Operating budget
Pays for annual services and yearly costs, such as teachers, public safety, health services, libraries, transportation operations, and annual debt payments.
Debt and CIP
Debt Service And Capital Projects In Montgomery County, Maryland
Debt service is the county's annual payment on money borrowed for long-term projects. It shows up in the operating budget even though the projects themselves are part of the capital budget.
Data status: FY27 Recommended debt and capital budget context
Last checked: 2026-05-19. Recommended debt service figures are County Executive recommendations and may differ from final adopted amounts. Capital budget explanations use official county CIP chapters.
The Short Version
FY27 Recommended DebtThe operating budget pays for annual services and yearly costs. The capital budget and Capital Improvements Program, or CIP, handle long-term projects such as school buildings, road work, libraries, and major renovations.
That is why paying teachers and building a school are in different budget systems. Teacher salaries are an annual operating cost. A school construction project is a capital project. If the county borrows for that project, the annual repayment appears later as debt service in the operating budget.
Total recommended Debt Service operating budget
$525,401,750
This is an FY27 Recommended operating budget figure for annual debt payments and related financing costs. It is not a total for every capital project in the CIP.
For project-level details, start with the official Capital Budget and Capital Improvements Program publication .
Operating Budget Vs Capital Budget
Capital budget and CIP
Plans and funds long-term public projects such as school buildings, roads, libraries, parks, major renovations, and other durable public assets.
How A Capital Project Can Affect The Annual Budget
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A long-term need is identified
The capital process is used for projects with long usefulness, size, and cost, not ordinary yearly operations.
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The project is placed in the CIP
The CIP lays out capital project estimates, funding requirements, budget requests, and timing over a six-year period.
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A funding mix is chosen
A project may use bonds, current revenue, PAYGO, grants, state aid, or other capital funding sources depending on the project and policy limits.
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Borrowing is repaid over time
When the county uses general obligation bonds or other long-term debt, repayment happens through principal and interest payments over future years.
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Annual costs enter the operating budget
Debt service, current revenue transfers, PAYGO, maintenance, utilities, staffing, and equipment can all affect future annual operating budgets.
How To Read The Terms
These terms are connected, but they do not mean the same thing. The CIP is the planning system for capital projects. Debt service is the annual cost of repaying certain borrowing. PAYGO uses current revenue instead of borrowing for some capital costs.
| Term | Plain-English Meaning | Related Glossary |
|---|---|---|
| CIP | The six-year Capital Improvements Program for public buildings, roads, and other facilities planned by county agencies. | Read definition |
| Debt service | Annual principal, interest, and issue-cost payments on bonded indebtedness. | Read definition |
| General obligation bonds | County borrowing backed by the county's full faith and credit and general taxing power, commonly used for long-lived public infrastructure. | Read definition |
| PAYGO | Current revenue used for capital projects instead of, or in place of, borrowing when the county uses pay-as-you-go financing. | Read definition |
What People Often Misunderstand
A capital project approval is not the same thing as funding an annual service. A new or renovated school building belongs in the capital budget. The teachers, principals, transportation, supplies, and other recurring school costs belong in the operating budget.
Borrowing does not make a project free. It spreads repayment over future years, and those annual payments use space in future operating budgets.
A multi-year CIP amount should not be compared casually with a single year of operating spending. They cover different time periods and different kinds of costs.