Montgomery County Councilmember Kate Stewart made the following statement about the Fiscal Year 2027 Operating Budget, the Fiscal Year 2027 Capital Budget and the Fiscal Year 2027-2032 Capital Improvements Program after the Council reached its preliminary agreement today. The Council’s final vote on the capital and operating budget resolutions for Montgomery County is scheduled for May 21.
Below is Councilmember Stewart’s full statement:
Today, the Council voted to move forward with the Fiscal Year 2027 budget. We supported a $7.9 billion Operating Budget and a $6.3 billion Capital Improvements Program for the upcoming year. This budget reflects a $143 million increase in local operating funding for Montgomery County Public Schools (MCPS), a 6.1% increase from last year.
This is the 13th municipal budget I have worked on as an elected official, throughout the first Trump Administration, COVID-19 and now. I can say this truly has been the most difficult budget that I have worked on.
I want to recognize the incredible collaboration of all of our County departments, our central staff at the County Council, and the many residents of all ages who reached out to my office and spoke to me with feedback on their priorities. Ensuring that we can work together in times like these is essential and I appreciate everyone.
I know at this is a time many are scared, anxious, frustrated, and even angry at the current circumstances. We are trying to fulfill needs with fewer resources and many unknowns. The role of government is to help residents through difficult times, to serve people and use our tax dollars to improve their lives.
This budget represents compromises, and even with all those compromises, we do not address all needs for many including our nonprofits, safety net programs and our schools.
We did not finish in an optimal place. I wish we had more funding available for MCPS in HVAC, roof repair, outdoor play spaces, and school security, and for our nonprofit partners. I know the lack of funding will cause difficult decisions by our partners.
To make this budget work, we had very specific options to meet our funding needs, and I want to share what we did. First, the Council cut many county services. We reduced the County government budget by over $100 million. These cuts are not inconsequential. But to make the puzzle work, we either needed to increase taxes, or find additional reductions in budgets that had already been deeply cut. New property taxes were not supported by my colleagues, which left us few options.
This budget is not something I am cheering for. Today, I supported this budget because I believe at this time this is the best we are going to do.
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We started this budget with the Executive’s 6.3 percent property tax and an income tax increase for all residents that would have been incredibly difficult for residents, given the cost of living and rising state assessments. Not only would this initial budget overly burden our residents, the proposed capital improvement projects would have saddled future budgets with fewer resources.
It is also important to note that the federal government and the state have passed down or cut tens of thousands of dollars of funding to the County. We had numerous positions to fund in key departments, such as our Office of Emergency Management and Homeland Security that used to be funded through federal programs.
Additionally, due to actions by the federal government the needs in our County have grown and our residents are being forced to stretch out their paychecks, if they are still getting paychecks. Residents are also feeling the impacts of high gas prices and grocery costs.
Unfortunately, we know that the worst is yet to come. Many cuts to federal programs and new program guidelines do not take effect until after the midterm elections.
I do want to recognize what we have been able to accomplish in this budget:
- A progressive income tax that we have been pushing for years and reducing taxes for 75% of income tax filers in this county, everyone who makes less than $150,000. Our residents with the lowest incomes who are bearing the brunt of inflation and federal aid cuts will see a reduction in their income taxes, while those with higher incomes will pay more. For more information about what a progressive income tax means, you can watch the Government Operations and Fiscal Policy Committee session that I chaired on April 29, 2026.
- To offset the cost of the progressive income tax, we did eliminate the Income Tax Offset Credit (ITOC). The ITOC is a tax credit that was only available to owner occupied homeowners who also have an income. Renters are not eligible for this tax credit. The credit also required an application, so homeowners who are not aware of the credit have not applied for and claimed it. In recent years, we have seen a decrease in the number of people who receive this credit.
I want to make sure that homeowners know there are other property tax credit programs within Montgomery County that they can still take advantage of. These include:
- The County Homestead Tax Credit;
- The Individuals 65 and Above and Retired Military Services Members Tax Credit;
- The Senior Property Tax Credit; and,
- The State Homeowners Property Tax Credit.
With the removal of the ITOC and combined with a real progressive tax plan, we put in place a new system that benefits those with less. We are asking those with properties worth more than $800,000 and who make more than $150,000 to pay more. These properties are well above the median home price in the county of about $645,000. The average homeowner earning $150,000 with a $645,000 home and no ITOC will see a $450 tax break, as compared to paying $506 more under the Executive’s plan.
Now, most residents will receive tax relief that doesn’t require homeownership or an application process.
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I had hoped that budget savings from the ITOC could provide $44 million in one-time revenue to fund critical heating, ventilation, air conditioning, and roof replacements in Montgomery County Public Schools. We heard loud and clear from residents out in the district and at hearings of the need for repairs at schools. The decision by the Council was to shift this funding into the MCPS operating budget. I am concerned by the lack of funding for these critical infrastructure needs in our schools, and understand the need to fund MCPS’ operating budget.
We did fund a number of our key social safety net programs. As the Councilmember with the most shelters for those facing housing insecurity in their district, I pushed for and am glad to see us fully funding programs for our unhoused community.
I also want to recognize that we were able to increase funding for nonprofits. In his proposal, the Executive set the inflationary adjustment for nonprofits at 2.5%. While I wish it was more, we were able to increase it to 3.5%.
We have prioritized keeping county employees and residents whole. We honored our public employee contracts and MCPS should do the same. The Council legally cannot prescribe how MCPS meets our funding level, that is the Board of Education’s job. We know making changes to their budget will not be easy – the Council has spent weeks grappling with reductions to our County government that are extreme, and pushed programs and anything else that can be deferred.
We’ve tried to balance needs with higher costs hitting residents and affecting our government delivering services. We took a hard look at how our services are and aren’t working, and mitigated proposed tax increases that would have been broad, sudden, and regressive. We cannot compound the economic pain that our lowest income residents are feeling, and we’re going to keep standing up for residents against abject cruelty. We take care of our own in Montgomery County.
I hope the decisions we make here will help us meet the needs of our community today, but we must recognize that in the next few years, things may not be much better. We must be thinking about how we are preparing ourselves for what we know will be rough times, with likely more state costs pushed down and federal cuts.
This is not the best or perfect budget, but I voted for it today because we need to move forward to support our County residents as best we can.
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Read the original article at mccouncil