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City projects $8.3 million FY25 shortfall as police, fire overtime and fleet costs drive deficits
Summary
Budget office reported an $8.3 million second-quarter shortfall in FY25 driven by higher sworn overtime, fleet upfitting costs and other agency deficits; administration imposed spending freezes for agencies with projected deficits.
Baltimore City’s budget office reported a second-quarter FY25 projection on Tuesday showing an $8.3 million shortfall driven by an estimated $30.9 million expenditure deficit against a $22.6 million revenue surplus.
Laura Larson, city budget director, told the Budget and Appropriations Committee the projection covers actuals from July 1 through Dec. 31 and reflects a $22.6 million revenue surplus driven largely by stronger-than-expected income tax and transfer/recordation receipts. Larson said the projection shows a $6.3 million shortfall in investment earnings and smaller revenue shortfalls in parking and traffic-camera receipts.
On the expenditure side, the budget office cited sworn overtime (police and fire) and fleet upfitting as the primary drivers of the $30.9 million deficit. Larson said sworn overtime was up about 9% year over year through the first half of the fiscal year, with police overtime among the largest contributors. She said the fire department’s year-to-date fleet and overtime costs contributed to its projected deficit.
Larson provided agency-level highlights: the fire department is projecting a deficit of just under $36 million, the police department a $25.2 million deficit, Recreation and Parks about $7.6 million and the sheriff’s office about $1.7 million. Several other agencies showed surpluses driven by vacancies and turnover, including the State’s Attorney’s Office and Department of Public Works. The citywide vacancy count improved from about 1,900 to 1,600 compared with the prior year.
The administration announced a spending freeze on agencies with projected deficits, requiring additional review of personnel reclassifications, discretionary overtime, procurement and P-card use except for agency directors and their direct reports. City Administrator Leach said finance staff monitor personnel actions and procurement and confirmed that the sheriff’s overtime spike was identified and halted once detected.
Larson said some FY25 third-quarter costs — notably the police contract and heavy snow removal — occurred after the period covered by the Q2 projection and will be reflected in Q3 updates. She said the city will provide updated third-quarter projections when the mayor’s FY26 budget is transmitted to the council in May.
What’s next: the budget office will finalize third-quarter projections and continue to forecast revenue and expenditure trends as the FY26 budget is prepared for Board of Estimates action.
