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OMB: Montgomery County projects higher near-term revenues but flags state and federal uncertainties
Summary
OMB reported upward revisions to FY25–FY30 revenues (FY25 +$132 million) driven by stronger income-tax distributions, but staff warned that the increases largely offset — not erase — structural budget imbalances and that state and federal actions could shift the outlook.
Montgomery County’s Office of Management and Budget presented an updated six-year fiscal plan showing upward revisions to projected revenues, while cautioning the Council about lingering structural imbalances and new state and federal risks.
Key numbers: Craig Howard (OMB) said the December fiscal-plan update projects FY25 revenues $132 million higher and FY26 revenues about $128.5 million higher than in the approved budget. The out-year revisions increase projected revenues further toward FY30 if current trends hold.
Drivers and caveats: Improved income-tax distributions and a stronger-than-expected November make up much of the increase, OMB and Finance staff said. However, OMB noted that much of the additional revenue will be required to address a structural gap created by the FY25 budget’s reliance on one-time resources for ongoing expenses. The county’s FY25 general-fund reserves are now projected at 13.1% of expenditures (higher than the 10.8% assumed in the approved budget), partly due to the revenue uptick.
Risk factors: Staff outlined several unknowns that could alter the picture: the State Board of Revenue Estimates (Dec. 12), state-level budget gaps and decisions that may shift costs to local governments, and potential federal policy changes that could affect capital gains, income tax distributions or employment for county residents employed by the federal government. OMB and Finance staff also flagged higher-than-planned overtime and participation-driven costs (working-families income supplement and public safety overtime) that increase projected expenditures.
Council response: Members asked for follow-up analysis on capital gains, the February income-tax distribution and the possible fiscal impacts if federal changes (including rapid shifts in federal employment) materialize. Staff committed to continuing analysis and to providing updated quarterly expenditure reviews and second/third-quarter projections to inform the March budget process.
What’s next: OMB will continue to monitor state and federal developments and provide more detailed second-quarter expenditure analysis in February to support the county executive’s recommended FY26 budget and Council review.
