The Montgomery County Council unanimously voted Tuesday to approve compensation plans for county employees as well as collective bargaining agreements for three employee unions, but some councilmembers shared concerns that budget deliberations for the coming fiscal year are becoming even more difficult.
“The council has a fiduciary responsibility to approve a budget and make sure that we have the necessary services for our community without overburdening them with taxes and fees, and at this point in the budgetary process, I don’t see how that’s done,” councilmember Marilyn Balcombe (D-Dist. 2) said prior to Tuesday’s vote.
The council unanimously approved collective bargaining agreements for these 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. All of the contracts included wage increases to adjust for inflation, as well as increases to “step” raise adjustments for long-term employees.
Prior to the vote, Balcombe noted that while she supports the contracts and compensation packages, she is concerned that paying for them as presented leaves few opportunities to make cuts to County Executive Marc Elrich’s (D) proposed $7.65 billion county operating budget in order to avoid raising taxes.
“What is most frustrating about the budgetary process is that once this compensation decision is made today, there is very little discretionary cost left to cut,” Balcombe said. “We’re really just nibbling around the edges.”
As of Tuesday, the council is officially considering 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. Elrich is now recommending that increase – which replaces an earlier proposal for a property tax hike — to fully fund Montgomery County Public Schools’ (MCPS) $3.65 billion budget request for fiscal year 2026, which begins July 1. The MCPS spending plan is included in Elrich’s proposed county operating budget.
With the 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 decide whether to adopt Elrich’s recommendation. The council is required to make a formal decision on any tax changes by May 15 for them to be implemented in fiscal year 2026.
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.
According to Elrich, it is not possible to pass his proposed budget without cuts unless councilmembers raise taxes. However, the council could reject Elrich’s proposal or adopt a smaller tax increase than he has proposed.
“I’m hoping that the majority of council members are amenable to this. I mean, there is no way to fund the things we need to do in the budget if we don’t do this,” Elrich said at a virtual press briefing last week. “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.”
A bleak financial outlook
Several councilmembers opposed the previous property tax proposal, and Elrich’s new income tax proposal has not received a warm reception. Councilmember Andrew Friedson (D-Dist. 1) was quick to speak out against it last week.
“Swapping one tax increase for another tax increase is not an appropriate solution as families are struggling in deeply uncertain times,” Friedson wrote in a statement Thursday..
While council President Kate Stewart (D-Dist. 4) has not outright opposed the proposed income tax increase, she has voiced hesitancy about raising taxes that impact residents.
“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 told Bethesda Today last week.
Councilmember Gabe Albornoz (D-At-large) echoed Balcombe’s sentiments on Tuesday. He said while he appreciates the work that went into the labor unions’ negotiations and wants to support the county’s workforce, he is concerned about an uncertain fiscal outlook in the county resulting from ongoing federal changes. Thousands of county residents have been laid off from their federal jobs since President Donald Trump took office in January.
“We can see the writing on the wall and what’s on the horizon; we are very likely to hit double-digit unemployment for our region and our community sometime within the next year,” Albornoz said.
Albornoz said that according to the Metropolitan Washington Council of Governments, for every federal government job lost, the county is anticipated to lose two private sector jobs as well.
“That obviously has a significant cascading impact on our county,” he said. “The decisions that we make today will have a repercussion on our ability to adjust. … I’m not being a Debbie Downer, I’m just reflecting the reality of the current situation we find ourselves in.”
Prior to Tuesday’s council vote on the compensation plans and collective bargaining agreements, Stewart said she is concerned about the “challenging” fiscal outlook but noted the importance of properly compensating county employees.
“No matter what happens at the national level, we work to remain true to our values, and that includes supporting our employees and ensuring that you are all treated with dignity and respect,” Stewart said. “Today is a day to move forward with these collective bargaining agreements, to support all of those who help keep Montgomery County moving.”
