Baltimore County budget director warns of ‘uncertainty’ for FY26, flags large funding gap
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Summary
Kevin Reed, Baltimore County director of budget and finance, told a District 3 town hall that federal and state uncertainty, rising fixed costs and school requests will require major reductions to fit within spending guidelines for the FY26 operating budget.
Kevin Reed, director of Baltimore County’s Office of Budget and Finance, told a District 3 budget town hall that the county faces “uncertainty and caution” as it prepares the fiscal 2026 budget.
Reed said the county must submit a legally balanced budget and maintain a healthy fund balance to preserve its bond rating. “The main word I wanna focus on is kind of uncertainty and caution,” Reed said during his presentation. He told attendees the county had fully obligated $161,000,000 in American Rescue Plan Act (ARPA) funds by Dec. 31, 2024 and has two years remaining to spend that money on capital projects submitted to the Treasury.
Reed described the county’s operating and capital budgets, saying the six‑year capital program totals about $3,130,000,000 and that general obligation bonds historically finance roughly 38% of capital funding. He said the county’s spending affordability guideline kept operating growth limited (FY25 guideline was 4.36%, which Reed said equated to about $118,000,000) and that mandatory fixed costs — health insurance, pension, debt service and contractual increases — account for roughly $65,000,000 in annual growth that is difficult to reduce.
“The total requests that have come in from the agencies totaled a little under $190,000,000,” Reed said, and he presented a gap between requests and what the county expects it can afford under current revenue projections. Reed said the county anticipates needing about $162,000,000 in reductions to align requests with the green “allowable growth” bar shown in his slides.
Reed also warned of external pressures: an uncertain federal policy environment, an estimated Maryland state budget gap and possible state actions that could shift costs to counties (he referenced the state’s Budget Reconciliation and Financing Act as part of the discussion). He recommended retaining a larger rainy‑day balance than the statutory minimum 10% because of those risks.
The county executive and council representatives sat through the presentation and later invited written submissions from residents who could not speak. No formal budget decisions were made at the town hall; the session was a public listening event for FY26 priorities.
Ending: Reed said Baltimore County will submit a balanced FY26 budget in line with spending‑affordability rules and work to maintain its triple‑A bond rating, but he emphasized contingency planning given the uncertain federal and state financial outlook.
