Board of Estimates approves $4.6 billion FY26 ordinance of estimates; backfills income tax shortfall with fund balance

The Board of Estimates on May 7 approved the BOE recommendations for the fiscal 2026 ordinance of estimates, advancing a $4.6 billion city budget to the City Council. Laura Larson, the city’s budget director, told the board the BOE-recommended total is $4.6 billion, a year-over-year increase of about $420.3 million, and a $2.6 billion general fund that is up roughly $256 million from FY25.

Larson said BBMR is recommending a $5.9 million reduction to the income tax revenue projection for FY26 and is “keeping the income tax rate flat at 3.2%.” She attributed the downward update to revised statewide economic projections from the state comptroller’s office and recommended backfilling the revenue shortfall with unassigned fund balance rather than making further reductions to ongoing general fund services.

BBMR’s recommended changes between the preliminary and BOE versions added roughly $18.4 million to the proposed budget, mostly to reflect final state and federal grant awards and to restore specific items: three positions moved from ARPA to the mayor’s Office of Neighborhood Safety and Engagement, a $500,000 allocation to expand youth engagement through the Office of African American Male Engagement, increases to solid waste line items, a one-quarter allocation for a new Garnerville (Gardenville?) Veil Center coming online next year ($200,000), and restored funding for two Law Department positions ($285,000). The BOE also recommended $1 million from the Convention Center’s food-and-beverage revenue for capital improvements and $433,000 more for debt service to reflect anticipated borrowing.

Larson told the board the BOE is increasing the planned use of fund balance from $48.7 million to $54 million and described how the city assigns portions of fund balance for specific risks, capital contingencies and one-time items. She said the city’s rainy day goal is about 8% of the next year’s general fund budget; Baltimore’s rain-day fund stood at about $167 million at the close of FY25, with assigned and unassigned components that support the recommended FY26 actions.

Board members discussed revenue choices and long-term goals. Council President Zeke Cohen and Comptroller Bill Henry both said they appreciated the administration’s capital investments and requested additional detail on certain programmatic tradeoffs, and Comptroller Henry explained he would abstain when the BOE formally voted in order to preserve his office’s role in advising City Council. Cohen later recorded an abstention as well when the BOE vote was taken.

Mayor Brandon M. Scott and budget staff discussed the 10-year financial plan the administration is preparing and said property tax competitiveness and tax-credit reform will be part of that work. Larson and the mayor’s office said the 10-year plan will propose actions intended to lower the residential tax rate over several years and will examine tax credits, non-resident contributions and other structural measures.

The BOE vote approved the ordinance of estimates and sent the BOE recommendations to the City Council for the council’s public hearings: an overview to the council is scheduled May 15, agency budget hearings through early June, and final adoption of the FY26 budget is set for June 26. The BOE recorded abstentions by Comptroller Bill Henry and Council President Zeke Cohen during its vote.