Montgomery County officials flag growing budget pressures as 2026 planning begins

Montgomery County finance staff told the Board of Commissioners on Sept. 25 that long‑running revenue growth has slowed and several cost pressures could widen a projected gap when the county begins formal 2026 budget deliberations.

The county’s finance presenter said officials collected roughly 73% of revenue budget year‑to‑date through July and had used about 55% of appropriations. Real estate taxes remain the largest revenue source; 97% of property tax budget had been collected, the presenter said, but the county’s real estate assessment base was down 0.10% through Aug. 31 compared with the start of the year.

The presenter framed the numbers as an early look ahead to next year’s budget. "We are in the process, you know, framing out what the 2026 budget is gonna look like. That's gonna be presented to the board in November," the presenter told commissioners.

Why it matters: Montgomery County relies heavily on real estate tax revenue, and the presenter said unfavorable assessment appeals have offset some growth in assessments. At the same time, several mandatory or hard‑to‑cut expenses are rising: an actuarial valuation raised the county’s pension contribution by about $2.1 million for 2025, and health care costs are expected to increase in the high single digits to low double digits, the presenter said. Those two items, plus contractual wage growth, were described by commissioners as the core drivers of the projected long‑term pressure.

Key figures and program details reported to the board: - Real estate tax collection: about 97% of budgeted property tax revenue received year‑to‑date. 73% of overall revenue budget collected through July; 55% of expenditures expended. - Real estate assessment base: down 0.10% through Aug. 31 year‑to‑date; the presenter called the current year‑to‑date position "not a good sign." - Median home sale price (year‑to‑date through July): $490,000, roughly a 4.3% increase from the same period in 2024. - Volunteer emergency service real estate tax rebate program (first year): about 1,100 volunteers certified; average rebate roughly $600; total rebates issued approximately $664,000 for tax year 2024. - Identified cost‑containment and savings: $2.5 million of candidate expenditure reductions identified across departments; prescription benefit restructuring expected to save about $1.3 million in 2026; bringing an ombudsman program in‑house projected to save about $300,000 annually; a timing‑related debt service reduction of about $3.5 million for 2025. - Investment income: performing above the adopted budget and currently projected to outperform by roughly $1.1 million (projection subject to future federal rate changes).

Commissioners pressed for early public framing and more preliminary numbers ahead of November budget presentations. Commissioner DeBello and others asked the finance team for a clear "status‑quo" or baseline projection showing the impact of expected automatic growth items (health care, pension, contractual costs) so the board and the public can see the magnitude of shortfalls before formal hearings.

The presenter also noted the county has been using general fund reserves temporarily to continue some state‑funded health and human services while the state budget remained unsettled; those reserves are expected to cover operations through year end but reduce investment income temporarily. The presenters and commissioners said they expect more precise actuarial and vendor numbers this fall ahead of formal budget proposals.

Ending: County staff said they will deliver a proposed 2026 budget schedule and a preliminary high‑level fiscal snapshot to the board in the coming weeks; the presenter reiterated that the proposed 2026 budget will be presented in November and follow the board’s usual public adoption process in December.