Hagerstown introduces FY26 budget, tax rate; staff warn electric fund faces multimillion-dollar shortfall

HAGERSTOWN, Md. — The Hagerstown Mayor and City Council on May 20 introduced an ordinance to adopt the city’s fiscal 2026 budget and an ordinance to set the tax rate for fiscal 2026, while staff warned that self-supporting enterprise funds — especially the electric fund — face near-term cash pressure.

City finance staff delivered a detailed review of four enterprise funds — parking, electric, water and wastewater — saying those funds must be self-supporting and describing projected deficits, debt-service timing and capital needs that informed the proposed FY26 budget and tax-rate introduction. The council voted to introduce the budget ordinance and the tax-rate ordinance for formal adoption at a subsequent meeting.

Finance staff framed the enterprise funds as “business-type” accounts that should pay their own costs. On the parking fund, staff showed operating revenue of about $1.421 million and operating expense of roughly $943,000, producing a modest operating margin that becomes a cash deficit after accounting for depreciation, principal payments and capital outlay. In the cash projection the parking fund begins FY26 with roughly $1.1 million (staff noted they were trending at about $1.2 million at the time of the presentation) and is projected to end FY26 with about $786,000; longer-range projections show the fund drawing reserves and going negative in later years unless revenue or capital assumptions change.

The electric fund drew the council’s most urgent attention. Staff presented FY26 service charges of…