‘Enough? I know it’s not’: Montgomery County Council signs off on budget plan

An emotional Montgomery County Council preliminarily approved a $7.9 billion operating budget Friday for fiscal 2027, including a new progressive income tax structure.

Last-minute maneuvering is expected to protect some Montgomery County Public Schools jobs that district officials said were at risk if the council did not fully fund the schools’ $3.8 billion request. Hundreds of employees, from social workers to central staffers, could still be out of work next year, according to district projections.

Tough economic times made budget choices particularly stark this year, prompting some council members to cry on the dais. Others warned future budget votes will be even more difficult based on the decisions made Friday.

“Next year is going to be tough,” Council President Natali Fani-González said.

The budget passed 9-2 on a straw vote, with District 7 member Dawn Luedtke and District 1’s Andrew Friedson voting no.

It needed a supermajority of eight votes to pass.

The council endorsed a progressive income tax plan that would raise rates by 0.1% for residents with annual incomes greater than $150,000 — to 3.3%.

The income tax for those making up to $50,000 would fall from 3.2% to 2.7%. For those making $50,001 to $150,000, it would decrease from 3.2% to 3%.

“The highest earners will be asked to pay slightly more,” Fani-González said. “I’m OK with that.”

The council also eliminated the county’s income tax offset credit, which is currently set at $692. Homeowners who claim their home as their principal residence are eligible for the credit.

Nearly half of the county budget flows to its public schools.

Montgomery County Public Schools will receive roughly $143 million more than last year in local operating funds, a figure that falls tens of millions short of what Superintendent Thomas Taylor said was necessary for a district facing steep inflationary pressures, complex student needs and expected raises for its employees.

“Is that enough? I know it’s not,” Fani-González said.

To bolster MCPS’ finances for next year, council members transferred tens of millions of dollars Friday from the roughly $6.3 billion capital budget to the operating budget.

It was a painful choice, members said, given the school district’s severe infrastructure needs. Several referenced New Hampshire Estates Elementary, a campus that’s emblematic of deteriorating conditions across the county.

“I visited New Hampshire Estates,” at-large council member Evan Glass said. “And when I went into the lower level, I immediately began experiencing respiratory problems, seconds upon going into that classroom.”

A complicated budget

Political circumstances, both local and federal, made a complex budget season even more difficult.

“When we first received this budget, I said that it was the worst budget I have ever had to deal with in all of my years in elected office, and I certainly told the truth,” said District 3’s Sidney Katz, who has served in this position since 2014.

County Executive Marc Elrich recommended an $8 billion operating budget that called for a roughly 6% property tax hike and a 0.1% income tax increase, saying a revenue boost was necessary to fund the school district’s request.

Council members rejected his plan.

Montgomery County was hit hard by federal job cuts, making a tax increase of that size especially unappealing to the council.

“As many emails that we received about schools, we received an equal amount about, ‘Don’t raise our taxes,’” council Vice President Marilyn Balcombe said.

So intense were the budget deliberations that last-minute changes pushed the vote back a day.

“Yesterday, literally as we were ready to vote, suddenly [Montgomery County’s] transparent process was replaced by indecision, behind-closed-doors deal-making and major last-minute changes that exacerbate our structural deficit,” Luedtke said.

District 5 council member Kristin Mink said the delay brought more time to restore some funding to MCPS and save jobs.

Taylor, the superintendent, published a list of potential cuts that could come if the council didn’t find more money for the district. Many union members packed the council room this week to demand protection for their jobs.

“We are in the place of, there’s no good options here,” at-large council member Will Jawando said. “There are worse options, and among them would be the devastating, catastrophic cuts to MCPS staff and educators. We cannot allow that.”

The council’s final vote on the budget is scheduled for Thursday.

Members are already foreshadowing difficult decisions for next year.

Friedson pointed out that the county’s structural deficit is projected at nearly $300 million.

“Using one-time resources to pay for ongoing expenses is the definition of fiscally unsustainable,” he said. “It sets up a fiscal cliff without a parachute.”

Three members — Glass, Jawando and Friedson — are running for county executive in next month’s Democratic primary.

Katz condemned what he perceived as political jockeying by some of his colleagues.

“It concerns me that this budget has become a vehicle for no compromise but for a way that someone can do something so they can send another press release,” he said.