies because they realized that more infrastructure helps their businesses. They are fine with additional taxing authority for the local government because they see it is going right back into investments that help their businesses to grow. When you look at Tysons Corner, for example they are paying a property tax rate of $1.66 per assessed value of $100. Bethesda is certainly the one with the greatest number of high-rise developments like Tysons Corner, the maximum rate is $1.10 per assessed value of $100. So, I think people would always suggest like Northern Virginia always has lower taxes than Maryland. Well, in fact, the taxes on commercial structures in Tysons Corner is $0.56 more than in Montgomery County. When you look at the K Street Corridor, any commercial building in Washington, DC that has a value of over $5 million, with all of those office buildings along Massachusetts Avenue and Capitol Hill are taxed at $1.85. So that is $0.75 more than the property tax rate in Montgomery County. The city is plowing that money back into infrastructure.

In Montgomery County, we do not have the tools to do that, which is why the County Executive is fighting for legislation this year at the State level to authorize Montgomery County to do that. Currently, we charge upfront impact taxes onetime fee. It goes into a fund and you never know if that fund is ever going to be big enough to build them. Charging these huge upfront costs are a barrier to development. That is why we are proposing to do away with that onetime huge tax and creating a special taxing district which charges that tax over multiple years. The collected tax just funds the infrastructure so that we can get these projects done. We can add road capacity where that makes sense. The County Executive has been from day one willing to say we’ve got to build a new American Legion bridge. We need to put an additional row, possibly on the Beltway. On 270, we need to make sure that both passages all the way to friendly and should be in reversible lanes to reduce its impact on the neighboring communities. Just like Northern Virginia has those extra two lanes going North in the morning and South in the afternoon, 270 should look the same. On 270, the volume is unidirectional, South in the morning and North in the evening. At the same time Marc Elrich wants us to move forward with the bus rapid transit system. Rapid vehicles are the key. The community rail is wonderful but rail is very expensive. Bus rapid transit, dedicated busways with guideways that can hold the bus steady and firm gives you the same sense of rail. It could move quickly because it’s in its own. It’s like what we have with the flash service running from White Oak to Burkesville right now.

I think most people would say I’m going to sit in my own car, choose my temperature and choose my radio as opposed to sitting on a bus. If the bus gets my destination in half the time well, you’ve got someone saying, alright, I’m going to get out of my car and get into that bus. There are ways that we can use additional road capacity when we get people out of their cars and into bus rapid transit. So, Marc Elrich definitely sees it as the future. It is the right vision because we’ve already getting a flash service up from 29 from Silver Spring to Burtonsville. Love to be able to tie that into Howard County and get it running into Colombia to help more people get off of 29. Marc obviously wants to do bus rapid transit on 355, Rockville Pike, Wisconsin Ave, and Frederick Rd from Friendship Heights to Clarksburg. We are moving forward with designs for a beer smell corridor to link the Red Line from the Wheaton Metro station to the Rockville Metro station, as well as the, New Hampshire Avenue corridor moving from Langley Park. We are aggressive at trying to design and build out the system. Unfortunately, it is impossible now without this new infrastructure financing ability where we would be copying Northern Virginia model. I am a lifelong resident of Montgomery County. I love this side of the river. I think it’s better side of the river. I think Virginia has come up with a way for us, a way to finance infrastructure that we should use as a model for the way that we do it. Things are happening in Northern Virginia that just are not happening in suburban Maryland, and this is not just Montgomery County issue. This is a Maryland issue. It is because of the way Virginia has moved forward with funding infrastructure, I think that’s why we need to copy what they’re doing and we need leadership in the state. Especially, now with President Biden’s infrastructure bill having passed and there being a lot of new Federal funds coming in and we will have the access to use those funds. Hopefully, the support of an administration at the State level who wants to get in and do more than just build toll roads can be a partner in multimodal approach of transportation by adding capacity not just on the Beltway and 270, but in transit through sensible ways, like bus rapid transit and other advancements to our local bus system.

Budget and Triple-A Bond Rating:

Nagender Madavaram: You are good with budget. Trump policies reduced the income for the County and Pandemic increased the expenditure. The County is facing very difficult situation. How do you keep AAA rating and address the budget deficit?

Richard Madaleno: I would say that the County Executive has taken some significant steps to put the county in a much stronger structural footing. When it comes to our finance, the County Executive was the first one to challenge the long-held assumption that we could not address the county’s unique and debilitating revenue caps that had been put in. Robin Ficker and a Coalition of Conservatives that were willing to try to strangle the Cunty government, he took on what was always seen as the third rail and said this situation is unacceptable. A crazy amendment from Robin Ficker that would have permanently prohibited the County from ever raising property tax rate and created a mechanism where it would have constantly driven down the property tax rate. Starving government and destroying our valued public services from our public schools through our public safety programs. Marc fought that one at the ballot box. That decisive victory alone has helped to stabilize our revenues and put us on par with all of our surrounding Maryland jurisdictions and the District of Columbia. So, it also provides stability and predictability for our property. The County has been one of the handful of jurisdictions in the country that has the so-called AAA bond rating. So, bonds are rated by a series of agencies on Wall Street. Whether or not this is a good investment or a bad investment, AAA is the best rating one can get. So, these Wall Street analysts look at us and say this is a valuable investment because this county has a history of paying its bills, paying them on time, and having the revenues in order to give us. We’ve been AAA bond rating since the 1960s. It means we have access to the largest number of investors with the lowest interest rates. That has certainly kept up during the Elrich administration. The rating agencies have been nothing but complimentary of this administration and its sensible and prudent fiscal policies.

