Chesapeake Beach council adopts FY2026 budgets and tax rates; amendments and procurement questions linger

The Chesapeake Beach Town Council voted June 12 to adopt the town’s fiscal year 2026 budgets and to set municipal tax rates for the coming year.

In a single meeting the council approved ordinances adopting the general fund budget, the mitigation fund budget, the water park fund budget, the utility fund budget (including rates, charges and fees), and the water reclamation treatment plant fund budget. Council also amended the general-fund ordinance to explicitly state the operating (personal) property tax rate before approving the amended ordinance.

Why it matters: The votes set the town’s spending plan and revenue rates for the fiscal year that begins July 1, 2025. Council members also debated whether to use general-fund revenue to support the utility fund while the town awaits the results of a utility rate study by consultant NewGen.

Key outcomes at a glance

- O-25-6: General fund budget and municipal tax rates — APPROVED (amended to add operating property tax rate) - O-25-7: Mitigation fund budget — APPROVED - O-25-8: Water park fund budget — APPROVED - O-25-9: Utility fund budget and water/sewer rates, charges and fees — APPROVED - O-25-10: Water reclamation (wastewater) fund budget — APPROVED

Council debate and unsuccessful amendments

Two council amendments were proposed during debate and failed to pass.

1) Admissions and amusement tax increase: Councilmember [name withheld in meeting audio] moved to raise the town’s admissions and amusement tax from 0.5% to 1.0% and to direct the additional revenue into listed general fund priorities. Town counsel advised the council that the tax rate is codified in town code and that any change would require a separate ordinance amending the municipal code; the amendment vote failed.

2) Reclassify a grant to the utility fund as a loan and redirect repayment to the general fund: A motion to rename the proposed transfer from the general fund to the utility fund from a "grant" to a "loan" (so future capital-connection receipts would flow back to the general fund) was made and failed on a voice/hand-count vote (the motion failed, 4—2).

Councilmembers' comments

Several council members said they were uncomfortable authorizing significant general-fund transfers to the utility fund before NewGen’s rate recommendations are finalized. NewGen had provided a timeline that might have produced rate recommendations in June, but councilmembers said the consultant’s deliverables were now expected in July; the town will revisit rates after receiving that work. Town staff said the decision to show transfers in the FY26 budget uses available FY26 revenue and that the council can amend rates later.

Quotations (verbatim)

- "We have an opportunity to get a price on concept A before the next council meeting... I can get a price on concept a in 5 weeks and hopefully in 4." — Mark Paddock, presentation to council (context: developer budget timing)

- "The council is in receipt of a handout... you will see that we are very low on that admissions and amusement tax." — Council discussion about proposed tax changes

Formal actions and votes (recorded in meeting)

- Motion to approve ordinance O-25-6 (FY26 general fund budget and tax rates): motion made and seconded; council approved the ordinance after an amendment adding the operating property tax rate. (Vote recorded in meeting as "the ayes have it.")

- Motion to approve ordinance O-25-7 (mitigation fund): adopted ("the ayes have it").

- Motion to approve ordinance O-25-8 (water park fund): adopted ("the ayes have it").

- Motion to approve ordinance O-25-9 (utility fund, including water/sewer rates): adopted ("the ayes have it").

- Motion to approve ordinance O-25-10 (water reclamation treatment plant fund): adopted ("the ayes have it").

- Failed amendment: increase admissions and amusement tax from 0.5% to 1.0 — failed (motion did not pass). Attorney advised a separate ordinance would be required to amend code language that currently sets the tax at 0.5%.

- Failed amendment: change the proposed general-fund transfer to the utility fund from "grant" to "loan" so subsequent connection-fee receipts would return to the general fund — failed on council vote (4—2).

Procedural and charter notes

Town attorney and staff reminded council members that certain changes (for example to a tax set in municipal code) require a separate ordinance or a charter amendment and cannot simply be altered inside a budget document. Council set a public hearing date for a proposed charter amendment about competitive procurement (CAR-25-2) to coincide with the next meeting schedule.

Speakers (attributed in article)

- Mayor — Mayor, Town of Chesapeake Beach (government) - Councilmember Eric — Councilmember, Town of Chesapeake Beach (government) - Councilmember Laura — Councilmember, Town of Chesapeake Beach (government) - Councilmember John — Councilmember, Town of Chesapeake Beach (government) - Kathleen — Councilmember, Town of Chesapeake Beach (government) - Dan — Town Treasurer (government) - Alyssa — Town Attorney (government) - Simelea — Town Administrator (government)

Authorities and references

- Town Code § 2-57-10 (admissions and amusement tax) — rate currently codified at 0.5% (counsel advised that an ordinance amendment is required to change the rate) - Tax-General Article, Annotated Code of Maryland — referenced as the state statute authorizing municipal admissions/amusement taxes and setting maximums

Clarifying details

- The operating (personal) property tax rate was added to the ordinance text at council request and is $1.39 per $100 of assessed value, recorded in the ordinance amendment the council passed. - The general fund budget includes a proposed transfer (noted in the budget documents) of approximately $549,000 to the utility fund; council debated whether to show that transfer before NewGen delivers rate recommendations.

Process and next steps

Council adopted the FY26 budgets and tax rates as amended. Members asked staff to work with NewGen and to return with any recommended rate changes; staff and the consultant will present updated rate proposals when available and council can amend the utility ordinance and budgets as needed.

Provenance: opening public hearing for O-25-6 began at the meeting start (public hearings segment) and final vote on O-25-6 occurred in the later business portion of the meeting when ordinances were taken up (meeting transcript June 12, 2025).

Searchable tags:["budget","tax rates","ordinance","utility fund","admissions tax"]

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