A Critical Analysis of the FY2027 Montgomery County Budget

Prepared by the Montgomery County Republican Central Committee  |  April 2026

EXECUTIVE SUMMARY

Montgomery County is not broke. It is broken — broken by political will.

Since Fall 2023, a state-authorized property tax rate hike and back-to-back SDAT reassessment cycles have flooded the County with record revenues. Income tax collections surged. Property tax collections climbed without another rate increase. A $260 million windfall arrived in November 2025 alone. Yet County officials stood before cameras and declared a "structural deficit" — then proceeded to propose an $8.02 billion budget, a 26% spending increase in four years, and a progressive income tax hike they called a "restructuring."

This report documents what the money bought — and what it did not. Residents are paying 29% more in property taxes than four years ago. Their streets are not safer. Their schools are not dramatically better. What did grow: county union paychecks at 6.5%+ effective raises per year while federal employees received 1.0%; non-competitive grants to political advocacy organizations that campaign for the same incumbents who write them checks; and a spending trajectory that the County's own Revenue Estimating Group warns is unsustainable by $854 million over six years.

KEY FIGURES: Budget grew $1.67B (26%) in 4 years. Tax bills up 29.3%. Revenue exceeded expenses by $231.7M in FY25 — yet officials claim insolvency. A $257M structural deficit is already projected for FY28.

SECTION 1: THE REVENUE SURGE OFFICIALS WON'T ACKNOWLEDGE

Fall 2023 Property Tax Rate Hike

In Fall 2023, the County Council raised the property tax rate from $1.1035 to $1.1522 per $100 of assessed value — a 4.41% jump on top of rising assessments. In FY26, the proposed rate climbed again to $1.2222 per $100, a 10.8% cumulative rate increase since FY22 on top of soaring assessed values.

SDAT Reassessments: MoCo's Numbers, Not the State Average

State officials cite statewide average assessment increases. These averages are deliberately misleading when applied to Montgomery County. Maryland assesses on a 3-year rolling cycle:

• MoCo Group 3 (2024 cycle): residential assessments +21.0% |  Statewide: 23.4%
• MoCo Group 1 (2025 cycle): residential assessments +17.7% |  Statewide: 20.1%
• MoCo Group 2 (2026 cycle): residential assessments +12.6% |  Allegany County: 14.4%  |  Statewide: 13.2%

The comparison to Allegany County is a political sleight of hand. Allegany's median home value is ~$150,000. Montgomery County's is ~$700,000. The same percentage produces a radically different dollar impact:

Source: SDAT January 1, 2026 Reassessment Press Release; Maryland Department of Assessments and Taxation

Revenue Surge — The Real Numbers

• FY25 property tax collections: $2.127 billion — up 2.9% from FY24 with no additional rate increase
• FY25 income tax collections: $2.27 billion
• FY25 total revenues: $6.3 billion — revenues exceeded expenses by $231.7 million
• FY26 property tax budget: $2.434 billion; income tax budget: $2.274 billion
• November 2025: reconciling income tax distribution of $260 million — nearly $45 million above expectation

BOTTOM LINE: Revenues exceeded spending by $231.7M in FY25. This is not a government out of money. It is a government that cannot stop spending.

Property Tax Impact on Real Families

Inflation same period: approximately 14%. County property taxes grew at more than twice the inflation rate.

Renters and businesses are not exempt. Apartment owners face $945 more per unit in FY26 vs. FY22 — costs passed directly to tenants. A $10 million commercial building pays $22,050 more annually. These costs flow into higher rents, reduced hiring, and business exits from the County.

SECTION 2: THE SPENDING BINGE

2A — Budget Growth: FY23 to FY27

Sources: Montgomery County FY27 Recommended Operating Budget; County Council Budget Committee records

The budget has grown at nearly DOUBLE the rate of inflation over four years — even as officials claim fiscal restraint.

2B — Union Contracts: Built for Politicians, Not Taxpayers

Montgomery County's collective bargaining agreements with MCGEO and UFCW 1994 have awarded employees raises that dwarf what federal workers — or most private sector employees — receive. This is a political transaction: incumbents award generous contracts; unions provide campaign support and ground troops at election time.

Sources: MoCo CBA FY24-26; FY27 OMB Workforce/Compensation Report; Federal Register Jan. 2026 GS pay schedule; BLS CPI-W

A county employee eligible for both a General Wage Adjustment and a service increment received an effective raise of 6.5% or more in FY26 — while a federal employee across the Beltway got 1.0%. Even Council President Fani-González admitted in her April 2026 memo that her proposed 2.0% GWA "is as large or larger than most private sector and other public sector employees."

• Compounding effect: 3% GWA + 3.5% service increment = 6.5%+ effective raise in a single year
• FY24 alone: Some employees received TWO raises — 3% in January and 3% more in June = 6% in one year
• Federal comparison: Federal GS workers received 1.0% in FY26 and 1.0% in FY27 — a real wage cut after inflation

County employees earning $80,000 received $5,200+ in raises in FY24 alone. Federal workers at the same salary got $800 in FY26. Same taxpayers funding both — radically different outcomes.

