Prince George's OMB warns county finances tight in 2026, federal-job losses cited as major downside risk

Prince George's County Director of the Office of Management and Budget Ross Early told the Compensation Review Commission on May 7 that the county's finances are stable for 2025 but face material risk in 2026 and beyond.

Early said the proposed 2026 budget shows a $120 million gap compared with current-year resources. "Sixty million of that $120 million has to go to the blueprint off the top," Early said, and he described additional planned allocations of roughly $30 million each for fire and police. He said most other departments would receive less in 2026 than in 2025.

Why it matters: Early said those structural commitments, together with changes made during the legislative session and uncertainty in federal employment and audit revenues, create a tighter near-term fiscal picture and could force difficult choices for the county in subsequent years.

Key figures and drivers

- Proposed 2026 gap: about $120 million, Early said. - Blueprint allocation: roughly $60 million of the gap is driven by an education "blueprint" requirement, described in the presentation as an off‑the‑top allocation to schools. - Public safety: Early said about $30 million is expected to go to fire services and $30 million to police from the proposed budget. - Telephone excise tax: OMB had budgeted receipt of a telephone excise tax that would replace an existing sales tax and generate $37.6 million annually; because county council approval came later than expected, Early said the county will receive about $9.4 million less in the near term (he described the near-term yield as roughly $28.2 million). - Legislative changes: Early said post-sine die changes included an additional $15.3 million for the Board of Education and $11.4 million in extra revenue added by the legislature; he said those items, combined with the excise-timing change and other factors, increased the county's shortfall by roughly $13 million compared with the budget submitted.

Downside risks

Early emphasized two federal-related risks. First, Prince George's County has a large population of federal employees and contractors; he cited an estimated 73,000 residents who work for the federal government and noted that high‑paying federal employers are embedded in the county's economy. He identified Goddard as a particularly large federal site with roughly 14,000 employees and said a loss of activity there would materially change the county's fiscal picture.

Second, Early said possible reductions in IRS enforcement could reduce the county's share of revenues tied to piggyback audits; he estimated the county receives about $30 million a year from that source and described it as a newly recognized risk tied to potential federal downsizing.

Reserves and strategy

Early said the county is aiming to preserve reserves for 2026: "We're about 14%," he said when describing the size of current reserves. He said staff are trying to avoid using reserves except for a limited set of one‑time items and are negotiating with the council on options to manage the near-term shortfall. He also warned that beyond 2026, county finances depend heavily on federal decisions and state policy changes.

Questions from commissioners focused on federal-worker counts, contractor exposure and bond-market implications. Early said the county will present a similar narrative to rating agencies ahead of a bond presentation next week and said he was "cautiously optimistic" but would not rule out a downgrade.

Votes at a glance

The commission approved the April 16 meeting minutes by voice/roll-call vote during the May 7 meeting. The motion to approve the minutes carried 6-0.

Ending

Early concluded his presentation and offered to provide additional detail to commissioners. The commission scheduled follow-up work on compensation comparisons and related items for future meetings.