We have a generous retirement system for our employees, especially our public safety retirees. That system is more than 100% funded from an actuarial standpoint and even higher from an overall valuation standpoint. So, while the State hasn’t even hit 80% but we had funded more than 100% from our pension program when it comes to our retiree health care benefits. Again, we have another 1.6 billion to fund, the value of it has almost doubled while Marc has been in office, in order to defray the costs of employee retirement healthcare and employee healthcare in the future. So, that we’re not making promises today for that leave taxpayers of tomorrow with the bill. We are prefunding that so that there is generational equity there. We have more money, believe it or not our retiree healthcare fund is more than the State of Maryland has for all of its employees. We have amongst the most aggressive reserve policies in the country to make sure that we have adequate reserves to deal with the rainy day. We are through this process going to wind up having faced probably the most difficult public emergency of the last century. We’re going to leave that with more money in reserves to deal with future problems. So, overall that Elrich administration has exemplary record of prudent fiscal management at the same time we’ve been able to honor our employees with important pay increases. New vision towards labor relations has allowed us to come to successful negotiations.

I don’t know if the public appreciates just how successful County Executive Elrich has been at addressing some of our fiscal conditions. We are better off as a result of his prudent leadership, sense of looking towards the future and not over promising? At the same time, there’s no question we have benefited from the policies of, especially the Democrats in Congress who were willing to fight it out with the Trump administration to get money to State and local governments to help them survive the pandemic. Certainly, President Biden’s American Rescue Plan, which has provided an enormous amount of money to help our school system and to deal with the impacts of COVID. So really, people should be quite proud of not only we have a County Government to respond to the community wide global pandemic and its impact on the County, but at the same time we’ve been able to prudently manage our resources. You know I love to joke with people about F. Scott Fitzgerald, who was probably one of the Great American writers, is a permanent resident of Montgomery County. His burial site is right at the corner of Rockville Pike and there’s no road at Saint Mary’s Catholic Church. So, I’m trying to point over there because his burial site is literally like a block and a half from where I am sitting right now. Fitzgerald wrote The Great Gatsby. The Great Gatsby is probably the seminal American novel of the Roaring 20s of the 20th Century. I think we are on the verge as a country because of the leadership of President Biden and his Democratic partners in Congress. Montgomery County’s longtime commitment to progressive policies that we are on the verge of roaring. I think what we have to do is be ready and the County Executive is uniquely positioned to have this conversation. In a proactive way, how we make sure the roaring 20s of the 21st century is equitable for the entire community. We do that through sensible policies, public services, and which has been the hallmark of Montgomery County for generations and will be as long as Marc Elrich is the County Executive.

Efficient Governance:

Nagender Madavaram: We saw problems in coordination among various departments in the County during pandemic. It is not easy to introduce changes in the administration. How do you improve efficiency in the County Government?

Richard Madaleno: We already started that fast. Well, Marc never stopped trying to be innovative. I mean one of the things this administration has done is created an innovation team that is designed to go out and help employees across the County government. Find ways to improve their services and efficiency. At the same time hopefully improve their job quality and satisfaction. So, instead of us trying to lead from the top and say where I’m going to introduce this new computer program that will improve efficiency. We are actually going out to the employees, getting them to come up with their best ideas and change the way that they’re approaching their work to improve efficiency, reduce costs, and improve productivity. We had these great success stories. We call it the Innovation Accelerator Program where we bring people in, give them the tools, help them come up with a project, and then they go back into their departments and come up with great ideas. I celebrate, you know, over the last year, we have completely replaced the computer system for our public libraries. I don’t know if you’re a regular user of the library system, but we have gone to a whole new platform that was actually an open-source platform, so at no cost to the taxpayers. We migrated to this whole new system it provides for easier use on mobile devices and home computers. It provides your ability to monitor what you borrowed, and to make it easier for people to check in and check out. Actually, manual intervention in check in and check out the book is reduced. We’ve eliminated collection of overdue fines because we realized that’s more expensive to library system than revenue. That was also actually a barrier to lower income families, especially children. We saved resources and bunch of staff time constantly by removing the cash register. Time and effort of library staff who are running this cash management system to be focused on the services that they’re providing. So, we have been innovative with our library system because we’ve gone to those people in library department and said how do we help you be innovative. Instead of Marc saying we’re going to have a new catalog system and book management system. He encouraged them to come up with their own. They found the open source. They’ve been changing the way that they innovate and manage, as a result we offer efficient services with less resources in the library system. I think that’s an example of the innovation that Marc wanted to champion exactly.

Beverages wanted to change system during his administration. I’m sure he would have loved to have had it done faster and quicker but it is large organization. They can take time to change things around. Those are the types of seeds that we’ve planted that are now bearing fruit across the organization. I wanted to just use the libraries as an example of his vision. It’s the frontline employees who probably know the best about how to do their job and more efficiently. What we have to do is free them up. So that we can all work collaboratively to come up with a better and more efficient government.

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