Spending-affordability panel recommends cautious revenue outlook, smaller GO issuance and prioritizing PAYGO for critical maintenance

The Howard County Spending Affordability Advisory Committee (SAAC) told the County Council on Wednesday that the county should adopt a cautious revenue forecast for the coming budget cycle, limit new general obligation borrowing and prioritize one-time PAYGO funds for essential maintenance and deferred capital.

The committee recommended the council use a 4% growth assumption for fiscal 2026 revenues and a 3.6% planning target for the five-year 20272031 outlook. "Income taxes are wildly unpredictable," said Todd Atterburn, SAAC vice chair. "Property-tax revenue provides a stable base, but we cannot reliably forecast income tax receipts in this environment."

SAAC also recommended a conservative general-obligation bond ceiling of $25 million for the year, citing the countys desire to preserve its triple-A credit rating. "We are cautioning with a flashing red light on new GO bond issuances because it commits the county over a 20-year period," Atterburn told the council.

The committee described several risk factors that informed its advice: a high local exposure to federal employment and contracting, the states fiscal shortfall and the possibility of cost shifts from state to county (including changes to teacher-pension funding), Medicaid funding uncertainty and newly discussed state liabilities tied to settlements. Dr. Richard Clinch, who leads the Jacob Fraen Institute and provides fiscal forecasting to the committee, told the council that federal procurement and direct federal employment are significant to the county. "Roughly 11% of Howard County residents work for the federal government directly," Clinch said, and the countys procurement exposure is higher than the state average. He said a modest reduction in federal employment could lower county income-tax receipts by an estimated $20$30 million in coming years under some scenarios.

On operating and capital priorities, the committee recommended directing PAYGO to essential and critical maintenance items rather than new, nonessential projects. Committee member Barbara Lawson said PAYGO should reduce long-term debt pressure and avoid locking in operating costs that are hard to sustain during a revenue squeeze. The committee singled out school deferred-maintenance needs and compliance obligations (for example, stormwater/NPDES requirements) as priority uses of limited PAYGO funds.

The SAAC urged the council to "pause" nonessential new long-term capital commitments until state and federal uncertainties clear. The committee argued the pause would give the county six to eight months to assess final state budget actions, the federal outlook and the impact of any state cost shifts on the county's budget.

Growth and housing: the committee urged the county to implement HOCO by Design and other measures to encourage housing types and locations that attract families and expand the tax base without increasing school-age population pressures unduly. "Robust economic growth is the healthiest long-term solution," said Josh Zucker, a SAAC member. The committee also discussed student-production rates by housing type, and panelists noted multifamily and high-rise units typically produce fewer K12 students per unit than single-family detached homes, which affects long-run school demand and fiscal planning.

Next steps: the SAAC recommended that council leaders adopt the conservative revenue target and limit GO issuances this year, direct PAYGO toward critical maintenance and deferred needs, and pursue policies that broaden the county's tax base. Committee members said they will continue to refine projections and provide the council with more detailed scenario testing as state and federal developments evolve.

Sources and provenance: presentation and discussion led by SAAC chair Holly Sun, vice chair Todd Atterburn and Dr. Richard Clinch; committee members included Ellen Flynn Giles, Barbara Lawson, Steve Hunt and Josh Zucker. County finance staff participated and supplied data to the committee.