Montgomery County Executive Marc Elrich today released his recommended Fiscal Year 2026 (FY26) Operating Budget of $7.7 billion. The proposal reflects a commitment to sustaining core services, investing in public education, affordable housing, economic development and public safety while ensuring financial stability amid economic and political uncertainties at the federal and state levels.

“We are facing economic and political uncertainty, but we cannot afford to stand still,” said County Executive Elrich. “This budget makes strategic investments in education, housing and public safety while maintaining the financial stability we need to weather whatever comes next. We must be prepared for challenges ahead while ensuring that essential services remain strong.”

The recommended budget accounts for rising costs due to inflation, contractual obligations with County employees and labor partners, and the elimination of certain federal funding streams. The budget also sets aside $87.2 million in additional reserve capacity to prepare for potential economic disruptions caused by actions at the federal and state levels.

The County Charter requires the County Executive to present a recommended budget by March 15 of each year. The recommended budget will be reviewed by the County Council over the next two months. The Council will adopt the new County budget in May, and it will go into effect on July 1.

Key Highlights of the FY26 Recommended Budget: 

• Largest-ever County contribution to Montgomery County Public Schools (MCPS) with a $250 million increase in local funding

• New public safety measures to improve emergency response and security

• Implementation of a fare-free Ride On bus system

• Necessary tax rate increase to fully fund MCPS and critical services

• Strategic reductions and targeted enhancements while maintaining core County government functions

• Budget amendments likely pending General Assembly action on the State budget and revenues

• Leaves $791 million or 11.2 percent in reserve ($87.2 million above the policy requirement) to address potential State and Federal budget actions

Balancing the Budget: Targeted Reductions and Revenue Adjustments 

The FY26 recommended budget is balanced through a combination of strategic reductions, vacancy savings and a modest property tax adjustment to sustain critical investments, particularly in education.

• $16.8 million in targeted program reductions

• $28.5 million in vacancy savings from unfilled positions

To ensure full funding for MCPS and other essential services, the budget includes a 3.5-cent increase in the education supplemental property tax, generating $56.3 million for Montgomery County Public Schools. This brings the total property tax rate to $1.0605 per $100 of assessed value while maintaining a lower weighted real property tax rate than neighboring counties.

Recognizing the need to minimize the impact on homeowners, the proposed budget also expands tax relief measures:

• Property Tax Credit increased by 25 percent to $860

• Fully offsets any tax increases for homes assessed at $495,000 or less

“Balancing this budget meant making difficult choices, but our focus remained on protecting our core services—education, public safety, housing and social services,” said Elrich. “We are using the tool we have for a progressive approach to taxation, shielding homeowners with lower assessed home properties while ensuring we have the revenue needed to keep our schools strong and our essential services running. Without this revenue, significant reductions to critical County programs would have been required. This approach allows the County to maintain financial stability while continuing key investments.”

Even with this increase, the County’s weighted real property tax rate ($1.0605) is far below neighboring jurisdictions. The graph below shows the combined residential and commercial property tax rates for selected jurisdictions. Unlike counties in Maryland, counties in Virginia and the District of Columbia can impose higher property tax rates on commercial property. Legislation is currently under consideration at the General Assembly that would grant Maryland counties this ability.

Supporting Public Schools and Services for Children and Youth 

The County’s investment in MCPS represents more than half of the total tax-supported budget.

The FY26 recommended budget provides a total of $3.62 billion for MCPS, responding to an unprecedented $284 million requested increase from the Superintendent and Board of Education to meet significant needs. The County’s contribution increases by $250 million—the largest-ever year-over-year increase—which funds negotiated compensation agreements, increases the number of special education teachers and paraeducators, and enhances school security.

“We are making the largest ever local investment in our schools because we know the stakes—strong schools mean a strong workforce and economy,” said Elrich.

If adopted by the County Council, MCPS funding will grow by $1,659 per pupil, and the budget will exceed the State’s Maintenance of Effort requirement by over $256 million. Pending final action on the budget by the General Assembly, County Executive Elrich will send amendments if needed.

