County Council considers ‘tough decisions’ to avoid potential budget deficit

Councilmembers say they won’t raise taxes; Elrich defends spending proposal

April 11, 2024 3:12 p.m.

The Montgomery County Council on Tuesday began grappling with how to address a potential structural deficit in County Executive Marc Elrich’s (D) $7.1 billion proposed fiscal year 2025 operating budget, weighing whether to cut programs and positions or raise taxes. Unlike last year, Elrich is not proposing a tax increase to fund his budget.


“Just because we don’t have a tax increase in front of us … doesn’t mean that we don’t have very difficult decisions to make,” councilmember Marilyn Balcombe (D-Dist. 2) said. 

Elrich’s proposal represents a 4.9% increase from the current fiscal year’s budget. The proposed budget for fiscal year 2025, which starts July 1, includes $3.3 billion for Montgomery County Public Schools (MCPS), funding 98.2% of the county school board’s request. The total school spending represents a $107 million increase over spending in the current fiscal year, but also represents about a $60 million cut in the school board’s funding request, according to board documents. 

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According to council staff, the proposed budget could result in a structural deficit of $115 million in fiscal year 2026, meaning the county would be spending more than it collects in tax revenues.

“Completely eliminating the $115 million structural deficit could be a real challenge, but if you can take it down by any meaningful amount, that will be a big improvement on this budget,” council Executive Director Marlene Michaelson told the councilmembers.

But Elrich told MoCo360 he believes the council staff’s projection is inaccurate.

“The staff has been wrong every year,” Elrich said. “They make projections based on incomplete information.”

The council took a straw vote Monday, unanimously agreeing with Elrich not to propose an increase in the property tax rate, but members still had concerns about the budget’s sustainability.

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Council staff voiced concerns that Elrich’s budget proposal is too reliant on one-time reserve funds and is inconsistent with council policies relating to the use of those funds.

The spending plan for the current fiscal year, which ends June 30, follows predictions of a mild recession. The budget staff report says the financial outlook for the coming fiscal year, which begins July 1, is “cloudy,” with forecasts of decreases in inflation, but lower revenue projections regionally.

On Tuesday, Michaelson and other council staff encouraged councilmembers to consider reducing funding proposed for new programs and services as well as reducing funding for base programs.

“It’s going to be very different [from last year],” councilmember Evan Glass (D-At-large) said of budget deliberations. “What concerns me is that we all have to have very honest conversations. And that is a very tough thing to do sometimes. … I’m going to be looking at the [job] vacancy rates, the social safety net, one-time expenditures.”


During a press briefing Wednesday, Elrich stressed that he wasn’t concerned about his budget plan.

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“There’s just been this insistence that we’re going to have a problem when we don’t have a problem,” he said, citing the county’s 15.4% funding reserve, which is above the 10% target for reserves.

“We’re able to take our surplus reserve and use a lot of it to fill gaps,” Elrich told MoCo360 earlier this week. “We’ve been very conservative, we don’t invent lots of new spending programs.”

Jennifer Bryant, director of the Montgomery County Office of Management and Budget, told the council Tuesday that the largest increase in tax-supported programs in the budget is for continuation of COVID-19 pandemic-era programs that were slated to end in 2024, including food insecurity and homelessness prevention services.

“Pressures we were seeing in the community and the needs that we’re seeing in the community have not subsided,” Bryant said. “The county executive had to make some very difficult decisions. … The county executive made a conscious choice and decision to continue those programs.”

According to county law, the council must vote on a final budget by June 1. Members likely will vote in mid- to late May.

“Getting what you pay for, if you will, as a taxpayer, is something that is top of mind when people are thinking about how well their government is working, what are their tax dollars going for and doing,” councilmember Dawn Luedtke (D-Dist. 7) said. “And that’s where I’m seeing cracks right now.”

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