Credit: Image via Flickr: <a href="">401(K) 2012</a> (CC BY-SA 2.0)

In his first week on the job, Montgomery County Executive Marc Elrich has proposed making budget cuts totaling more than $40 million for the current fiscal year to maintain a general fund reserve level that is satisfactory to bond rating agencies.

According to a memo sent to the County Council by council Administrator Marlene Michaelson and legislative analysts Gene Smith and Jacob Sesker, fiscal 2018 ended with a shortfall of $41 million in anticipated reserves compared to previous estimates.

The memo states that agency spending for fiscal 2019 will need to be reduced by $44.1 million, with most cuts occurring in county government and to the Maryland-National Capital Park and Planning Commission.

The council is scheduled to hear the report at its Tuesday meeting.

Elrich’s appointed budget director Rich Madaleno, an outgoing state senator, said Monday that former County Executive Ike Leggett had set a goal of maintaining general fund reserve of 9.4 percent of county revenues at the end of the current fiscal year, and 10 percent at the end of fiscal 2020. Leggett has frequently cited large reserve levels as a factor in the bond rating agencies’ consistent AAA rating of Montgomery County, because it demonstrates the county’s financial stability in the event of another economic downturn.

But due to lower-than-expected revenues at the end of fiscal 2018, which ended Sept. 30, reserve levels are projected to finish at 8.4 percent.


“That leaves the reserve account not where the council and the executive had wanted it when it adopted the FY 19 budget last spring and the commitment to the bond rating agencies,” Madaleno said.

Madaleno said that Elrich has asked department heads to submit budget cut proposals to him, with the goal of submitting a county savings plan for the current budget year by mid-January, when the council returns from its holiday recess.

“He [Elrich] has been very clear in directing county government and asking the other agencies to keep the commitments that we’ve made about our various reserve accounts,” Madaleno said.


Madaleno said Elrich did not have details on where the budget cuts would occur.

Asked why Elrich had embarked on a savings plan so early in his administration, Madaleno said that in a normal year without a transition to a new county executive, such an undertaking would have likely occurred earlier.

Council President Nancy Navarro said in an interview over the weekend that Elrich spoke with her last Wednesday and informed her that revenue projections for the end of fiscal 2018 had been lower than expected.


Navarro said that Elrich told her that in order for him to keep his promise of maintaining a general fund reserve level of 10 percent, budget cuts would have to be made. But he did not elaborate, she said.

“He said he wanted to talk to his department heads so they would know this was coming,” Navarro said.

Navarro said the council will likely take up the issue of the budget cuts when they return from recess in mid-January. The council must approve any savings plan made by the county executive.


“I have alerted my colleagues and let them know that when we come back from break we’ll have public hearings and committee sessions,” she said.

Dan Schere can be reached at