The budget also expands early childhood education initiatives, providing $4 million in additional funding for child care subsidies and support programs. Additionally, the budget funds:

• $1.7 million addition for School Health Services – including $1.5 million for Blueprint-required nurses in new community schools

• $414,000 for new Linkages to Learning program at Burnt Mills Elementary, Greencastle Elementary and Silver Spring International Middle schools

• $688,000 to expand Excel Beyond the Bell to East Silver Spring Elementary and Waters Landing Elementary School

• Expands School-Based Food Assistance Grant Program to 20 additional schools using a combination of existing funding and a $300,000 enhancement

• $65,000 to improve recruitment and retention of bilingual therapists

Affordable Housing Preservation and Production 

The FY26 recommended budget continues to prioritize housing affordability by directing $312.8 million toward affordable housing preservation and production. This also includes increased funding for rental assistance, homeownership support and revitalization efforts in struggling communities.

Key investments include:

• $59.8 million for the Housing Initiative Fund, including:

• $25.4 million for the Rental Assistance Program

• $12.4 million for multifamily housing production and preservation

• $9.7 million for Housing First programs

• $5.5 million for Homeowner Downpayment Assistance

• $2 million for Building Neighborhoods to Call Home

• $4.8 million for other expenses

• $107 million for Affordable Housing Acquisition and Preservation projects, including $75 million in new funding

• $1.9 million for Troubled and Distressed Common Ownership Communities

“Housing affordability remains one of our greatest challenges, and we are putting real resources into solving it,” said Elrich. “This is the largest investment in affordable housing in the county’s history. We cannot let affordability slip further out of reach for our residents. My FY26 Recommended Operating Budget provides financing for the County’s full spectrum of affordable housing and associated services.”

Enhancing Public Safety and Emergency Services 

Investments in public safety remain a critical component of this year’s budget. The proposal includes funding to expand the “Drone as a First Responder” program, strengthen real-time crime analysis capabilities and improve emergency response times by adding a new Basic Life Support unit.

• Montgomery County Fire & Rescue Service:

• New Basic Life Support Unit for emergency response

• Adds position to enhance public education and outreach

• Supports two civilian EMS educators for the High School Cadet Program

• Montgomery County Police Department:

• Drone as a First Responder Program expanded to Germantown (bringing total locations to five)

• 15 security guards to enhance safety and security for Progress Place

• Digital forensic software investment for crime investigations

• Launches “Speed on Green” traffic camera pilot program

• Department of Corrections and Rehabilitation:

• Addresses necessary cost increases for overtime, food, and pharmacy needs

• Emergency Management and Homeland Security:

• Replaces reduced federal support with County funds for critical emergency response programs

• Continues $300,000 in one-time funds to support nonprofit organizations at high risk of experiencing hate crimes for a total of $1.2 million

“We need to be smart about public safety—not just reactive, but proactive,” said Elrich. “That means investing in the right tools, technology and personnel to improve emergency response and crime prevention. This budget strengthens our fire and rescue services, enhances crime analysis capabilities and expands our Drone as a First Responder program—because faster response times and better coordination save lives. We’re also making targeted investments in security and emergency preparedness to protect our most vulnerable residents and ensure that we are ready for any crisis that comes our way.”

Transportation and Transit 

The FY26 recommended budget advances Montgomery County’s commitment to a modern, sustainable and equitable transit system by making Ride On a fare-free service. This move prioritizes accessibility while eliminating outdated fare collection costs, improving operational efficiency and encouraging ridership growth.

“Zero fares support the County’s equity goals, with the potential to boost ridership to shift more trips to transit, in support of climate and sustainability goals,” said Elrich. “From a budget perspective, a zero-fare policy eliminates the need to replace the obsolete fareboxes on Ride On buses or develop a fare enforcement system, which would burden County residents who can least afford fines. Ride On has seen consistent ridership growth but also increased fare evasion, such that in FY25, fare revenue is expected to be $1.6 million. This represents a $1.2 million decline year-over-year and an $18.9 million decline from FY19.”

