The Montgomery County Council is expected to vote Tuesday to override County Executive Marc Elrich’s veto of legislation that would offer tax breaks for some developers that create workforce housing units.
During its meeting, the council will also formally begin consideration of Elrich’s income tax increase proposal and hold a work session on the proposed fiscal year 2026 county operating budget.
The council will meet at 9 a.m. in the Stella Werner Council Office Building in Rockville for its regular weekly business meeting. Here’s what to expect:
Veto override
The council is expected to override Elrich’s veto of legislation that would offer tax breaks for some developers that create workforce housing units.
By a vote of 10 to 1, the council approved the tax break legislation April 8 after unanimously passing a zoning text amendment (ZTA) that would expedite the process for converting office and other commercial buildings to residential uses. The legislation establishes a property tax break program for any residential development approved under the conversion ZTA that fulfilled the requirement of providing 17.5% or more moderately priced units at 60% of the county’s area median income (AMI). The AMI is defined as the midpoint of a specific area’s income distribution.
Council Vice President Will Jawando (D-At-large) was the only councilmember to vote against the property tax break legislation.
The zoning amendment and tax program were proposed as part of the More Housing N.O.W. (New Options for Workers) legislative package that is sponsored by several councilmembers. The package was introduced in January by councilmembers Andrew Friedson (D-Dist.1) and Natali Fani-González (D-Dist. 6).
The legislative package aims to allow more residential building types – including duplexes, triplexes, townhomes and apartments – along the county’s transit corridors, with a requirement that 15% of a project’s proposed housing serve the local workforce. The goal of the legislative package is to increase access to more affordable workforce housing through two zoning text amendments: the one already passed that expedites the process for conversions, and another that would increase the permitted density in certain zones along transit corridors.
Elrich cannot veto ZTAs but was allowed by law to veto the bill that would establish a property tax break program. He held a press conference April 21 to announce his veto of the legislation, saying “we should not be subsidizing market-rate housing.”
Under the council’s Rules of Procedure, a supermajority of at least seven of the 11 councilmembers must vote in favor of overriding a county executive’s veto.
Income tax proposal
The council will formally introduce for consideration Elrich’s 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, which begins July 1.
Elrich wrote a letter to council President Kate Stewart (D-Dist. 4) on April 22, 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. 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.
One councilmember, Friedson, has already come out in opposition to the proposal, calling it “backwards” and criticizing increased taxes on residents.
The council could reject Elrich’s proposal or adopt a smaller tax increase than he has proposed. Its Government Operations and Fiscal Policy Committee is scheduled Thursday to review the fiscal impacts from Elrich’s latest proposal, as well as potential alternatives. A public hearing is scheduled for 1:30 p.m. May 13.
Budget work session
The council will hold work sessions on various aspects of the proposed fiscal year 2026 county operating budget, including some collective bargaining agreements.
County government staff members will meet with the council to discuss the proposed compensation plans and policies for county employees and the cost of these decisions, including pay adjustments, retirement benefits and potential reductions.
The council will also consider proposed collective bargaining agreements for three county employee unions: Municipal and County Government Employees Organization (MCGEO) UFCW Local 1994, Montgomery County Career Fire Fighters Association of the International Association of Fire Fighters Local 1664 and Fraternal Order of Police Lodge 35.
The council’s Government Operations and Fiscal Policy Committee is recommending approval of all three agreements.
