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Comptrollers office warns federal cuts, state tax changes could squeeze Howard County revenues
Summary
A comptrollers office official told the Howard County Council that reductions in federal employment and contracting, together with state tax proposals and possible cost shifts, could slow local revenues. Officials said they are monitoring data and will provide follow-up information to the council.
Michael Beard, director of intergovernmental affairs for Comptroller Brook Thurman, told the Howard County Council on Wednesday that recent federal and state developments could reduce revenue available to the county.
Beard said Howard County accounts for nearly 9.7% of Marylands gross income from federal wages for tax year 2023 and that the average federal civilian salary in the county was about $129,580. "Further reductions in federal employment and spending will have a slowdown on Maryland's economy. That's just a fact," Beard said, citing a March Board of Revenue Estimates meeting.
The comptrollers office briefed the council on several risk factors: a decline in federal employment and federal contracts, a lowered state withholding forecast and a state budget proposal that would change how itemized deductions are treated for state income tax purposes.
Why it matters: Howard County has a high share of residents with federal wages and substantial exposure to federal procurement and contracts. Changes at the federal level or in state tax policy can reduce withholding and local income tax receipts, while state proposals to shift program costs to counties would increase local spending needs.
Beard summarized key federal and state findings for the council: the Board of Revenue Estimates reduced its 2025 withholding growth forecast to about 2.4% (from 3.1%), and the comptrollers analysis of the Budget Reconciliation and Financing Act (BRFAA) found that proposals to eliminate itemized deductions could raise Howard County local income tax revenue in an initial estimate by about 5.2% because of the countys relatively large share of higher-income, itemizing taxpayers.
Council members pressed Beard for local detail. Councilmember (Miss) Young asked for estimates of federal contractor layoffs and Department of Defense impacts in the county; Beard said a statewide estimate presented to the BRE was about 29,000 federal positions affected but that county-level breakdowns were not yet available and he would follow up. Beard also offered to share the BRE presentations and analysis with the council after the meeting.
Immigration and workforce issues also came up. Councilmember (Miss) Rigby asked whether the end of certain temporary protected-status pathways would affect sectors that rely on immigrant labor, such as construction and childcare. Beard said the comptroller's office has produced an immigration report showing immigrants' positive fiscal and labor contributions and that his office is tracking changes closely.
Several council members raised state-level cost-shift risks: proposals circulating in Annapolis could require counties to absorb larger shares of teacher pension costs, special education costs and potentially future settlement payments tied to wrongful-conviction cases. Maureen, director of government affairs for the county executive, told the council she has been working with the Maryland Association of Counties and said a variety of cost-shift proposals are being discussed, including possible future cost-sharing for settlements and pensions.
Medicaid funding was another concern. Council members and Beard agreed the county faces risk if federal Medicaid funding declines or if the state is forced to revise its Medicaid financing mid-session; Beard said a special session to address a shortfall was a possibility under discussion.
Whatwas not decided: Beard and other staff repeatedly said some specific county-level numbers were not yet available and promised follow-up analyses. On several questions the office said it would forward more detailed county-level breakdowns after consulting the Bureau of Revenue Estimates and the Department of Legislative Services.
Next steps: Beard said the comptroller's office and the BRE will provide the council links and follow-up information. County staff and council members asked for stress-test scenarios and county-specific estimates that would separate direct federal employment, contractor impacts and other exposures.
Sources and provenance: the presentation and remarks were delivered by Michael Beard of the Maryland Comptroller's Office (intergovernmental affairs); the council's discussion cited the Bureau/Board of Revenue Estimates and Department of Legislative Services analyses.
