The Montgomery County Council Government Operations and Fiscal Policy Committee on Wednesday recommended that the full council adopt a modest increase to the county’s FY27 spending affordability guideline and six‑year capital improvements program.

The committee endorsed “Option B,” a staff‑developed middle ground that raises general obligation (GO) bond capacity by about $20,000,000 per year (roughly 7% over the current trajectory of $280,000,000 per year) and increases park and planning bond capacity by $1,000,000 per year to $9,000,000. Committee members said the recommendation will go to the full council for adoption by the first Tuesday in October, as required by county code.

Committee members and staff framed the decision as an affordability judgment rather than a statement of need: the SAG sets bond capacity based on revenue and debt metrics, not project demand. Council staff presented three options: Option A (maintain the current trajectory at $280,000,000 per year for GO bonds and $8,000,000 per year for park and planning); Option B (the committee’s recommended middle option, adding approximately $20,000,000 per year in GO capacity and $1,000,000 per year for parks); and Option C (the county executive’s proposal, which would raise year‑one GO capacity to about $340,000,000 and increase total six‑year bond capacity by roughly $510,000,000 compared with Option A).

Rachel Silberman of the Office of Management and Budget said the county’s debt‑affordability metrics have improved compared with the prior SAG review and, in the executive branch’s view, the recommended executive levels are affordable under certain alternate revenue measures. “The debt affordability metrics look better than they have in 15 years,” Silberman said, adding that the executive’s recommended debt levels are “affordable, in our view, based on the metrics that you see before you.”

County finance staff described five quantitative debt‑capacity indicators used to test each option, including: total GO debt as a percentage of full market value (guideline: not to exceed 1.5%); debt service as a share of general fund operating revenue (guideline: not to exceed 10%); real debt per capita; debt as a share of total personal income (guideline: not to exceed 3.5%); and a payout ratio (share of debt principal paid in 10 years). Staff said all three options meet the GO debt‑to‑assessed‑value guideline and the debt‑to‑personal‑income guideline, but all three options exceed the real debt per‑capita guideline under current population forecasts. The debt‑service‑to‑revenue indicator performs differently across the options: Option A fails the first year but improves in later years; Option B fails in the first three years then improves; and Option C remains above the 10% guideline for five of the six years in the CIP period.

Staff cautioned that assumptions drive those results. Department of Finance projections used in the analysis assume a 5% annual interest rate for all six years, upwardly revised operating revenue growth for FY26 (7.3% year‑over‑year) and slightly higher assessed property tax base projections for FY27–30 compared with the February forecast. Staff also noted qualitative risks that are harder to quantify, including potential federal workforce layoffs and a possible federal government shutdown that could affect local revenue later in the fiscal year.

Parks Director Mittie Figueredo urged the committee to treat park bond capacity separately from the county’s GO‑bond discussion, saying the additional $1,000,000 per year for parks would cost the parks operating budget about $80,000 per year in debt service and that the department can “absorb” that amount. “We believe that about $80,000 a year is absorbable for us,” Figueredo said, asking the committee to “decouple” park bond capacity from the larger GO‑bond decision.

Several council members said they preferred a cautious approach while retaining flexibility to revisit the SAG if economic conditions deteriorate. Councilmember Fritz argued against changing the calculation methodology midprocess to achieve a preferred outcome, calling such a move “fiscally irresponsible.” Councilmember Katz and others said they could accept Option B, and Councilmember Cass described Option A as the most conservative choice but supported the committee’s compromise recommendation to send Option B to the full council.

The staff analysis showed the operating‑budget debt‑service impact of Option C would exceed Option A by approximately $1,500,000 in FY27 and grow over time (staff estimated a $31,500,000 annual difference by FY32), reflecting the long tail of 20‑year GO bonds. The executive also provided an alternative revenue metric that incorporates certain program revenues (for example, fees for fire services, recreation and mass transit) and would make the debt‑service ratios appear more favorable; council staff advised against changing the metric during this review and recommended tabling a methodological change for a future SAG review.

Action and next steps: the committee recorded a unanimous recommendation to transmit Option B to the full council. The full council must adopt the spending affordability guideline by county code by the first Tuesday in October for odd‑numbered years and may revisit approved FY27–28 guideline amounts by the first Tuesday in February, with up to a 10% upward adjustment for years 1 and 2 as allowed by county code.

Full council review will include the staff analysis, the executive’s transmittal materials, and additional presentation of debt‑service and revenue assumptions; committee members said they expect to reassess the guideline in January or February if economic indicators or federal workforce impacts warrant reconsideration.