Additional key investments include:

• Expands Flash Bus Rapid Transit with Howard County partnership

• Further electrification of the bus fleet, reaching 112 total electric buses by the end of FY26

• Solar microgrid project at the Gaithersburg bus depot

• Necessary bus shelter maintenance upgrades

“I am pleased that we are able to partner with Howard County to expand Flash service to allow transit between Columbia down to Silver Spring. However, I continue to be concerned about our ability to build the transportation infrastructure that a 21st-century community must have to remain competitive,” said Elrich. “Our current property and real estate transaction tax structure is centered on the taxation of residential development. It is reflective of the economy of the 1950s and 1960s, which was fueled by post-WWII rapid growth of residential development. During this time, Montgomery County was able to build the best schools and modern transportation infrastructure. However, as we have become a mature and developed community, this tax structure is no longer sufficient or equitable for us to have the transportation infrastructure needed to develop and sustain a strong 21st-century economy.”

Support for Individuals and Families 

The FY26 recommended budget prioritizes critical services for vulnerable residents, ensuring that individuals and families in Montgomery County have access to stable housing, health care and essential support programs. With federal funding reductions and rising costs, the County is stepping up to fill gaps and sustain programs that serve those most in need.

Investments in Services to End and Prevent Homelessness:

• $6.9 million increase for the Short-Term Housing and Resolution Program

• $2.9 million increase for eviction prevention

• $2.0 million increase for the Rapid Rehousing Program to help residents struggling with rents

• $1.2 million increase to address the end of Federal support for the Housing Initiative Program

Key investments in health care:

• $2.2 million increase for Montgomery Cares Clinics to expand services, meet enrollment growth and open a new center at the Islamic Center of Maryland

• $300,000 increase to address the lack of dental services in East County

• $722,000 increase for HIV/AIDS and STI services in response to federal grant reductions

• $148,000 increase to continue senior nutrition services at the Silver Spring Recreation and Aquatic Center

“People don’t stop needing support just because federal dollars dry up,” said Elrich. “When residents are at risk of losing their homes or struggling to afford medical care, we need to step in. This budget strengthens our safety net, keeps people housed, expands health care access and ensures seniors and vulnerable populations receive the services they rely on. We are investing in people because that’s what builds a stronger community.”

Investing in Climate and Environmental Sustainability 

The FY26 budget reaffirms Montgomery County’s commitment to environmental sustainability and climate resilience, dedicating $379.2 million in operating and capital funds to advance key initiatives. These investments build on the County’s Climate Action Plan by addressing waste management, renewable energy and clean water protection while ensuring long-term sustainability.

Key environmental investments include:

• Initial design of a Material Recovery and Biological Treatment Facility to modernize waste processing, allowing for the eventual shutdown of the Resource Recovery Facility

• Continued funding for an improved recycling system

• $250,000 for public outreach on the County’s plastic bag ban ahead of the January 1, 2026 law change

• $150,000 increase in funding for the Clean Water Montgomery Grant Program

• Restoration of $230,000 in communications support for the Climate Change Planning Non-Departmental Account

• $15.8 million for the Montgomery County Green Bank, ensuring continued support for clean energy initiatives

“Our environmental commitments are not just words on paper—we are putting real dollars behind them to ensure a healthier, more sustainable Montgomery County,” said Elrich. “We are moving forward with the critical work of shutting down the incinerator, modernizing our waste system and expanding clean energy investments. These are necessary steps if we are serious about tackling climate change, improving air quality and making sure our policies match our values.”

Workforce and Economic Development 

Montgomery County’s workforce and business community are facing new challenges due to federal decisions that are impacting key industries, funding streams and workforce development programs. To ensure that the County remains a competitive economic hub, the FY26 budget prioritizes strategic investments that strengthen local job training, support entrepreneurs and expand opportunities for business growth.

Key investments include:

• $2.5 million for WorkSource Montgomery to continue job training and workforce development efforts

• Additional support for Summer RISE and workforce programs at the Montgomery County Correctional Facility, which were previously supported by federal funds

• $580,000 for BioHub Maryland, further establishing Montgomery County as a leader in the life sciences industry

• $5.3 million for the Montgomery County Economic Development Corporation to drive business growth and retain key industries

• Additional support for business development and marketing efforts

• $4.6 million for business incubator programs, providing resources for entrepreneurs, mentoring and ecosystem support

“As we navigate economic shifts and workforce challenges, we must be proactive in supporting our residents and businesses,” said Elrich. “This budget ensures that we continue to invest in our workforce, attract high-quality jobs and build a strong economic future. By expanding job training, supporting innovation and helping local businesses thrive, we are strengthening the foundation for long-term economic success.”

Click here for full news release from the Montgomery County Government