The Montgomery County Council is setting annual spending affordability guidelines that are expected to hold the property tax rate and mandate a 1.4 percent ceiling on increases in the county budget.
“This year want to hold the line and be conservative in our approach,” County Council President Nancy Navarro said during a news conference Monday.
By establishing benchmarks in spending affordability guidelines, the council is setting the stage for the annual process of budget and spending reviews that starts next month when County Executive Marc Elrich releases his first proposed multi-billion-dollar budget.
The council’s reticence to raise taxes appears to stem from economic projections that show a decrease in average per capita and family incomes in the county, and the likelihood of a national recession in the next two years.
Navarro said the council’s government operations committee decided earlier this year not to raise the property tax rate of 74 cents per $100 of assessed value.
Spending affordability guidelines are determined by the overall condition of the economy, personal income levels, economic activity in the county and population growth, according to a report sent to the council from its analysts.
The report noted negative economic trends that could emerge in the year ahead, including a 30 percent chance of a national recession in the next two years, according to the National Association for Business Economics.
The report estimates that population growth will stabilize at 0.9 percent and household growth will stabilize at 1.1 percent, resulting in lower projected average incomes and affecting growth in tax collections.
“In addition, the composition of the population growth over the past 15 years continues to generate service demands and place pressure on income-based revenues for Montgomery County,” the report noted.
Among the guidelines the council is considering:
– A ceiling on property tax increases. A unanimous vote by the council would be needed to increase the tax rate, which last occurred in 2016.
– A 1.4 percent cap in the county’s main operating budget, below the rate of inflation.
– A freeze on additional funding for nonprofit grants. Funding will be held at $12.2 million, which was last year’s amount.
– Keeping funding levels for Montgomery County Public Schools and Montgomery College at maintenance-of-effort levels, meaning the same per-student spending from last year. The council could later decide to increase this amount beyond last-year’s levels.
The County Council passed a mid-year savings plan at the request of Elrich last month to make up a $44 million budget shortfall that occurred due to lower-than-expected county revenues. The goal of the savings plan, as Elrich and council members have said, is to achieve a 10 percent reserve fund for emergency spending by 2020.
The 2020 fiscal year begins July 1.
Dan Schere can be reached at Daniel.schere@moco360.media
