DLS: Eastern Shore counties to receive about $900 million in state aid under governor's budget; counties face proposed cost shifts

Delegates and senators in the Eastern Shore delegation heard a Feb. 7 briefing from the Maryland Department of Legislative Services (DLS) that placed combined state aid to the region at about $900 million for fiscal 2026, and flagged proposed budget changes that would shift some costs to county governments.

DLS analyst Hiram said, “the 9 counties on the Eastern Shore, when you add up their funding, it will total around $900,000,000 in FY '26.” The presentation described how most state aid is targeted by formula and distributed based on local wealth, population and program-specific measures.

The briefing summarized property-tax and income-tax bases across the nine Eastern Shore counties and detailed program-by-program state support. DLS analyst Valerie Monroe said the county revenue outlook “provides a snapshot of the fiscal health of county governments in Maryland” and noted that the report uses adopted budgets and projections for FY24–FY25. DLS staff highlighted that per-capita assessable bases and local tax rates vary widely across the region: Queen Anne’s, Talbot and Worcester counties have the highest per-capita property bases, while Somerset and several others have much lower per-capita net taxable income and therefore qualify for disparity grants.

Why it matters: state aid and local tax bases determine how much money counties and school systems can provide for public safety, transportation and schools. Delegates questioned DLS staff about county-by-county differences and about the budget’s proposed reductions and cost shifts.

Major figures and programs shown by DLS: - Total FY2026 state aid for the nine Eastern Shore counties: about $900 million, with roughly $826 million going directly to local governments and about $77 million going to retirement payments, DLS said. - County and municipal aid: approximately $84 million for FY2026 (about $3 million more than the prior year). - Education: DLS reported local school systems on the Eastern Shore would receive roughly $675 million in direct state school aid in 2026, an increase of about $35 million over the prior year; DLS noted that roughly 75% of state aid is for public schools. - Program highlights: enhanced police aid (partly driven by population density and violent-crime weighting), fire and rescue aid (statutory minimum 2% share per county), local health grants (DLS estimated roughly $28.1 million for the Eastern Shore), local highway user revenues (municipal components are significant across the Shore), disparity grants targeted to lower net-taxable-income counties, and targeted Blueprint for Education enhancements (concentration-of-poverty grants and 4-day pre-K components).

Proposed reductions and cost shifts. DLS staff pointed to elements in the governor’s proposed budget that would reduce state aid and shift costs to counties and local school systems: DLS said the governor proposed a $262 million reduction in state aid in the administration bill, and that the total fiscal impact described in DLS materials was about $283 million. The presentation explained that of the local fiscal impact shown, counties would pick up about $143 million in additional costs. DLS staff described two prominent shifts: - Teachers’ and community-college retirement: DLS staff said the governor’s proposal would raise the local share of retirement costs (DLS illustrated, for example, the specific amounts counties such as Caroline and others would face). - Property-assessment cost split: the current split pays 50% by the state and 50% by local governments; the governor’s proposal would shift the share toward local governments (DLS said the proposal would make local governments pick up 90% with the state covering 10%, creating an additional statewide local cost of about $20 million).

DLS also noted the timing of local highway-user revenue changes: enhancements in FY25–FY27 would revert to a lower share in FY28 (from 20% in FY25–FY27 back to 15.6% in FY28), creating a future reduction in that source of local revenue.

Questions from delegation members focused on the distributional details (for example, why Kent County ranks high on local wealth measures but also shows relatively high free-and-reduced-meal shares) and on which specific programs would be affected by proposed reductions. DLS staff explained the distinction between measuring wealth on a per-capita tax-base basis and per-pupil measures and said the nonpublic-placement special-education costs would be shifted modestly (DLS cited examples showing small dollar impacts for individual Eastern Shore counties).

What the delegation asked DLS to follow up on: members requested county-level breakout calculations for the teacher retirement and property-assessment shifts; DLS agreed to provide additional detail and to make underlying exhibits available from its web portal.

Ending: DLS staff closed by showing the website locations for the county revenue outlook report and state-aid data downloads; DLS said session materials will be updated after the legislative appropriation process. The briefing moved to audience questions before the meeting shifted to invited utility and industry guests.