Allegany County officials say governor’s proposed budget would cut about $5.1 million, kick off local budget process

Allegany County officials told the County Commissioners on an initial budget kickoff that the governor’s proposed budget and related tax law changes would reduce county revenue by about $5.1 million this fiscal year, county staff said. County leaders said the losses are in addition to roughly $13.1 million lost last year and another $5.1 million reported afterward, leaving two-year revenue declines of about $18.2 million.

The commissioners were presented with a one-page summary prepared by county staff and distributed to Governor Wes Moore’s office, House and Senate leadership, the county’s legislative delegation and committee chairs. County staff said the immediate impacts they have identified in the governor’s proposal include reductions to the disparity grant, new direct billing for teacher pension costs, increased county share for the local assessment office, and changes in state income-tax calculations that flow through to county receipts.

Why it matters: county staff said the combination of recurring and one-time revenue losses would force the county to choose between service cuts and tax increases. Staff warned that if the governor’s proposals and the related statutory changes remain in final state action, the county would face “difficult” budget tradeoffs including reductions in services and further staff cuts.

County staff identified several specific items in the governor’s proposal and their local cost estimates: a cut of $816,000 to the county’s disparity grant; a new county liability for teacher pension costs estimated at $754,000; and a proposed increase in the county share of the local assessment office from 50% to 90%, which staff estimated would cost Allegany County about $728,000. In addition, county staff said changes to state income-tax treatment tied to the governor’s plan would reduce Allegany County income-tax revenue by about $3.2 million this year.

Staff also flagged a separate formula-driven change in highway-user revenues: an increase to 1.6 for the current year that staff described as temporary unless the General Assembly acts next year. County staff said without legislative action the highway-user revenue level would drop sharply in the next fiscal cycle and further reduce local receipts.

County finance estimates cited at the meeting showed that one penny of the county property tax base generates about $550,000; county staff said restoring $5 million in lost revenue from the proposals would require roughly a 10-cent (0.10) property-tax increase. County officials cautioned that Maryland law limits the local income-tax rate and that even increasing the county income tax to the statutory maximum (3.2 percent, as referenced at the meeting) would generate only about $500,000 more, far short of the shortfall identified.

Commissioners and staff discussed operational impacts already underway: a thin workforce caused by vacancies across departments, a roughly $1 million projected health-insurance overrun tied to recent plan changes, and smaller savings such as eliminating curbside recycling (estimated by staff at about $190,000) that by themselves would not bridge the gap. County management, staff said, is preparing options that will be presented to the commission in the coming weeks showing revenue and expenditure alternatives.

County leaders said they have given their lobbyists the county’s one-page summary and a letter to distribute to state leaders and will continue to press the delegation and committee chairs to protect the county’s revenue streams. As an immediate step, staff said they will circulate the one-pager publicly and to outside agencies and begin a public outreach effort to explain possible tradeoffs between service reductions and local tax increases.

The commissioners did not take a formal vote on any budget measure at the meeting; the item was a kickoff and informational briefing. Staff said a formal budget calendar will be circulated and that they may delay some local deadlines until state action is final. The county’s management team will develop specific expenditure reductions and yield calculations for property- and income-tax options for commission consideration.