5 things to know about Montgomery County’s new budget

The Montgomery County Council officially passed a $7.9 billion operating budget Thursday for fiscal 2027, including a new progressive income tax structure.

The 11-member council unanimously approved the spending plan, though council members Andrew Friedson and Dawn Luedtke had voted against it in a May 14 straw vote.

“This was a very challenging budget, very emotional too,” council President Natali Fani-González said prior to Thursday’s vote. “The most challenging since the Great Recession, I would say.”

Debate centered on funding Montgomery County Public Schools in a year marked by rising inflation and mass layoffs in the federal and private sectors that complicated the county’s finances.

The budget gives the district $143 million more than it received in the current fiscal year’s budget — a more than 6% raise. But Superintendent Thomas Taylor had requested tens of millions more.

County Executive Marc Elrich initially proposed a $8 billion operating budget. He called for an approximately 6% property tax hike and a 0.1% income tax increase to fully fund the school district’s $3.7 billion request.

“The County Council repeatedly criticized my budget proposal, saying they were worried about a structural deficit,” Elrich said during a media briefing Wednesday. “Then they passed a budget that creates, using their framework, a much bigger long-term problem,” he said, referring to funding gaps.

Other departments are feeling the impact of fiscal challenges and changing priorities. Here are five things to know about the county’s new budget.

1. It uses several one-time revenue sources for ongoing costs, growing the county’s projected structural deficit to $293 million in the coming year.

This bothered several council members and was the reason Luedtke and Friedson voted against the budget in last week’s straw vote.

Future budgets as a result will be even tougher than this year’s, Luedtke said in a May 15 statement. “There will be significant resources devoted to County government and MCPS that simply won’t exist past June 30, 2027.”

Other council members, including Kate Stewart, who was a begrudging “yes” vote, expressed similar concerns.

“This budget is not something I am cheering for,” Stewart said in a May 15 press release. “I supported this budget because I believe at this time this is the best we are going to do.”

2. Elrich may use his veto power.

He told reporters during a media briefing Wednesday that while he doesn’t have the authority to veto the income tax plan, he will decide whether there are other places to cut.

The council may, however, with a supermajority vote, override his veto.

3. The council increased funding for nonprofit grants by 3.5% over the current fiscal year.

Elrich’s proposed inflationary adjustment was 2.5%. Council members said their larger increase responds to cuts to nonprofit grants at the federal and state levels. But the council also cut into the budget for the county’s business incubator program, which aims to help small businesses grow.

4. Public safety saw increased investments in some areas and cuts in others.

The council increased funding to hire more emergency call center operators to reduce 911 response times. But some other programs, including the county’s canine contraband unit for prisons, automatic license plate readers, and vehicle recovery software, were hit by cuts in excess of $150,000 each.

5. The council made more than $100 million in cuts to the county government’s budget.

The cuts included some to county services to fund the budget without a property tax increase. But the council chose to maintain short-term housing and emergency shelter programming as one of these services, citing its success in drastically decreasing the county’s homelessness rate.