Hagerstown staff present FY26 budget with proposed 5.5¢ tax-rate increase to close $16.4 million gap

City finance staff presented the administration's proposed fiscal 2026 general fund budget at the April 15 work session, saying earlier department requests left a $16.4 million shortfall that was pared down to a slight surplus through reductions, deferrals and alternative funding.

Finance Director Michelle Hepburn told the mayor and council the budget started with a general fund deficit of $16,400,000 and that staff reduced requested general-fund transfers to the capital improvement program by $8,200,000 to bring the general fund to a near balance. "To put this into perspective, I have never seen it that high since I've been here in 15 years," Hepburn said of the initial $16.4 million deficit.

The proposal projects recurring revenue of about $67.2 million, with total budgeted revenue of roughly $71.4 million when one-time fund-balance transfers are included. Property taxes are the single largest revenue source, budgeted at about $46.5 million. On the spending side, salaries and benefits are the city's largest cost at about…