Montgomery County Council unanimously approves 3% inflationary increase for nonprofit contracts

The Montgomery County Council on May 8 approved a 3% inflationary adjustment to nonprofit contracts in the fiscal 2026 operating budget, a move council members said is intended to help nonprofit providers recruit and retain staff as costs rise.

The adjustment totals about $5,252,556 across multiple departments and, council staff said, roughly $3.5 million (about 68% of the total) is within the Department of Health and Human Services. Council staff also said each 1 percentage-point change in the inflationary adjustment is equivalent to roughly $1,750,852 across the budget.

Council members framed the vote as a floor rather than a full solution to nonprofits’ financial pressures. “Nonprofit organizations, just like county government, the vast majority of their operating budget is made up in people,” Council member Alden Albanese said, adding that personnel costs are the major driver of nonprofit budgets. “I wholeheartedly support this recommendation,” Albanese said. Council member Ellen Balcom, who said she had run a nonprofit, called the adjustment a matter of parity with county compensation increases and said, “it’s so difficult to meet our basic inflation costs, particularly in keeping our staff.”

Several council members cited anecdotal outreach from nonprofit leaders as they explained their votes. “I have received many emails and calls from our friends,” Council member Maria Feeney Gonzalez said, adding that the nonprofit sector is “part of our workforce” and “we rely on you.” Council member Joshua Friedson said local nonprofits are “core” to the county’s social safety net and described the 3% as “the minimum of what is required to be able to maintain the services that they’re providing on our behalf.”

Council staff presented the recommendation as the County Executive’s proposal for FY26. A hand vote was taken in the chambers and, as the clerk recorded, the motion carried unanimously among those present.

The council’s action places the 3% adjustment in the budget as recommended; members and staff noted that continued federal and state funding shifts could require further action later in the budget process.

The council’s approval does not guarantee individual nonprofits will receive identical contract increases; council staff said the 3% is allocated across multiple department contracts and NDAs and is distributed according to existing contract relationships and departmental budgets.

Council members repeatedly thanked nonprofit leaders for attending the meeting and urged continued partnership as the council and county staff reconcile the full FY26 operating budget in the coming weeks.

While council members described the increase as modest relative to need, they framed it as a baseline step intended to reduce turnover and preserve services that serve many of the county’s most vulnerable residents.