Frederick County staff present FY‑26 budget showing roughly $10 million shortfall, set Friday for informational review

Frederick County finance staff gave supervisors an initial overview of the proposed fiscal year 2026 general fund budget, saying the county’s proposed revenues total about $261 million and proposed expenditures total about $271 million, leaving an initial gap of roughly $10.4 million.

Cheryl, a county finance staff member who presented the materials, said, “Last year's revenue per our resolution was $256,000,000,” and that the FY‑26 proposed revenue reflects new construction and personal property estimates. She told the board that the summary packet includes a detailed line‑item backup behind the second tab for members who want to follow the math.

The shortfall calculation reflected three primary factors staff highlighted: roughly $15 million in increased department requests, about $5 million in new revenue (mainly new construction and a small increase in grants), and a $5.5 million planned transfer from the capital fund to the general fund. “If you take that new revenue of $5,000,000 and my shortfall of 10, it takes you back to the bottom change here on the blue white form of 15,000,000,” Cheryl said.

Why it matters: supervisors will need to identify reductions, additional revenues or use of fund balance to close the gap before final adoption. County staff flagged that the current presentation does not yet include the full school board request, capital requests outside what’s already been included, or some new position costs.

Board members and staff discussed several technical assumptions behind the numbers. The county’s proposed real‑estate tax rate was described as “revenue neutral,” recognizing only new construction; staff said the precise personal‑property totals will not be finalized until mid‑March when the vendor reports are available. Cheryl reiterated that contingency assumptions include a 4% salary increase and an initial contingency placeholder (described in the packet as “300,” units not specified in the summary). She also said no health‑insurance increases were budgeted in the draft.

Supervisors asked for trend data and comparisons. Cheryl said a multi‑year revenue and fund‑balance trend drawn from audited financial statements will be presented Friday to help frame whether current estimates are conservative relative to prior years. “You will be seeing in the very initial part of that a trend analysis of revenues over the last 11 years,” she said.

Several supervisors asked how school requests would change the picture. Staff estimated the schools’ operating request could be in the $8 million range; Cheryl characterized that as a preliminary expectation and said the formal school presentation is scheduled for Feb. 12. Members also noted roughly $19 million in previously outstanding capital requests that remain a factor.

Staff identified state legislative items that could materially affect local revenue: a recurring proposal to phase down personal property tax over multiple years, and a separate potential reimbursement for localities with high disabled‑veteran rates that could return several hundred thousand dollars to the county. Cheryl said both items remain in flux and that any legislative change would likely be phased in to avoid a single‑year shock.

Cheryl closed with an operational note about Friday’s session: “It is not a decision making day, it's really an information, distribution and gathering day,” meaning supervisors will receive information and ask questions but are not expected to take final votes.

The county staff recommended that Friday’s work session focus on summary pages—general fund summary expenditures, capital summaries and new positions—and said larger departments (public works, sheriff, fire and rescue, health and others) will appear for additional detail at that meeting.