Howard County projects 4.9% general‑fund growth for FY26 but warns of federal exposure and one‑time revenue decline

Howard County budget officials told the County Council on Monday that the proposed FY26 general‑fund budget totals about $1.6 billion and represents a $71.7 million, or 4.9%, increase over the prior year.

Holly Sun, the county’s budget administrator, said the proposal does not assume any property‑tax increase. "The final proposed budget for general fund is $1,600,000,000 once excluding use of fund balance," Sun told council members, adding later that the net increase of $71,700,000 is intended to support the base budget for public services and locally funded education costs.

Sun and council members spent much of the session discussing the forecast’s assumptions and the risks behind them. The administration is relying on a mix of mostly recurring revenues (property and income taxes), a $0.75 per‑line monthly increase in the 9‑1‑1 fee (expected to generate roughly $3.2 million), and higher interest income than was budgeted last year. Sun said the county projects property‑tax revenue growth of about 4.6% and income‑tax growth of about 4.1% for FY26.

But the presentation emphasized significant downside risk. Sun said the county is disproportionately exposed to federal spending: roughly 11% of residents are employed directly by the federal government and a larger share work for federal contractors. "If 20% of federal‑related employment was lost, that's equivalent to a loss of 5% of total workforce," she said, noting that such a shock would reduce income‑tax receipts and ripple through other revenues.

Interest income has been unusually large in recent months because of high market rates; Sun said FY24 produced a spike in investment earnings countywide. The administration now projects about $24 million in use‑of‑money/property revenue for FY26 — higher than recent historical budgets but well below the FY24 peak. Council members repeatedly cautioned that interest income and other “one‑time” gains should not be counted on to support ongoing spending.

The proposed budget includes $98 million of PAYGO (use of fund balance) for FY26, of which roughly $34.8 million was earmarked for capital PayGo. Sun said $18.7 million of PayGo was proposed for school systemic renovation and $23.5 million was identified for one‑time operating initiatives, including $1.5 million for a school one‑time expenditure pending Maryland State Department approval.

Council members pressed the administration on contingency planning. They were told contingency reserves in the FY26 proposal are about $1 million — markedly low by historical standards — and that midyear corrective actions would likely include hiring freezes, service reductions or other difficult choices if collections fall materially short of forecast.

Why it matters: the proposed FY26 revenue picture determines how much the county can provide to schools, community services, libraries and public safety. The presentation framed the budget as balancing competing priorities while emphasizing that volatile, nonrecurring revenues and national economic shifts make the outlook uncertain.

What happens next: the County Executive’s proposed budget is before the council for review and modification during the spring work sessions. Council members asked for further detail on the administration’s savings estimates (vacancy savings, travel/training/printing reductions, facility energy savings) and for updated fund‑balance figures to inform midyear and longer‑term planning.