Montgomery County executive unveils spending plan with no tax increase

By Steve Thompson  Washington Post March 15 2024 

Montgomery County property tax rates would hold steady while the county puts more money into schools, affordable housing and other priorities under a spending plan unveiled by County Executive Marc Elrich (D) on Thursday.

Higher tax bills from rising property values are projected to help support the roughly $400 million in increased spending baked into Elrich’s plan for the budget year that begins July 1, a $7.1 billion framework that he said marked a return to normalcy after navigating the challenges presented by the coronavirus pandemic.

“We’ve been able to manage this without increasing the rates to get this extra money,” Elrich said Thursday during a budget briefing.

That marks a departure from last year, when the county executive’s initial pitch included a 10 percent property tax increase to help pay for schools; the county council, which ultimately approves the budget, favored a 4.7 percent tax hike.

Nearly half of the county’s budget is devoted to the public school system, Maryland’s largest with about 160,000 students and more than 200 schools. The schools budget under Elrich’s proposal would total $3.3 billion, an increase of about $128 million, or 4.0 percent over this fiscal year.

Elrich’s budget proposal comes as the state continues to roll out the Blueprint for Maryland’s Future, a landmark law that funnels billions of local and state money toward public schools. Some county executives have expressed concerns to state leadership about the law centered on costs, and they have gone to the General Assembly to request changes to their tax codes to foot the bill.

Added expenses during the pandemic years brought budget-wide challenges, followed by new problems when federal aid began running out.

About $33 million of the school budget would pay for positions previously covered by federal coronavirus relief funds, according to the school system’s budget request. Those federal funds will expire for school systems across the country in the upcoming fiscal year. Montgomery County Public Schools plans to use the requested $33 million to cover the costs of about 100 positions, which include social workers and psychologists.Share this articleNo subscription required to readShare

The next biggest chunk of the proposed county budget, $755 million, or nearly 11 percent of the total, goes to public safety expenditures that include police, fire and correctional services. That is an increase from this fiscal year’s $701 million approved public safety budget.

Elrich said his budget proposal also includes “an unprecedented $65-million increase in affordable housing” money, bringing the total to more than $169 million to help finance the preservation and production of affordable units.

The county was short 24,590 units for residents who made less than 100 percent of the area median income, according to a report last year from the Metropolitan Washington Council of Governments. It estimated that Montgomery’s existing stock of naturally occurring affordable housing could shrink by an additional 7,000 to 11,000 units before the close of the decade.

The county’s economic advisers are forecasting a possible slight recession later this calendar year, which could affect both this and next fiscal years’ budgets. “But everybody says it’s mild, it could be extremely mild,” Elrich said. “We hope it’s extremely mild.”

The county is expecting property valuations to increase 5.6 percent in the coming fiscal year.

Montgomery officials expect to end this fiscal year with $957 million in reserves, which represents 15 percent of adjusted governmental revenue, exceeding the county’s policy of holding at least 10 percent in reserve.

County Council President Andrew Friedson said the council appreciates Elrich’s work on the proposal.

“With unprecedented needs and finite resources, we must ensure every dollar is put to its best use to serve the greatest needs of Montgomery County residents,” Friedson (D-District 1) said in a statement. “We look forward to receiving the views of our community members during the budget process, so we can carefully balance the need for important County services with pressures on our taxpayers.”

The council is scheduled to hold public hearings on the budget before a June 1 deadline for final action.

Nicole Asbury contributed to this report.