Caroline County unveils FY2026 budget proposal; commissioners cite state mandates and hold major rates steady

Deputy Administrator Daniel Fox summarized Caroline County’s proposed fiscal 2026 operating and capital budgets at a May 6 public hearing, telling the Caroline County Commissioners that property tax and income tax remain the county’s two largest revenue drivers and that the county is proposing to hold major rates steady.

"Property tax has not been increased or adjusted and [is] going on 10 years," Fox said, and he noted the property tax rate in the proposal is "proposed at 98¢, per a hundred dollars of assessed value." He also said the county plans to keep the income tax rate at 3.2% for the eighth straight year.

The proposal reflects several state-driven cost shifts that increased county obligations this year, Fox said. Counties must now pay 90% for a local state office that the county previously funded at 50% (an estimated additional $146,000), and the state is phasing down its supplement for teacher retirement funding; Caroline County faces an increase in its share of teacher retirement costs (about $561,000) and an estimated local school formula contribution of roughly $1.8 million for the coming year. Fox also said the county budget posted earlier reflected a projected local income tax reduction of about $1.1 million under an earlier state proposal, though that plan has since been revised.

Why it matters: The shifts from Annapolis are driving material changes in local spending demands and narrowing policy choices for commissioners as they balance service obligations with limited revenue options.

Most significant items in the draft budget include a proposed 25-step pay plan and a 2.5% cost-of-living adjustment for county employees; a one-step increase for sheriff’s office step plan participants with the same 2.5% COLA; and no changes to employee benefits costs borne by staff. On the capital side, Fox said the county’s general fund capital budget is projected to finish around $5.6 million, with money set aside for road repairs, equipment replacement and building upkeep, and local shares for education projects.

Fox described two large capital commitments: Caroline County’s estimated local share for Chesapeake College’s proposed technology building — a design-year local contribution currently projected at about $2.7 million in total county budgeting — and an initial planning/design contribution of roughly $165,000 for Lockerman Middle School spread across several years. Fox said the county is setting aside local funds now because of uncertainty in future state support.

Public comment and staff reaction: Dr. Clifford Coppersmith of Chesapeake College told commissioners that possible federal grant cuts in a presidential budget proposal could affect programs serving Caroline County students, citing Upward Bound, TRIO and adult basic education as programs at risk. "There could be a special session in October in which we could see a rescission that would affect us in the fall," Coppersmith said.

Caroline County Commissioners thanked staff for the budget work and highlighted the county’s reserves and prior steps to fund pensions and other long-term obligations. Commissioner Travis Breeding (president of the Caroline County Commissioners) and other commissioners emphasized uncertainty from state and federal actions and said the county will watch developments closely before final adoption.

Ending: The commission held the required public hearing and took public testimony. Commissioners will consider any additional public comment and state-level developments before finalizing the FY2026 operating and capital budgets.