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Baltimore County outlines fiscal challenges, plans April budget release amid state and federal uncertainty
Summary
County Executive Kathy Klausmeier and Director Kevin Reed presented the county's FY26 budget outlook at a District 2 town hall, warning of state funding cuts, uncertainty in federal aid and a need to balance growing fixed costs with limited new revenue.
County Executive Kathy Klausmeier and Kevin Reed, director of the Baltimore County Office of Budget and Finance, told residents at a District 2 budget town hall that the county faces fiscal uncertainty heading into the FY26 budget year and will release a proposed budget on April 11.
Why it matters: Reed said federal aid makes up roughly 9% of the county's operating revenues and that uncertainty at the federal level, together with a projected $3 billion state deficit, could force the county to absorb additional costs. He and the county executive said the county must present a legally balanced budget by July 1 while protecting its AAA bond rating.
Reed summarized the county's finances and constraints. He described the operating budget as roughly $4.6 billion, with about half in the general fund and approximately $400 million in federal aid. He said more than half of every tax dollar goes to the public school system, with large shares directed to pensions, debt service and employee costs. The six-year capital program totals about $3.13 billion, Reed said, financed largely by water/sewer charges and general obligation bonds.
"We do have a lot of challenges ' with our upcoming fiscal picture," Reed said, adding that the county received $161 million in American Rescue Plan Act funding that must be spent within federal timelines and that the county has avoided using ARPA for ongoing operating costs.
Officials emphasized mandatory fixed costs. Reed said roughly $65 million in fixed costs (pensions, debt service and contractual increases) are unavoidable, while school system requests and other needs push total requests well above available growth.
Klausmeier stressed the local stakes. "We are committed to working with all of our partners ' to present a balanced budget and continue investing in our county's future," the county executive said, and she urged public input at town halls and through written submissions.
Timeline and constraints: Reed said the county's fund balance policy requires a minimum 10% rainy-day fund, a spending-affordability guideline constrains ongoing costs to economy-related growth, and voters recently approved a referendum used to finance capital projects like school replacements. The county executive said the administration will submit a proposed FY26 budget on April 11; the county council will then review and adopt by May for a July 1 start.
Residents were directed to townhall@baltimorecountymd.gov to submit comments if they were unable to speak in person.
Ending: County officials said they will press to maintain the county's AAA bond rating, noting that rating helps reduce borrowing costs for capital projects, and reiterated that the budget will require difficult tradeoffs as state and federal uncertainty affects local revenues.
