Prince George's County officials warned of about $170 million budget gap as state education mandate and federal grant risks rise

Prince George's County Council members were briefed on Feb. 4, 2025, by Stan Early, director of the Office of Management and Budget, who said the county faces roughly a $170 million budget gap for fiscal 2026 and significant new costs tied to the state education funding “Blueprint.”

Early told the council the county’s estimated new county-source revenue for the coming year is about $51.8 million, while the county will be required by state law to increase school spending by about $60 million next year and face additional governor-proposed costs of roughly $21 million, creating a structural mismatch between expected revenue and mandated spending.

Why it matters: the shortfall, coupled with a negative outlook from a rating agency and uncertainty about federal grants and the region’s federal workforce, could reduce the county’s flexibility to fund services, limit use of fund balance, and increase borrowing costs if a downgrade occurs.

Early said the county is contending with multiple revenue pressures and policy-driven cost increases. He listed these factors: the Blueprint for Maryland’s Future (the state education funding law) that would require an estimated $60 million in additional county spending for 2026 and rise in future years; a roughly $21 million package of additional governor-proposed costs; and the loss or reduction of several intergovernmental revenue sources. “If the blueprint goes forward as currently in law, then we’re looking at $60,000,000 additionally for, from the county for next year,” Early said. “Our total additional revenue is $51,000,000. So before we start with everything else, we have a — we got a problem.”

Early flagged several quantifiable items and risk areas: about $300 million in federal grants that support the Board of Education are at risk pending federal decisions; about $260 million in county grants from state or federal sources may be affected; and roughly $100 million associated with the Housing Authority (vouchers and public housing) could be reduced. He also said the county has an estimated $135 million of “unusable tax value” because of homestead tax constraints tied to reassessments.

Early provided other economic context: county unemployment stood at roughly 3.6%, compared with the state’s 3.3% rate; roughly 10% of jobs in the county are federal positions; median single-family home price is about $447,000 and unit sales have declined, which reduces transfer and recordation tax receipts.

Council members pressed for additional detail. Council Member Harrison said the briefing “sounds like you pulled the alarm,” and asked for specifics on debt levels and the county’s vulnerability to a credit downgrade. Early said general obligation bond terms on existing debt generally do not change after issuance, but new borrowings would be more costly if ratings fall. Harrison also asked for a full accounting of positions funded by federal or state grants so the council can estimate potential local costs if those grants are cut.

Vice Chair Burrows urged the administration to make clear to state leaders and the public what the practical consequences would be if the state continues to shift costs to counties while implementing the Blueprint: “I feel like with the state shifting a lot of its cost to the county on top of the blueprint obligation…we’re being forced to run a county with both hands behind our back,” Burrows said. Burrows asked that the county prepare clear, department-level descriptions of cuts or service changes that would follow if additional funding is not provided.

Other council members asked about stormwater financing, the size of outstanding bonds and the county’s debt policies, whether the county has already received American Rescue Plan Act funds (Early confirmed the ARPA money remains in the county’s accounts), and how quickly projections can be updated as federal and state actions evolve. Early said many figures remain fluid and promised the administration would provide additional analyses, including the number of federal employees who live or work in the county and a breakdown of positions funded by federal or state grants.

Early also warned that rating agencies have flagged the county’s use of fund balance as a concern and that the federal workforce uncertainty — including possible federal layoffs or program changes — could affect income tax revenue timing and levels across 2026–28.

Council response and next steps: Council members asked the administration to prepare follow-up materials — including an itemized list of positions funded by federal and state grants, a debt inventory and the modeled fiscal impact of several scenarios — and for the council leadership to coordinate communications with state lawmakers in Annapolis. Early said the administration will provide those analyses ahead of the formal budget submission.

The council subsequently voted 9–0 to convene an executive session on legal advice and pending litigation related to recent federal immigration law enactments; that vote was procedural and separate from the budget briefing.