The following is the overview from the $5.9 billion budget proposed by Montgomery County Executive Marc Elrich. You can find the full budget proposal below:
This budget is focused on providing our youngest residents with a great start to life. To that end, I have proposed funding of $2.8 billion for the Montgomery County Public Schools (MCPS). I am also proposing $10.4 million for our Early Care and Education Initiative so that we can continue to expand and improve early education services.
This budget contains a
modest 0.8 percent increase in tax-supported spending for County Government,
which is directed primarily at increasing affordable housing and addressing
structural gaps in our fire service and transit budgets. This budget provides
our residents with a great amount of detail about my entire $5.9 billion
This budget also ensures
that we attain our fiscal policy goal of holding 10 percent of our adjusted
gross revenues in reserve in FY20, and we maintain that level in FY21. This is
of particular importance now as we face uncertain times.
As I finalize the details
of my recommended budget, I am keenly aware of the public health emergency
facing our community and the nation. I am proposing this budget with a focus on
both the next few days and weeks, as well as the next year and beyond. As we
respond to this global health emergency, the economic situation of our
residents and our nation are changing rapidly. While this budget reflects my
view of County Government on March 16, we all need to be flexible to respond to
changing conditions and needs. These conditions may result in me submitting
revisions, supplementals and amendments to alter this proposal as conditions
As we address the immediate
needs of our residents and plan for the future, one thing has become abundantly
clear to me – our County Government’s revenue structure has reached the
breaking point and must be fundamentally altered.
Our County Charter includes
a provision that limits the growth in property tax revenue – not property tax
rates – to the growth in the Consumer Price Index (CPI) for all consumers in
the Baltimore-Washington Region from the December 1 to November 30 of the
preceding year. Since the Federal Government no longer publishes this index, we
have been using the CPI for just the Washington Region. For the period of
December 1, 2018, to November 30, 2019, the CPI for the Washington region was
only 1.27 percent. No matter how much assessments increase, the total amount of
property tax revenues cannot grow by more than 1.27 percent.
It is important to note
that this revenue limit does not mean the average property tax bill will only
increase by 1.27 percent. Quite the opposite. Most individual bills will
increase (or decrease) by the change in one’s taxable assessment. Since County
law limits growth in assessments to 10 percent in any given year, a property
with such an increase in value will see its tax bill go up by roughly 10
percent. The Charter revenue limit only redistributes the tax burden from
properties with little to no increased value to those properties with the
greatest increase in value. This has meant that some residents in modestly
priced homes have faced 10 percent increases while some high-value properties
actually saw their tax bill cut.
When the County Council
proposed to the voters our current Charter limit on property taxes in 1990, few
people could have foreseen the dramatic changes that would take place in
Montgomery County and around the globe. In the past 30 years, our school
population has grown by 65 percent and our overall population has grown by 40
percent. The services we provide are now more complex and seek to address a range
of challenges, from traffic congestion and climate change to health care
disparities and linguistic diversity. And over the past four decades, our
property tax rate has declined by 35 percent.
We have all witnessed other
local governments regionally and nationally experience generational decline due
to conflicting, irreconcilable fiscal policies. Montgomery County is at the
precipice of such a decline if we cannot get ourselves out of this cycle of
self-enforced structural deficits and inequitable, unpredictable revenue caps.
Therefore, I will be sending the Council a proposal for a Charter amendment
that will revise our revenue cap to provide certainty to homeowners. This
proposal will eliminate our old, cumbersome revenue cap and replace it with a
three percent cap on the increase in any homeowner’s taxable assessment. This
will give our taxpayers real protection from unexpected increases in property
values. It will also provide the County Government with a higher degree of
predictable tax revenues like every other jurisdiction in our region.
Without such a change in
the Charter, our community could be facing a situation in FY21 where a
recession and deflation cripple our ability to provide emergency services and a
quality public education system. This perfect storm would threaten lives and
diminish the value of properties in our County. I will not stand by and let our
community be harmed by the ghosts of voters from four decades ago.
In order to meet the
challenge of our rapidly growing school system over the next year, this budget
proposal also calls for the creation of a 3.1 cent supplemental property tax
rate. State law provides each county with the authority to establish a
supplemental property tax rate exclusively for its public schools. While this
will be the first use of this State authority in our county, three other
counties have already established a similar supplemental tax for their public
schools. Even with this additional funding, we will still be providing the
school system with less support per pupil than in 2010. A decade of slow growth
nationally, unpredictable tax policy changes at the Federal level, and our
severe Charter limit has left our schools playing catch-up on funding while
absorbing an enrollment growth of more than 25,000 new students.
I am proposing this supplemental tax rate this year to partially offset an unexpected underperformance of the property tax for the last two years. In preparing the FY19 County budget, the taxable property base of the County was overvalued. As a result, the property tax rate needed to generate revenues at the Charter limit for the past two years was set too low. This resulted in lost revenues of $80 million, now permanently embedded in our revenue projections. Fortunately, the income tax has overperformed estimates during FY20 to offset this loss. However, even before the current COVID-19 crisis developed, we were forecasting income tax revenues to drop to a lower level. With this supplemental tax rate, we will be back to the rate set for FY17. We will remain significantly lower than other Maryland counties and in line with the residential rates in Northern Virginia. It is also important to note that the Northern Virginia counties charge higher rates for commercial properties with even higher rates for commercial properties in business districts like Tysons and Crystal City.