A Critical Analysis of the FY2027 Montgomery County Budget

Prepared by the Montgomery County Republican Central Committee

April 2026

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.

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.

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: 4%

• MoCo Group 1 (2025 cycle): residential assessments +17.7% — Statewide: 1%
• MoCo Group 2 (2026 cycle): residential assessments +12.6% — Allegany County: 4%
  • Statewide: 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 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

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.

2A — Budget Growth: FY23 to FY27

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

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 received 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 + 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 0% in FY26 and 1.0% in FY27 — a real wage cut after inflation

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.

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 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 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 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: Fund ==> Elect ==> Fund Again

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

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%, 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 and Howard County

Who Actually Pays: High Earners Carry the Tax Base

Before raising income taxes on “high earners,” the County Council should reckon with how concentrated MoCo’s income tax base already is — and how exposed the County becomes if even a fraction of those earners leave.

• Montgomery County accounts for one-sixth of Maryland’s population but would pay 44% of the combined state and county income tax increase in Governor Moore’s FY26 package — more than Baltimore City, Anne Arundel, Baltimore, Howard, and Prince George’s counties
• In the capital gains surcharge, nearly 45% of all affected Maryland taxpayers live in More than three-quarters of that surcharge revenue comes from just ~10,200 filers with income above $1 million.

• The New York City parallel is instructive: NYC’s top 1% of filers — about 41,000 people
  • pay more than 40% of all city income The top 10% pay approximately

two-thirds. The remaining 90% of taxpayers contribute only one-third. MoCo’s income tax structure almost certainly mirrors this concentration.

• People earning $200,000+ account for a majority of MoCo’s total adjusted gross income
  • the direct base from which income taxes are This is not a broad tax. It is a tax on a narrow demographic that has alternatives and the means to act on them.

Among the Highest Combined Tax Rates in the United States

Maryland’s income tax is already among the most burdensome in the country. Adding Montgomery County’s piggyback tax creates a combined burden that rivals New York City

— and in some brackets, surpasses Newark and approaches Yonkers.

Sources: Maryland Comptroller 2026 withholding tables; Maryland Budget Reconciliation Act 2025 (new 6.25%/6.50% brackets effective TY2025); Montgomery Perspective income tax comparison analysis (May 2025). Note: MD capital gains surcharge (+2% on AGI >$350K) and itemized deduction phase-out (7.5% on AGI >$200K) not reflected above — effective marginal rates are higher.

• At the $200,000+ income level — the threshold above which Fani-González’s restructuring bites hardest — MoCo is exceeded only by New York City among major

U.S. jurisdictions. When DC Council Member Jack Evans said “Thank God Maryland keeps raising their taxes,” he was not joking — Virginia and DC benefit directly from MoCo’s self-imposed competitive disadvantage.

• MoCo’s combined rates are already far higher than Virginia and dramatically higher than the Carolinas, Tennessee, and Florida — the exact states that IRS migration data shows

are absorbing Maryland’s departing high-income taxpayers.

The Tax Flight the Council Will Not Discuss

The IRS tracks adjusted gross income (AGI) migration by county every year. The data for Montgomery County is unambiguous.

• MoCo has experienced net out-migration of taxpayer income in virtually every year on From 2012 to 2022, the County averaged $800 million per year in net AGI losses — with the gap growing by an average of $80 million annually.
• People leaving MoCo consistently earn more than people moving in. Out-migrants average $61,540 in per-capita income vs. $54,636 for in-migrants — a $6,905

per-person income gap that compounds across thousands of departing households.

• During the pandemic, MoCo’s high-income households relocated primarily to Florida ($930 million net AGI loss), Delaware ($190 million), Texas ($150 million), and Virginia ($130 million) — Palm Beach, Miami-Dade, and Sarasota counties led the Florida
• Statewide, 58% of Maryland’s lost income came from filers earning $200,000+; another 27% from the $100K–$200K range. High earners are leaving at rates nearly 4x higher than low-income filers — 6% AGI outmigration rate vs. 2.9% for those under $25,000.
• Nationally: In 2023, roughly 700,000 high earners ($200K+) moved across state lines, taking their income with Florida netted $20.7 billion in new AGI; North Carolina gained $3.9 billion; Tennessee gained $2.8 billion. Maryland lost $1.9 billion. The Council proposes to accelerate this trend.

$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. These fall into two categories that warrant different treatment before any final budget decisions are made.

Category A — Clearly Discretionary: Cut or Substantially Reduce

The following programs have no core service obligation and should be eliminated or sharply reduced pending justification:

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

Category B — Requires Further Analysis Before Cutting

Two line items on the discretionary list should not be treated as straightforward cuts without additional review. Both have characteristics that may tie them to core County obligations or revenue-generating functions:

MCGOP position: These two items should be removed from the ‘automatic cut’ list pending a formal service-delivery and ROI review. All other Category A items should be cut immediately.

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 MCPS funding
  • calling this the “restrained” option
• The question no one in the majority asks: with $584 million in additional investment,

what measurable outcomes improved?

Administrative Overhead: The Benchmark Problem

A core driver of MCPS cost growth that receives almost no public scrutiny is administrative overhead. The standard that should apply is not what neighboring Maryland counties spend — it is what the highest-performing, most efficiently run school districts in the United States spend. The numbers from each district’s own official published budgets tell a stark story.

Side-by-Side: MCPS vs. FCPS Administrative Spending

Sources: MCPS FY2025 Operating Budget (montgomeryschoolsmd.org) — Category 1 Administration ($74.9M, 2.2%) + Category 2 Mid-level Administration ($196.0M, 5.8%). FCPS FY2025 Annual Report of Expenditures (fcps.edu) — Administration, Attendance & Health ($154.9M, 3.62%). State reporting categories differ slightly between MD and VA; direction and magnitude are consistent.

• If MCPS ran at FCPS’s 3.62% overhead rate, it would spend approximately $121 million on administration — freeing up roughly $150 million per year that currently never reaches a classroom, without raising a single tax dollar.
• FCPS serves a larger district ($4.28B budget, ~177,000 students) with less administrative spending in dollar terms than MCPS ($3.35B budget, ~155,000 students). Size does not explain the gap — management discipline
• High-performing comparable benchmarks include: Fairfax County VA, Loudoun County VA, Gwinnett County GA, and DuPage County IL — all large suburban districts with strong academic outcomes and leaner administrative structures.
• The County Council should commission an independent administrative efficiency audit of MCPS benchmarked against Fairfax County and other top-performing peer districts before approving any additional funding increases in FY27.

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: $50 million to reserves,

$32 million for spending — it does nothing to address the structural imbalance

Five-Year Scorecard

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

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 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 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 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 evidence of political activity — posted publicly online.

Structural Reforms

• Reform the structural The $257 million FY28 gap results from spending commitments made without revenue certainty. Require a 3-year balanced budget outlook before approving annual budgets.
• Right-size MCPS $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 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.

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 Republican Central Committee

15833 Crabbs Branch Way, Rockville, MD 20855 mcgop.com | [email protected] | (301) 417-9256

By Authority of Brigitta Mullican, Treasurer

1. SDAT January 1, 2026 Reassessment Report https://dat.maryland.gov/SiteAssets/Pages/Assessment-Reports/January%201,%202026%20Press%20Release%20and%2 0Report.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/cafr.html
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://www.montgomerycountymd.gov/council/Resources/Files/agenda/cm/2026/20260417/20260417_CM3.pdf
6. Montgomery County FY27 Recommended Operating Budget https://www.montgomerycountymd.gov/OMB/fy27-recommended-budget.html
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/