County Council unanimously passes $5.8B budget
$600M shortfall expected over two years; line of credit considered
The Montgomery County Council approved a $5.8 billion budget for the next fiscal year on Thursday.
After weeks of discussions to cut spending from the budget for the next fiscal year, the Montgomery County Council unanimously approved a $5.8 billion budget on Thursday.
Officials cut around $70.3 million in proposed spending to create a “continuity of services” budget, which mostly didn’t include any new programs and initiatives.
The council also unanimously approved a $4.4 billion capital budget.
But the county isn’t done with cutting spending. Because of the economic impacts of the coronavirus pandemic, officials expect to come back to the budget for more reductions.
In a statement, Council President Sidney Katz said that approving the operating and capital budgets “provides stability, while we await a clearer picture of expenses and revenues that will emerge during the summer and fall.” He released the same statement when the council supported the budget on March 14.
County staff members project a revenue loss of up to $600 million combined in the current and next fiscal years because of the public health crisis.
The county is considering opening a line of credit — up to $300 million — for the first time because of the financial impacts of the pandemic. Lines of credit are used as “insurance” to address any cash flow issues.
“We are researching a line of credit because of the COVID-19 crisis and the problems it is causing economically,” Michael Coveyou, the county’s finance director, wrote in an email on Thursday. “The financial impact of this crisis is expected to be felt for at least the next year or two, so securing a line of credit is a prudent course to pursue.”
“We have not made [a] decision about whether we will take this course of action nor have we discussed it with the Council,” he wrote.
The county began researching a line of credit in March, Coveyou wrote.
The largest cut in tax-supported funding for the approved budget was to Montgomery County Public Schools.
The council approved a roughly $2.8 billion budget for the school system. About $2.6 billion is tax-supported — about $41.3 million less than what County Executive Marc Elrich proposed.
Around $32.4 million of tax-supported funding was taken out of departmental budgets in the county government.
Another $3.4 million was added to the Maryland-National Capital Park and Planning Commission budget.
The budget funded 98.4% of Elrich’s proposed fiscal year 2021 budget.
In a statement released Thursday evening, Elrich wrote that his recommended budget was formed in a period before the pandemic began.
“My administration fully recognizes that the FY21 budget by necessity will be a flexible document that will evolve to take into account what are changing daily circumstances,” he wrote.
The council also unanimously approved property tax rates that will be roughly the same as the current year. The new weighted average property tax rate will be 97.85 cents per $100 of assessed value — a decrease of a hundredth of a penny from this year.
Elrich had proposed a roughly 5-cent tax increase – most of which would go to the public school system through a special 3.18-cent supplemental property tax. The council rejected the tax increase.
The income tax offset credit, which is provided against the county’s real property tax rate to offset increases of more than 2.6% of the county’s income tax revenues, was set at $692.
In his statement, Elrich said he was disappointed that the council did not set the credit at his proposed $800.
“The Council’s own staff concurred with the benefits of my proposal as their analysis demonstrated that homes worth $250,000 would have realized $74 savings; homes worth $500,000 would have saved $40; and homes worth $750,000 would have saved $6,” he wrote. “Homes worth $1 million would have paid an extra $28 in taxes.”
County reserves are expected to be at 10% — around $549 million.
Here are some highlights of the FY21 budget:
● Montgomery County Public Schools: $2.8 billion
● Health and Human Services: $339 million, of which more than $887,000 will be used for 10 additional school nurses and $100,000 as a county match for the summer Supplemental Nutrition Assistance Program (SNAP)
● Montgomery College: $318.3 million, with no increase in tuition rates or fees for students
● Police department: $281.9 million, adding seven crossing guards
● Transportation department: $235.6 million, with funding for the Kids Ride Free Program and new FLASH bus service from Burtonsville to Silver Spring
● Fire and Rescue Service: $225.4 million
● Maryland-National Capital Park and Planning Commission: $164.5 million, of which $105 million will be used to enhance and maintain the park system and $300,000 for athletic field renovations
● Environment department: $164.2 million, of which $400,000 will be dedicated to climate change planning
● Housing Initiative Fund: $61.8 million
● Recreation department: $46.3 million with added service for North Potomac senior programming and added Wheaton senior programming
● Public libraries department: $42.1 million
● Working Families Income Supplement: $20.1 million
● Community grants: $10.4 million for organizations that provide essential services to residents
● Montgomery County Early Care and Education Initiative: $5.9 million
● Montgomery County Economic Development Corporation: $5 million
● County incubator programs: $3 million
● Nonprofit organizations: $1.6 million to assist with capital projects
● Visit Montgomery, MD: $1.6 million
● WorkSource Montgomery: $1.3 million
Briana Adhikusuma can be reached at firstname.lastname@example.org.