By Adam Pagnucco.
County Executive Marc Elrich has released his recommended FY25 operating budget today. It now heads to the county council for its review. The council approves the operating budget in mid-May and the next fiscal year begins on July 1.
I will dig into this budget in the next couple weeks but here are a few broad strokes.
The headline is that Elrich’s new budget does not contain a property tax increase. That follows a proposed 10% property tax hike last year which the council trimmed to 4.7% and a smaller proposed property tax hike in FY21 which the council outright rejected. The income tax remains at the state’s maximum level (3.2%) and the energy tax is unchanged.
MCPS is getting most of what it wants. Last month, the school board requested a $3.353 billion operating budget. Elrich is recommending a $3.293 billion MCPS operating budget. This is $60 million less than what MCPS wants, but it is a $128 million increase from last year. Additionally, Elrich notes that his recommended budget exceeds the state’s Maintenance of Effort floor by $133 million.
Elrich is recommending a net increase of 141 full-time equivalent (FTE) positions in county government and a net increase of 403 FTEs across all agencies. This continues the trend of continual expansion of government from this executive, who ran on a platform of restructuring in his first race. Relative to the population, there will now be 10.49 county government FTEs per 1,000 residents, the highest level in at least 25 years.
Elrich’s union contracts are generous once again. Most fire fighters and police union members will be receiving combined wage adjustments and step increases of 7.0% plus many other enhancements. County government employees represented by MCGEO will receive combined wage adjustments and step increases of 8.0% plus other increases. Personnel costs are projected to rise by $141 million, or 10.2%.
The county’s reserves will be 11.6% of revenues, above the county’s target of 10.0%. Right now, the county’s reserves are projected to be 15.0% at the end of FY24, one of its highest levels on record. Elrich is planning to use some of the reserves for ongoing spending, an issue sure to provoke interest at the council.
Across all agencies, the executive is recommending a 4.9% operating budget increase for FY25. That’s above the average 3.8% annual increase in total operating budgets since FY16 but less than the increases in FY21 (5.0%) and FY23 (5.8%). I suspect federal aid had something to do with those latter increases. This is a fairly robust spending boost given the fact that the executive chose not to raise taxes.
While there won’t be a tax fight, there are a few issues to be resolved. First, the long-term sustainability of county spending will be raised once again (but probably not acted upon). It’s much easier to sustain annual 7-8 point raises for employees in non-recessionary times than when a downturn hits – and Elrich’s budget mentions the possibility of a recession. Second, there will be discussion of how the executive would like to use reserves. The council has its own ideas for how to use them such as the $20 million business incentive package proposed by Council President Andrew Friedson. And third, I predict the MCPS unions will demand full funding of the school budget. Last year, the teachers staged a sit-in at the council chamber. Will that happen again?
The recommended budget is 868 pages long. There are bound to be some goodies in there. Let’s look at it together in the coming weeks. Happy reading!