2C — Your Tax Dollars Funding Their Election Machine: The NGO Racket

Beyond major line items, the County quietly routes tens of millions annually to nonprofits that double as political advocacy operations — groups that campaign for open borders, rent control, and Democrat candidates, then receive taxpayer grants from the very officials they elect.

Tax Dollars  ==>  NGO Grants  ==>  Political Activism  ==>  Incumbents Re-Elected  ==>  More Grants

CASA de Maryland

• $16.4 million in active non-competitive Montgomery County contracts as of late 2023
• January 2024: Council unanimously added $338,500 more — single contract award of $788,500 — despite ongoing controversy
• Simultaneously funded by Prince George's County, Baltimore City, Baltimore County, the State of Maryland, Fairfax County VA, and the federal government
• Organized as a 501(c)(4) political advocacy entity — campaigns for open borders, driver's licenses for undocumented immigrants, and Democratic candidates by name
• None of these contracts were competitively bid. The Council simply wrote a check.

Sources: Montgomery Perspective (Nov. 2023): "Should CASA Get Our Tax Dollars?"; Montgomery Perspective (Jan. 2024): "Council Unanimously Approves More Non-Competitive Money for CASA"

Montgomery County Renters Alliance

• FY26 county contract: $259,194 — non-competitive, awarded for "tenant education services"
• Executive Director compensation from this contract: ~$173,000 — fully two-thirds of the entire contract value
• $173,000 exceeds the salary of Maryland's Lt. Governor ($165,000) and a Montgomery County Councilmember ($167,000)
• Lobbies for rent control and just-cause eviction — policies that devastate rental housing supply — while campaigning for the incumbents who fund it

Source: Montgomery Perspective (Oct. 2025): "Banerjee Blasts Renter Leader's $170K in Compensation"

The Full Pattern

Sources: Montgomery Perspective (Jan. 2024, Nov. 2023, Oct. 2025); County Council budget amendments; Office of Grants Management FY26-27 notices

SECTION 3: WHAT THE COUNCIL PRESIDENT'S OWN MEMO REVEALS

On April 17, 2026, Council President Natali Fani-González circulated "A Progressive Approach to the FY27 Budget." Billed as a fiscally responsible alternative to County Executive Elrich's proposal, it is in fact a roadmap for higher taxes, sustained spending growth, and redistribution dressed in the language of restraint.

The Tax "Restructuring" That Is Actually a Tax Increase

• Fani-González proposes a progressive income tax restructuring: new brackets at 2.5%, 2.8%, 3.2%, and 3.3%
• Net FY27 effect: +$82 million in additional revenue — she acknowledges this explicitly. This is an $82 million tax increase, labeled as "restructuring."
• The higher income taxes fall on the demographic — upper-middle-class professionals — that MoCo must retain to remain competitive with Fairfax County, Howard County, and other Maryland jurisdictions

$88 Million in Discretionary Spending — Identified by Her Own Memo

Fani-González's memo includes an "optional programs" list she herself acknowledges as discretionary. Total: $87,956,524. If you can call it optional, you can cut it.

Source: Council President Fani-González memo, "A Progressive Approach to the FY27 Budget," April 17, 2026

MCPS: $584 Million Added — And Still Asking for More

• MCPS received $584.4 million in added County funding from FY22 to FY26 — averaging $146.1 million per year in new spending
• Fani-González proposes an additional $90 million (+3.8%) in FY27 County funding for MCPS — calling this the "restrained" option
• The question no one in the majority asks: with $584 million in additional investment, what measurable outcomes improved?

SECTION 4: THE COMING FISCAL CRISIS

The Revenue Estimating Group Warning

In December 2025, the County's own Revenue Estimating Group (REG) issued a stark warning: revenues will fall $100 million to $270 million short of spending projections every year from FY27 through FY32. Cumulative projected shortfall: $854 million.

This is not a Republican projection. This is the County's own analysts warning that the current trajectory is mathematically unsustainable. The Council received this report — and then proposed an $8 billion budget anyway.

The Structural Deficit Admission

• Fani-González's own memo projects a $257.3 million structural deficit in FY28 — one year from now
• She implies this will require "approximately a 9-cent property tax increase" in FY28 — on top of increases already imposed
• The income tax restructuring's $82 million is largely one-time in nature: $50 million to reserves, $32 million for spending — it does nothing to address the structural imbalance

Translation: The majority knows the spending is unsustainable. They are passing the bill to next year's taxpayers — and next year's elected officials.

Five-Year Scorecard

Sources: County REG December 2025 Quarterly Report; FY27 Recommended Operating Budget; Fani-González April 2026 memo

SECTION 5: WHAT RESPONSIBLE GOVERNANCE LOOKS LIKE

The MCGOP does not oppose all spending. We oppose reckless spending financed by tax increases that hit working families hardest — justified by a "deficit" narrative contradicted by the County's own financial data.

