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Hagerstown staff present FY2026 general fund proposal; 5.5‑cent property tax increase proposed
Summary
City staff reviewed the FY2026 budget book and proposed a 5.5‑cent increase in the real estate tax rate to help cover rising expenses, including police and fire salary increases and capital transfers to infrastructure.
City staff presented the proposed fiscal 2026 general fund budget during the April 8 work session, highlighting spending priorities, reserves, and a recommended 5.5‑cent increase in the real estate tax rate.
Michelle (city finance staff) and budget team members walked the mayor and council through the budget book’s structure, the capital improvement program and financial projections. Staff cited growth in assessed values and other revenue changes from the State Department of Assessment and Taxation (SDAT) and recommended a 5.5‑cent increase rather than reducing the tax rate to yield constant revenue.
Under the proposal, the FY2026 general fund budget would total about $71.4 million, up roughly $7.5 million from the FY2025 budget. Staff attributed $6.3 million of that increase to property tax revenue and said salaries, wages and related employee benefits account for about $4.6 million (roughly 62%) of the total general fund expense increase. Police and fire combined were listed as the largest department drivers, with police showing increases tied to contractual salary changes and nine additional sworn positions plus four civilian positions; fire overtime and negotiated changes drove increases in that department.
Staff also outlined proposed uses of fund balance reserves totaling about $4.1 million, mostly for one‑time items and capital projects. The city reported an unassigned general fund balance of approximately $22.99 million at the end of the audited fiscal year, representing about 45.5% of annual operating expenditures (about 5.5 months of operating reserves), well above the city’s policy minimum of two months (17%).
Capital improvements were discussed as a five‑year program; staff highlighted a $2.9 million general fund transfer to infrastructure for FY2026, with $2.1 million directed to police and fire capital projects. Staff also noted ongoing ARPA allocations and that most ARPA funds had been obligated by the December 31, 2024 deadline.
Council members asked clarifying questions about chart definitions (for example, whether pie charts represented property tax dollars only), fire vehicle purchases (two vehicles: one engine and one box truck, total $775,000), and how department reorganizations (planning and code administration) would be reflected across the budget. Staff said department-level line items would be adjusted mid‑year to reflect anticipated reorganizations but that overall totals would still be presented in the departmental financial detail pages.
Staff proposed returning to the council at a future meeting to review the capital improvement program and user fees; council members asked for follow‑up materials from traffic, school capacity and other technical agencies if needed for major development questions.
