Prince George’s County staff warn federal funding uncertainty could deepen local budget strain

Prince George’s County General Assembly Committee members were told Tuesday that Maryland’s 2025 budget and continuing federal uncertainty could force additional state and local budget action this year.

Consultants speaking to the committee said the state adopted a $67.9 billion operating budget for fiscal 2026 but also built significant reserves while making hundreds of millions in cuts and revenue changes that shift cost pressure to counties. Daryl Barnes of Barnes International told the committee, “We were able to put $2,100,000,000 away in the rainy day fund,” and described a mix of revenue increases and departmental reductions in the enacted plan.

The committee’s presenters said the risk stems largely from possible federal actions that would reduce reimbursements for programs such as Medicaid and federal contracts that support local employment. The panel repeatedly flagged the possibility of a special session in Maryland later this year to address lingering fiscal issues and said county leaders should plan for continued budget pressure.

Barnes and other presenters traced how the enacted package used a combination of cuts, one-time reserves and revenue changes. Presenters cited several new or increased statewide revenue items included in the package: stepped increases to income taxes on high earners, a capital gains surcharge, and higher collections on sports wagering and cannabis sales. Barnes and colleagues also listed higher vehicle fees and increased title fees among the revenue actions adopted by the General Assembly.

The committee heard specific programs intended to help workers potentially affected by federal layoffs. Barnes and others discussed the Federal Workers Act (sponsored by Delegate Jazz Lewis), which creates a loan program to provide short-term, interest-free loans for people affected by federal layoffs; presenters said the enacted funding included $6.5 million in the current fiscal year and an additional $10 million in a subsequent allocation. Committee members asked how long the fund would last; Barnes replied that distribution is first-come, first-served until dollars are exhausted.

Speakers also warned about the potential loss of federal waiver funding that supports Maryland’s hospital payment system and other programs. Ron Young of Evans and Associates told the committee the state’s Medicaid and waiver structure is “uniquely at risk” if federal policy changes, and he said such shifts could force additional state and local trade-offs.

Committee discussion emphasized local planning. Vice Chair Cindy Harrison and other members said they expect budget conversations to continue, possibly in a special session, and urged staff and lobbyists to continue tracking federal developments.

The presenters provided summaries of line-item allocations and one-time bond and capital grants for Prince George’s County in the adopted capital and operating budgets, and they pledged to send members fuller lists and the teams’ weekly tracking reports.

Forward-looking notes: presenters recommended county officials prepare contingency plans for reduced federal reimbursements and to monitor potential special-session legislation that could include both cuts and additional local revenue options.