Immediate Steps

• Freeze the property tax rate at current levels. Revenues are already at record highs — no increase to $1.2222 is justified.
• Adopt the full $87.9 million in discretionary cuts Fani-González identified in her own memo — not just a fraction of them.
• Audit all non-competitive NGO contracts. Require competitive bidding above $50,000. Terminate contracts with organizations engaged in partisan political activity using public funds.
• Freeze new union GWA negotiations until the structural deficit is resolved. Existing service increments are already generous; no new General Wage Adjustment while the County projects a $257 million shortfall.
• Publish a full list of all NGO and community grant recipients with contract amounts, performance metrics, and documentation of political activity — posted publicly online.

Structural Reforms

• Reform the structural deficit. The $257 million FY28 gap is the result of spending commitments made without revenue certainty. Require a 3-year balanced budget outlook before approving annual budgets.
• Right-size MCPS funding. $584 million in new County money over four years demands a return-on-investment accounting: test scores, graduation rates, teacher-to-administrator ratios. Outcomes must drive appropriations.
• Benchmark county compensation to the federal GS schedule and regional private sector median — not to each other. County employees should not systematically outpace federal and state workers funded by the same taxpayers.
• Create a Montgomery County Taxpayer Protection Act requiring a referendum for any property tax rate increase above the rate of inflation.

CONCLUSION

Montgomery County taxpayers have been extraordinarily patient. They have absorbed a 4.41% rate hike on top of 17%–21% assessment increases. They have watched their county's budget balloon by $1.67 billion in four years — nearly double the rate of inflation. They have funded $16 million in no-bid contracts to political advocacy organizations and watched union employees collect 6.5% effective raises while federal workers across the Beltway received 1%.

And now they are being asked to fund an $8 billion budget, restructure the income tax upward by $82 million per year, and accept that a $257 million structural deficit is already baked into next year.

The majority's answer to every problem is the same: more money, more taxes, more spending. The data shows that record revenues have not produced fiscal stability — they have produced a political class comfortable spending as if the boom will last forever, confident they will never be held accountable.

Montgomery County Republicans believe residents deserve a government that lives within its means, respects their property, and spends their money as carefully as they earned it. The FY27 budget is not that government. Montgomery County can — and must — do better.

Montgomery County Republican Central Committee

15833 Crabbs Branch Way, Rockville, MD 20855

mcgop.com  |  [email protected]  |  (301) 417-9256

By Authority of Brigitta Mullican, Treasurer

SOURCES & REFERENCES

1. SDAT January 1, 2026 Reassessment Report — https://dat.maryland.gov/SiteAssets/Pages/Assessment-Reports/January%201,%202026%20Press%20Release%20and%20Report.pdf
2. Montgomery Perspective — MoCo Group 1 Assessments Up 17.7% (Dec. 2024) — https://montgomeryperspective.com/2024/12/31/moco-group-1-property-assessments-up-by-17-7-percent/
3. Montgomery County FY25 CAFR / Financial Statements — https://www.montgomerycountymd.gov/Finance/Resources/Files/data/financial/acfr/FY2025_ACFR.pdf
4. Montgomery County Revenue Estimating Group — Dec. 2025 Quarterly Report — https://www.montgomerycountymd.gov/Finance/Resources/Files/REG_Quarterly_2025_12_15.pdf
5. Council President Fani-González — "A Progressive Approach to the FY27 Budget" (April 17, 2026) — https://assets.montgomerycountymd.gov/files/2026-04/CP-Budget-Approach-4-17-26.pdf
6. Montgomery County FY27 Recommended Operating Budget — https://apps.montgomerycountymd.gov/BASISOPERATING/Common/Index.aspx?FY=2027&VER=REC
7. Montgomery County Employees CBA (FY2023–2026) — https://www.montgomerycountymd.gov/pol/Resources/Files/About/Montgomery-County-Employees-Collective-Bargaining-Agreement-July-1-2023-thru-June-3-2026.pdf
8. Federal Register — January 2026 GS Pay Schedules — https://www.federalregister.gov/documents/2026/02/03/2026-02189/january-2026-pay-schedules
9. Montgomery Perspective — Should CASA Get Our Tax Dollars? (Nov. 2023) — https://montgomeryperspective.com/2023/11/08/should-casa-get-our-tax-dollars/
10. Montgomery Perspective — Council Approves More Non-Competitive Money for CASA (Jan. 2024) — https://montgomeryperspective.com/2024/01/24/council-unanimously-approves-more-non-competitive-money-for-casa/
11. Montgomery Perspective — Banerjee Blasts Renter Leader's $170K Compensation (Oct. 2025) — https://montgomeryperspective.com/2025/10/23/banerjee-blasts-renter-leaders-170k-in-compensation/