DLS: Howard County to receive $523.5M in state aid for FY26; governor's proposal would cut $13.9M for county

Department of Legislative Services analysts briefed the Howard County delegation on Feb. 12 that the state will provide $523,500,000 in state aid to Howard County for fiscal 2026, including $443,400,000 in direct aid and $80,200,000 in retirement payments.

Arnold Aja, a DLS policy analyst, said the Howard County Public School System receives the lion's share of direct aid — $386,100,000, or roughly 87% of the county's direct state aid. “The vast majority of state aid is targeted to the public school system,” he said.

Compared with fiscal 2025, total state aid to Howard County increases by $26,300,000, with the school system receiving $19,400,000 of that gain and the county government receiving $782,000. Aja highlighted several program lines: $5,000,000 under the existing police aid formula, an $812,000 police-aid enhancement tied to violent-crime counts, $6,500,000 in local health grants (driven by salary enhancements for state health employees), and $6,300,000 in local highway user revenue for fiscal 2026.

Aja also described that the local highway user revenues program share will revert in fiscal 2028 from 20% to 15.6% of the gasoline and motor-vehicle revenue account unless changed, and that jurisdictions with a larger share of municipal residents receive a higher per-capita allocation under the formula.

Valerie Monroe, another DLS analyst, walked the delegation through online reports and charts that detail county-level state aid by program and by fiscal year. She noted the State Aid to Local Governments page on the DLS website contains multi-year charts and a state-aid overview report used by local governments for fiscal planning.

Aja closed the presentation with an analysis of the governor's proposed reductions. Under the administration's combined budget reconciliation and related education bills (identified in the presentation as Senate Bill 429 and its cross-file House Bill 504), DLS estimates roughly $263,000,000 in statewide state-aid reductions. For Howard County, the net effect shown in the presentation is a $13,900,000 reduction in state aid plus an additional $1,000,000 in property-assessment costs shifted to the county, for a combined negative impact of about $15,000,000.

“Under the governor's budget plan…he is proposing around $263,000,000 in state aid reductions. The vast majority of this decrease affects the public school system,” Aja said. He explained that the reductions include lower per-pupil funding under collaborative-learning programs, higher local cost-sharing for nonpublic placements, and higher local shares for teacher and community-college retirement payments and property-assessment costs.

DLS noted that despite these shifts, Howard County's projected property-assessment growth will produce significant tax-base increases. The presentation cited an estimated $57,200,000 increase in property-tax revenue for FY25, which DLS said could offset some cost shifts if the county maintains its current tax rate.

Why it matters: The presentation laid out both the current-state funding landscape and how proposed state-level reductions and cost shifts would alter local fiscal responsibilities, particularly for the county government versus the local school system.

DLS analysts offered to provide hard copies of their reports to delegation offices and to follow up as the budget moves through the legislative process.