If the Montgomery County Council does not approve County Executive Marc Elrich’s recommended 3.4% property tax rate increase for fiscal year 2026, Montgomery County Public Schools (MCPS) could be facing a $47.2 million cut to its proposed $3.65 billion budget, according to a Tuesday council staff report.
Elrich’s proposed $7.65 billion county operating budget plan for fiscal year 2026 includes the property tax rate increase in order to fully fund the MCPS budget request for the upcoming fiscal year, which begins July 1.
Elrich’s proposed tax increase is enabled by a state statute that allows jurisdictions to raise property tax rates to supplement public school funding. If approved by the council, homeowners’ tax rate would be $1.0605 per each $100 of assessed value of their property, an increase of 3.5 cents from the current rate of $1.0255.
The staff report presented during Tuesday’s council meeting depicts possible funding scenarios that would be required if the council does not approve the recommended property tax rate increase. The scenarios were requested by council President Kate Stewart (D-Dist. 4), according to the report.
Stewart said during Tuesday’s meeting that the council committees would be thinking about what reductions could be included in the budget reconciliation list but noted that reductions on the list may not be included in the final budget.
“We want to make sure we are having conversations that are transparent and everyone understands the pulls and takes of what our decisions are gonna mean,” Stewart said following the presentation of the report. “This is a budget year like we’ve never had before. There are a lot of things we’re going to need to be considering.”
Elrich’s proposed spending plan represents an increase of 7.4% from the county’s current $7.1 billion operating budget. The budget proposal is now in the hands of the council for review, with an expected vote on a final spending plan in mid-May.
The county school board tentatively approved its proposed $3.65 billion operating budget in February. The proposal represents a nearly 9% increase over the current MCPS budget of $3.32 billion. The additional $300 million included in the budget would help pay for spending such as an expected 3.25% base salary increase for staff and the proposed addition of 688 special education positions, according to MCPS officials.
According to the Tuesday report, if the council does not include the recommended 3.4% tax increase in its final budget, but maintains other aspects of Elrich’s proposal, such as proposed increases to income tax credits, the council would need to reduce the proposed county spending by $88.7 million to balance the budget. That could mean a budget reduction of $47.2 million for MCPS, if the cuts were calculated based on the proportion of expenditures for MCPS and other county services.
According to the report, Elrich’s proposed $168 increase to income tax credits would reduce the amount of taxes owed for primary residences in the county and would have expenditures associated with its implementation.
The required cut to the proposed county spending would be less if the council doesn’t support both the proposed property tax rate increase and the income tax credits increase — $30 million for MCPS and $56.3 million in total.
The report doesn’t recommend what the council should cut if it doesn’t approve the proposed tax rate increase. It notes that instead of calculating proportionally, the council could cut negotiated wages for MCPS, county government and parks staff by 1% and save $33.6 million.
According to the report, each 1 cent increase in the property tax rate generates about $25.4 million in tax revenue.
The fiscal year 2026 budget comes in the wake of a difficult budget season in 2024 that required the county school board to make significant spending cuts. The cuts were needed to close a spending gap after the council approved a fiscal year 2025 MCPS operating budget that was $30.5 million less in spending than the school board requested.
Those cuts led to increases in class sizes, the elimination of the Montgomery Virtual Academy and a delay in pre-kindergarten expansion.
At Tuesday’s rally held by the MCPS employee unions before the council meeting, Montgomery County Education Association President David Stein, who leads the teachers union, said he wasn’t happy about the scenarios that wouldn’t fulfill the district’s budget request or result in cutting wages. In a chant led by Stein, the crowd of nearly 200 said they also wouldn’t be OK with cuts to wages, special education or school safety.
“Seeing all of you out here, I’m really optimistic,” Stein told the crowd. “Because they can listen to their staffs, or they can listen to us.”
Bethesda Today reporter Ginny Bixby contributed to this story.
