The Montgomery County Council is expected Tuesday to consider County Executive Marc Elrich’s (D) request to increase the county’s income tax rate from 3.2% to 3.3% to help fund the public school system in fiscal year 2026, according to the council’s meeting agenda.
Elrich wrote a letter to council President Kate Stewart (D-Dist. 4) earlier this week, sharing his plan to withdraw his previous proposal to increase the county’s property tax rate by 3.4% and replace it with an income tax hike. Elrich said an income tax increase would be a more equitable solution for county taxpayers than a property tax hike.
Both proposals were introduced to fully fund Montgomery County Public Schools’ (MCPS) $3.65 billion budget request for fiscal year 2026, which begins July 1. The MCPS spending is included in Elrich’s proposed $7.65 billion county operating budget that’s under consideration by the council.
With a new funding proposal introduced just weeks before the council is required to adopt a final budget plan, the council is on a much tighter timeline to make a decision about whether to adopt Elrich’s recommendation. The council is required to make a formal decision on any tax changes by May 15 in order for them to be implemented in fiscal year 2026.
The council has already held a required public hearing on the proposed property tax hike and now will need to hold another on Elrich’s new proposal. That hearing is scheduled for 1:30 p.m. May 13 during the council’s regular meeting at its Rockville offices.
As he did with his proposed property tax hike, Elrich is already facing opposition to his latest funding initiative. Councilmember Andrew Friedson announced his opposition to the proposed income tax increase in a statement released Thursday evening.
“Swapping one tax increase for another tax increase is not an appropriate solution as families are struggling in deeply uncertain times,” Friedson wrote in his statement.
He said Elrich’s proposal “looks backwards” and would make the county less competitive in relation to other jurisdictions in the region.
“Due to continued rising property assessments, Montgomery County is already generating more revenue from county taxpayers — it’s our responsibility to fund schools, public safety, transportation, parks, and libraries, while living within our means and without adding additional costs on residents,” Friedson wrote.
Elrich disagrees with Friedson’s assessment, noting in his State of the County address on Thursday that the county needs to emulate Northern Virginia in its taxing mechanisms.
Elrich released his recommended budget plan on March 14. The spending plan represents an increase of 7.4% from the county’s current $7.1 billion operating budget. The council is reviewing Elrich’s proposal and is expected to approve a final budget in mid-May.
In his letter to Stewart this week, Elrich explained the proposed change was due to legislation passed by the 2025 Maryland General Assembly that allows counties to increase the formerly mandated income tax rate of 3.2% to a maximum of 3.3%.
“There is no way to fund the things we need to do in the budget if we don’t do this,” Elrich said during a virtual media briefing on Wednesday. “The worst cuts you could make are certainly to the school system, but everything else would wind up coming out of social services, environmental programs. And I’m really concerned.”
According to council documents, the council last voted to increase the county’s income tax rate in 2003, when it was set to 3.2%.
In an interview Wednesday with Bethesda Today, Stewart said she told Elrich there was not enough support on the council for a property tax rate increase. Friedson and councilmembers Evan Glass (D-At-large) and Laurie-Anne Sayles (D-At-large) had all publicly released statements saying they didn’t support the initial proposal to increase the property tax rate.
However, Stewart said the council will have to “carefully consider” whether an income tax hike is the right answer.
“We need to think about that very carefully. Our residents are really feeling the stress of what is happening right now in the country. We have seen taxes go up at the state level,” Stewart said.
She also mentioned the mass layoffs of federal workers who reside in the county as a source of financial stress for affected county residents.
In 2023, the council compromised when negotiating a property tax rate hike to fund county spending, including the MCPS budget, for fiscal year 2024. While Elrich proposed a 10% increase and some councilmembers, including Friedson, advocated for no tax increases, the council voted to meet in the middle and settled on a 4.7% increase.
The council could reject Elrich’s proposal or adopt a smaller tax increase than he has proposed. Its Government and Operations Committee, which is chaired by Stewart, is scheduled to review the fiscal impacts from Elrich’s latest proposal, as well as potential alternatives, on May 1.
