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Montgomery leaders say quarter finished positive as federal funding pause raises questions
Summary
City officials reported modest revenue gains for the first quarter of fiscal 2025 but said a recent Office of Management and Budget memo pausing new federal financial assistance could affect projects; council asked staff to track impacts.
Montgomery Mayor Reed and city staff reported that the first quarter of fiscal 2025 ended with modest revenue gains across several tax categories but cautioned that a recent Office of Management and Budget memorandum temporarily pausing some federal financial assistance could disrupt projects that rely on federal funds.
The update, delivered to the Montgomery City Council during its meeting, said sales and use tax was essentially flat compared with December of the previous year, while lodging tax showed a rebound of more than 16% in December and roughly 10% for the quarter. Gasoline tax collections gained about 5% in December and nearly 2% for the quarter; alcoholic beverage tax declined nearly 3% for the same month but grew more than 13% for the quarter, the presentation said.
“Year over year, sales and use tax revenue has a growth rate that is positive and nearly 2% more than the Q1 of fiscal year 2024,” the city’s financial update said.
City staff also briefed the council on a Jan. 28 memorandum from the Office of Management and Budget directing federal agencies to pause obligations and disbursements of federal financial assistance while they complete a review. The memorandum, according to the city briefing, “does not apply to Medicare, Social Security benefits, or any direct assistance provided to individuals.” The city’s federal government relations firm, Squire Patton Boggs, was identified as involved in tracking the development.
Mayor Reed and staff said they are seeking legal and lobbying advice about whether the OMB action can lawfully pause or withhold funds that Congress has appropriated. “Can the executive order usurp Congress’s legal appropriation powers to disperse federal money? That is up in the air right now,” the mayor said. The city said it expects updates as federal guidance and any challenges develop.
The council did not take formal action on federal guidance at the meeting but asked staff to continue monitoring possible effects on city projects and to report back when more information is available.
Ending: City staff said they will circulate further information to council members as it arrives and that the city’s federal lobbyists and legal counsel are engaged in evaluating the memorandum’s effect on specific grant-funded projects.
