Montgomery County Council approves $7.9 billion operating budget, adopts progressive income tax structure

The Montgomery County Council approved a $7.9 billion operating budget that includes a newly adopted progressive income tax structure, Council President Natalie Fanny Gonzales said during a public question-and-answer session.

Gonzales, who identified herself as council president, said the new tax structure sets a 2.7% taxable-rate band for incomes up to $50,000, a 3.0% band roughly between $50,000 and $150,000, and a 3.3% top rate for taxable income above $150,000, which she said is the maximum the state allows. "I am very proud that we finally passed a progressive income tax structure," Gonzales said.

The council also approved a funding increase for Montgomery County Public Schools (MCPS). Gonzales said the council raised school funding by 6.1% compared with last year, which she described as a $143,000,000 increase, and emphasized that the school board retains authority to decide how those dollars are allocated. "It's up to the school board to decide how they're gonna allocate those funds," she said.

Gonzales described the budget approval as a ‘‘consensus budget,’’ saying she had expected eight supporting votes but that the final tally reached nine. She said she postponed a prior session when some colleagues told her moments before the meeting that they were not ready to vote. "I am not gonna have a session if I don't have every single council member ... really understand that they're about to make a decision that is important," Gonzales said, explaining the delay.

Members of the public pressed the council on transparency after some questioned whether conversations that moved money from the capital improvement program (CIP) into the operating budget occurred out of public view. Gonzales responded that reconciliation items and debates had been aired in full session and that late changes and members not being prepared prompted additional review and packet disclosures. She said the council will hold fall work sessions and convene a task force on financial infrastructure—including labor, business, nonprofits and department heads—to address long-term fiscal sustainability.

On the budget shortfall, Gonzales said the county faces a structural gap that predates the current budget and has been worsened by reduced state and federal funding and local spending pressures. She characterized the gap at roughly $189,000,000 and said closing it will require difficult decisions on spending, increased tax base through housing and job growth, and procedural reforms to how the council conducts budget work.

Gonzales repeatedly cautioned that the county council cannot direct how the school board spends the funds it receives. "The county council has no authority on the school board. 0," she said, stressing that board votes are required before the council can consider claims about specific school line-item cuts or preserved jobs.

Gonzales urged the public to track the fall discussions and said she plans changes to rules of procedure governing committee chairs, virtual participation and motion practice to reduce last-minute confusion in future budget cycles. The session ended with an offer to continue Spanish-language follow-ups one-on-one and an appeal to broader community participation in fall planning.

Next steps: Gonzales said the council will hold work sessions in the fall and convene a task force on financial infrastructure; she also signaled procedural rule changes will be proposed to reduce late-session delays.